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As BP Trial Nears, Hints of Progress on a Deal

February 25, 2013 by Leave a Comment

The plan, worth a total of $16 billion, would limit the fines paid by BP under the Clean Water Act to $6 billion, a proposal that could help reduce its tax liability, said one person briefed on the plan who spoke on the condition of anonymity.

BP would also pay $9 billion in penalties to cover damages to natural resources as well as the cost of restoration, that person said. The remaining $1 billion would be set aside in a fund that could be tapped if unanticipated environmental damages related to the spill developed.

No one at BP, the Justice Department or the states involved has commented on any settlement proposal, but several lawyers briefed on the negotiations said that a $16 billion proposal had been made. The affected states are Alabama, Florida, Louisiana, Mississippi and Texas, although only Alabama and Louisiana are participating in the trial.

Even if settlement talks slow or stall, the proposal represents a big breakthrough for several reasons, lawyers briefed on the talks said. For one, it represents the first time that Louisiana, which was hardest hit by the spill and would receive the largest payout of any state from a settlement, has participated in an offer.

In addition, the proposal signals the first agreement among states and the federal government on two other crucial issues: a rough plan for how the states would divide any settlement money, and how the settlement would balance fines and penalties against BP.

In any deal, BP would want to pay penalties as opposed to fines, because penalty payments, like those that cover damages to natural resources, are tax-deductible, while payments for fines, like those for Clean Water Act violations, are not.

All parties said they were prepared to go to trial. On Sunday evening, it appeared that opening arguments would proceed, though Judge Carl J. Barbier of Federal District Court in New Orleans could delay them if parties in the case told him that settlement talks were progressing.

The first phase of the trial, which was expected to last three months, will determine whether BP or its contractors were “grossly negligent” in causing the accident, which killed 11 workers and soiled hundreds of miles of beaches from Louisiana to Florida. The accident occurred when a drilling rig leased by BP, the Deepwater Horizon, exploded, causing an estimated four million barrels of oil to spill.

If Judge Barbier were to find BP grossly negligent, the company could face fines of up to $17.6 billion under the Clean Water Act. If the company and its contractors were found to have acted “negligently,” a less-severe standard, the per-barrel fines would be only one-quarter of that, or some $4 billion. The higher fine would also require that Judge Barbier agree with the government that four million barrels of oil spilled into the gulf. BP says the estimate is exaggerated.

In time, the company will also be assessed penalties under a separate federal statute, for environmental damages and remediation costs. Estimates of those penalties range widely, from $5 billion to $20 billion, with some projections estimating current costs and higher ones reflecting potential future effects on the gulf, lawyers said.

One reason for the states’ difficulty in shaping an offer has been their disagreement over how the money would be paid. Some states, like Florida, prefer to see the company pay more in economic damages because those would give the states greater flexibility in spending the payouts. Payments for pollution-related penalties typically must be used for environmental purposes.

There are strong reasons for all sides to reach a deal. Blaine LeCesne, a law professor at Loyola University New Orleans, said payments could flow faster, and it would be costly to proceed with a trial only to have it interrupted by a settlement or partial settlement later. A settlement would also avert future appeals. For BP, a settlement could avert months of bad publicity coming out of a trial that could include embarrassing testimony and documents retelling the story of the accident.

But Mr. LeCesne added that progress had been slow because “there are too many diverse claimants with varying interests and varying litigation perspectives.”

Left unresolved by the current settlement proposal are claims by the affected Gulf Coast states against BP for economic damages, which could account for billions of dollars more.

As part of the trial scheduled to start Monday, Transocean, the owner and operator of the Deepwater Horizon rig, and Halliburton, which was responsible for pouring the cement plugs in the well, also face possible civil penalties.

The fallout from the spill has dealt a punishing blow to BP, forcing it to divest valuable oil and gas fields around the world over the last three years to set aside $42 billion in payments. It has already spent more than $14 billion on spill response and cleanup, and nearly $10 billion in payments to affected local governments, businesses and individuals.

BP pleaded guilty last year to 14 criminal charges, including manslaughter; admitted negligence in misreading important tests before the blowout; and agreed to pay $4.5 billion in fines and other penalties. The Justice Department has also filed criminal charges against four BP employees.

Last February, a trial to resolve claims against BP by individuals and businesses affected by the spill was delayed by Judge Barbier on the eve of trial because of settlement talks. BP subsequently agreed to create a fund now valued at $8.5 billion to settle those claims. However, numerous individuals and businesses chose not to participate and are also parties to the trial starting Monday.

Article source: http://www.nytimes.com/2013/02/25/business/energy-environment/as-bp-trial-nears-hints-of-progress-on-a-deal.html?partner=rss&emc=rss

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Career Couch: When the Boss Gives You One Project Too Many

January 15, 2012 by Leave a Comment

A. In situations like this, people often automatically say “yes” out of fear, says Jim Camp, a negotiations coach in Dublin, Ohio. “We have a real desire not to let down our bosses,” he says. “People are afraid if they say they can’t do it, they look incompetent or incapable.”

Matthew J. Kaplowitz, a psychologist in Manhattan who specializes in executive coaching, says employees generally don’t trust authority and find it hard to be honest about things like handling more work. “When we deal with authority, it’s an uneven game,” he says. Because people today are especially fearful about losing their jobs, they are reluctant to say no to their bosses.

Q. What can you do instead of saying yes to a work request?

A. At first, express gratitude that you’ve been asked to take on something new, because it means that your boss believes in you, says Tres Roeder, president of Roeder Consulting, a project management consultancy in Cleveland and author of “A Sixth Sense for Project Management.”

If you think you may already have more work than you can handle, tell your boss that, because you’re juggling other time-sensitive projects, you need to examine the details of this new task to determine if there’s some way you can fit it in, Mr. Roeder says. You may find that you won’t be able to, but automatically responding “no” without any consideration gives the impression you just don’t want to deal with it, he says.  “And you don’t want to be known as the person who always says no unless they get the perfect assignment,” he adds.

If the work needs to be done immediately, tell your boss what you’re already working on and then let him or her do the prioritizing, says Evelyn Williams, a professor at Wake Forest University in Winston-Salem, N.C., who teaches organizational behavior. “Ask what you should do first. Should you stop working on X and Y and finish this new project first?” Framing it this way creates the feeling of a partnership between you and your boss, rather than putting you in a subservient role, she says.

Another option is to act as a quarterback, bringing in others who might be able to help. For example, Mr. Roeder says, the new project may require a lot of financial data, so you could say, “Let’s get someone from finance to help with that data, and I will see to it the rest of the work is completed.”

Q. By agreeing to take on extra work, you’re creating a crisis because you can’t get everything done on time. Is there some way out that won’t reflect badly on you?

A. Start by estimating how long the project will take — then decide whether there is any way to fit it into your week. Think about quick ways to achieve milestones in the project and what kind of deadline is realistic, then take that information to your boss, Professor Williams says. Simply telling your boss that you are overwhelmed and can’t get the work done could make you seem less competent, she says.

If there is no way for you to do any of the work in the allotted time, take responsibility by saying you accepted the assignment without having thought things through, says Mr. Camp, author of a book on negotiating called “Start With No.”

“Let your manager know that in hindsight, you realize you should have asked him what was most important, so you are doing that now,” he says.

Q. Is it ever a good idea to try to squeeze in the extra work, even if you’re already feeling stretched?

A. If the project could improve your skills or get you noticed by those who can promote your career, it may be worth losing sleep over, Professor Williams says. “Think about it strategically,” she says. “Will the task or project be a good thing for your career? Will it build your network?”

Your manager may be handing you this new project with the intention of pushing your limits — to improve your professional capabilities, Mr. Roeder says. If that seems to be the case, try to fit it in.

Q. What can you do in the future to help manage your work commitments?

A. Give short, weekly status updates about your workload to your manager, Professor Williams says. “Managers can’t see into every employee’s world,” she says. “You have to tell them what’s happening in the trenches so they can make better allocation decisions.”

E-mail: ccouch@nytimes.com.

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U.A.W. Shelves Chrysler Talks and Turns to Ford

September 22, 2011 by Leave a Comment

After the U.A.W. announced a tentative contract with General Motors last week, it was widely expected to focus on Chrysler next with the goal of striking a more lucrative deal with Ford by leaving that company last. Instead, the union announced a four-week extension of the old contract with Chrysler — hours before an earlier extension was set to expire — and then said it was turning its attention to Ford.

“I have just concluded a meeting with President Bob King, and I am proud to announce that we have been chosen as the next department to begin the final stages of negotiations, and not Chrysler as previously speculated,” Jimmy Settles, the U.A.W. vice president in charge of negotiations with Ford, wrote in a message to workers that the union posted on Facebook. Mr. Settles wrote that he is eager “to begin intense discussions with the company and work towards a tentative agreement.”

The delay in reaching a deal with Chrysler follows a critical letter that Chrysler’s chief executive, Sergio Marchionne, sent last week to Mr. King. Mr. Marchionne chided Mr. King for failing to show up to finalize a settlement — Mr. King had chosen to remain in talks with G.M. rather than divide his time between the two companies — and said the two had “failed” workers by not finishing talks before the previous contract was set to expire.

Mr. Marchionne then traveled out of the United States on business but returned to Michigan earlier this week and had been expected to meet with Mr. King. He told reporters in Italy on Monday that he expected a quick resolution to the negotiations and was eager to “get this issue behind us.”

The latest extension with Chrysler expires Oct. 19.

“When one model stalls, you jump in another one that you think will be moving,” said Harley Shaiken, a professor of labor relations at the University of California at Berkeley. “It doesn’t mean that Chrysler is deadlocked; it simply means that there were some unexpected obstacles and the union thought Ford would be more productive.”

Meanwhile, G.M. workers are beginning to vote on their tentative agreement, which includes bonuses totaling $9,000 over four years, larger profit-sharing checks, raises for entry-level workers and new jobs for work that otherwise would have been performed in Mexico.

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Partner Could Gain Control of Mets in 3 Years

May 29, 2011 by Leave a Comment

Einhorn is expected to receive a one-third share of the Mets in return for his investment, but could gain much more. He will have the option in three years of raising his stake to 60 percent, effectively ending more than three decades of control of the team by the Wilpon family.

Fred Wilpon, the principal owner, could block a move to take over his team by repaying the $200 million invested by Einhorn. But Einhorn would then retain his one-third share of the team, essentially at no net cost, according to the person with direct knowledge of the negotiations, who spoke on the condition of anonymity because he was not authorized to publicly discuss the matter.

Steve Greenberg, the investment banker hired by the Wilpons to sell a minority stake in the Mets, declined to comment. Rob Manfred, executive vice president of Major League Baseball, also declined to discuss the deal. A spokesman for Einhorn said he had no comment. In a statement, the Mets said their exclusive negotiating agreement with Einhorn, who attended Saturday night’s game at Citi Field and spoke to Manager Terry Collins in the dugout, was “strictly confidential.” They later issued a second statement saying “there is uninformed speculation regarding terms of a potential deal.”

It is unclear what Einhorn would have to pay to increase his stake in the team to 60 percent in three years. Customarily, an auditor would be hired to revalue the franchise to determine the basis for negotiations over a price.

The deal now being discussed between Einhorn and the Mets does not include a stake in SNY, the team’s profitable cable television network. Einhorn said Thursday that he was not interested in the television business, unlike many other bidders for the team.

The outline of the proposed deal was first reported by ESPNNewYork.com.

Though the deal is not final and is subject to the approval of Major League Baseball, its terms underscore the vulnerability of the Wilpons, whose team is swimming in debt, bleeding cash and losing fans. Wilpon said it could lose about $70 million this year, $20 million more than last year.

The Mets are also embroiled in a legal battle with Irving H. Picard, the trustee representing the victims of the fraud in Bernard L. Madoff’s Ponzi scheme, who is seeking $1 billion from the Wilpon family.

Einhorn, 42, is expected to seek legal indemnity from that case, which is being mediated by Mario M. Cuomo, the former governor of New York. Einhorn is also likely to clarify what role he would have if the Mets were forced to sell the club.

The potential agreement with Einhorn “certainly demonstrates a desperate need for immediate cash by Wilpon,” said Marc Ganis, the president of SportsCorp, an industry advisory firm. Einhorn, on the other hand, was striking a clever deal, he said.

“His downside is he receives one-third of the Mets for a three-year, $200 million loan,” Ganis said. “His upside is he would be the control owner of the Mets in three years at a reasonable valuation and only have to buy 60 percent, not 100 percent, to achieve that.”

Einhorn is president and co-founder of Greenlight Capital, a hedge fund that manages about $8 billion. His willingness to invest $200 million in a distressed team and maintain a path to majority ownership echoes a strategy he has used in amassing his fortune. He is known for buying into severely undervalued assets that have the potential to recover.

Few teams publicize the sale of minority stakes; even fewer publicize them before the sales have been made final. Yet the Mets announced their intention to sell 20 to 25 percent of the club four months ago. Since then, the team has slumped in the standings, sustained a rash of injuries and experienced a 10 percent decline in attendance from last year.

Wilpon was roundly criticized last week for making negative comments about his star players and for calling his team “lousy” and “snakebitten.” He also said his team was “bleeding cash.”

The announcement that the Mets were in exclusive negotiations appears to have given the upper hand to Einhorn, because it deterred other potential investors and set up an expectation that a sale would be made.

Still, Wilpon, who made his fortune in real estate, may be calculating that the team and the economy may recover in three years, which would make it easier for him to raise the cash needed to fend off a takeover of the club. At that time, Wilpon could sell part of his stake in SNY to Einhorn, or raise cash to repay him.

In the short term, the $200 million from Einhorn is almost certain to meet the team’s most pressing needs and potentially stabilize its finances into next year. The Mets are expected to use half the money to pay back loans to banks and Major League Baseball, according to several people with direct knowledge of the team’s finances. The rest would help pay player salaries and cover other expenses.

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U.A.W. Open to More Jobs At a Second-Tier Pay Level

March 30, 2011 by Leave a Comment

The official, Joe Ashton, a vice president in charge of the U.A.W.’s dealings with General Motors, said creating jobs was a priority for the union entering this fall’s negotiations with the three Detroit carmakers.

“We will look at anything, when it comes to negotiations, that will retain jobs,” Mr. Ashton said. “The most important thing going into this set of negotiations is jobs.”

He said the union would ask G.M. to reopen plants in Spring Hill, Tenn., and Janesville, Wis., and to keep operating a plant in Shreveport, La., that is scheduled to shut in mid-2012. He said the Spring Hill and Janesville plants, which G.M. placed on standby status as part of its bankruptcy reorganization in case more production capacity was needed in the future, had a “great” chance at being revived but that he was not so sure about Shreveport’s prospects.

G.M.’s vice president for labor relations, Cathy Clegg, said the company would reopen the two standby plants if needed but that it had enough capacity to meet current demand.

“Absolutely, we would like to be able to have demand for our products be such that we’ll be able to turn those plants back on,” Ms. Clegg said.

Mr. Ashton and Ms. Clegg said G.M. already was planning to call back all of the approximately 2,000 workers on layoff status by year’s end and would undoubtedly need to hire some additional workers, but they declined to say how many or where.

They spoke to reporters after a training demonstration at G.M.’s Orion assembly plant, which is preparing to build a pair of subcompact cars, the Chevrolet Sonic and Buick Verano, later this year. G.M. considered closing the plant, located north of Detroit, but reversed course after the U.A.W. agreed to a deal that allows 40 percent of its 1,550 hourly workers to be paid about half as much as the others.

G.M. said the arrangement was necessary so it could profitably build such small, inexpensive cars in the United States, something none of its competitors do. The deal expands on a 2007 provision in the U.A.W.’s contracts with G.M., the Ford Motor Company and the Chrysler Group that allows newly hired workers to earn about $14 an hour instead of the standard rate of about $28.

No current workers have been moved down to the lower tier, and Harley Shaiken, a professor at the University of California, Berkeley who specializes in labor relations, said he expected the union to prevent that from happening because it would anger the membership.

The two-tier wage system was controversial within the union when it was created, but comments by Mr. Ashton and by the U.A.W.’s president, Bob King, last week, signaled that the union was increasingly embracing it as a means of creating jobs.

“The U.A.W. leaders clearly do not like the two-tier wage,” Mr. Shaiken said. “But they view the creation of domestic jobs as urgent. I think the tradeoff they’re looking at is that it is far easier to raise that wage in future negotiations than to reopen plants that have been permanently shuttered.”

At a convention of union leaders from across the United States in Detroit last week, Mr. King acknowledged his opposition to two-tier wages but suggested that the union would not press for its elimination anytime soon.

He noted that, because workers on the second tier can be moved to the first when positions open up, the system can encourage automakers to bring some work in-house that had been done by suppliers or in other countries. The Chevrolet Aveo, which the Michigan-built Sonic will replace, is imported from South Korea.

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