Texas County Court at Law Judge Jack Sinz in Nacogdoches
County on Friday signed a temporary restraining order to stop
TransCanada from building a pipeline across the property of
Michael Bishop in east Texas, about 150 miles (241 km) northeast
of Houston. Sinz said there was “sufficient cause” to halt work
on Bishop’s 20-acre (8 hectare) property until a planned Dec. 19
hearing.

The judge’s action is the latest of several landowner
disputes that could prove troublesome for TransCanada. In
February, another Texas judge temporarily halted pipeline work
in northeast Texas due to archaeological concerns.

The U.S. Army Corps of Engineers gave a permit in July to
the $2.3 billion Gulf Coast Project, which will carry 700,000
barrels of crude per day from the Cushing, Oklahoma, storage hub
to Houston.

There have been sporadic pipeline protests across Texas,
including demonstrators who chained themselves to machinery and
suspended themselves from trees in the path of the pipeline in
east Texas in November. Actress Daryl Hannah was arrested along
with a Texas landowner in October for attempting to block a
bulldozer from clearing land for the pipeline.

According to Bishop, a 64-year-old ex-Marine and medical
student, the material to be carried on the pipeline is not crude
oil but diluted bitumen, which does not meet the conditions of
TransCanada’s permits.

“I’m a former Marine,” Bishop told reporters on a conference
call. “I ain’t run from a fight in my life, my friend, and I
damn sure ain’t running from this one.”

Bishop, who is representing himself in the case, is also
challenging whether TransCanada, Canada’s largest pipeline
company, can use eminent domain to condemn private land for
pipeline construction.

Bishop cited 2009 changes to Texas’s eminent domain law that
specify that the law can be used only for public projects. “Here
we have a private foreign corporation taking sovereign taxpayer
land away from them under the guise of eminent domain,” he said.

TransCanada said it has begun construction on Bishop’s
property, and that he signed an easement allowing TransCanada
access to the property three weeks ago.

“Mr. Bishop’s request does not impact overall construction,
and we are on track to bring this pipeline into operation in
late 2013,” the company said in a statement. Bishop said he had
signed the easement, but said he acted “under coercion and
duress”.

The pipeline is the southern leg of the Alberta-to-Houston
Keystone XL project, which TransCanada split in two after U.S.
President Barack Obama refused to approve the project last year
because of environmental concerns.

The company expects a U.S. decision on whether the remaining
portion of the line can be built to come early next year.

“Black Elk has repeatedly failed to operate in a manner that
is consistent with federal regulations,” James Watson, diretor
of the U.S. Bureau of Safety and Environmental Enforcement
(BSEE), said in a statement.

In a letter, the offshore regulator said Houston-based Black
Elk’s performance “must be improved immediately,” and gave it
until Dec. 15 to submit a plan.

The Nov. 16 explosion and fire occurred when workers were
welding a pipe on the deck of West Delta Block 32 platform,
which sits in 56 feet (17 meters) of water about 17 miles (27
km) south of Grand Isle, Louisiana. The incident evoked memories
of the deadly 2010 Deepwater Horizon disaster that killed 11
people and triggered the worst oil spill in U.S. history.

Black Elk Chief Executive John Hoffman said in a statement
that the company has received the letter and “We will be in full
cooperation with all agencies.”

The Black Elk explosion did not unleash a major oil spill –
the company told the U.S. Coast Guard that up to 28 gallons of
oil in the pipe may have spilled. Oil and gas production at the
rig had been shut down since mid-August.

The BSEE’s letter cited “troubling safety incidents” at
Black Elk, which operates 98 production platforms in the Gulf of
Mexico. The agency has logged 156 non-compliance issues in 2012,
up from 99 in 2011 and 60 in 2010, according to agency data.

Black Elk has committed “a number of significant safety
violations that demonstrate a disregard for the safety of
personnel,” BSEE’s letter said.

Those include an Oct. 2011 incident where use of an
acid-based chemical hospitalized six rig workers at its High
Island 571A well off the Texas coast.

The settlement includes a $1.256 billion criminal fine, the largest such levy in U.S. history, the oil company said on Thursday. U.S. Attorney General Eric Holder called the deal a “critical step forward” but was adamant that it did not end the government’s criminal investigation of the spill.

The government also indicted the two highest-ranking BP supervisors aboard the Deepwater Horizon during the disaster, charging them with 23 criminal counts including manslaughter.

The April 2010 explosion on the rig in the Gulf of Mexico killed 11 workers. The mile-deep (1.6 km) Macondo oil well then spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska.

The company said it would plead guilty to 11 felony counts related to the workers’ deaths, a felony related to obstruction of Congress and two misdemeanors. It also faces five years’ probation and the imposition of two monitors who will oversee its process safety and ethics for the next four years.

Wall Street analysts said the deal will allow BP to focus again on oil production, while one U.S. senator from Louisiana said he hoped the settlement would not prevent his state and others from collecting civil penalties.

U.S.-listed BP shares gained about 0.3 percent on Thursday while its London-traded shares were flat.

BP, which replaced its chief executive after the spill as its market value plummeted, still faces economic and environmental damage claims sought by four Gulf Coast states and other private plaintiffs.

“It certainly is an encouraging step,” said Pavel Molchanov, oil company analyst with Raymond James. “By eliminating the overhang of the criminal litigation, it is another step in clearing up BP’s legal framework as it relates to Macondo.”

The disaster has dragged BP from second to a distant fourth in the ranking of top Western oil companies by value.

PROBATION AND MONITORS

The settlement could also prompt a debate in Congress about how funds would be shared with the Gulf Coast states. Congress passed a law last year that would earmark 80 percent of BP penalties paid under the Clean Water Act to Louisiana, Mississippi, Alabama, Florida and Texas.

“With these unprecedented criminal penalties assessed, I urge the Obama administration to be equally aggressive in securing civil monies that can help save our Louisiana coast” through other avenues, Louisiana Senator David Vitter said in a statement. “I certainly hope they didn’t trade any of those monies away just to nail this criminal scalp to the wall.”

Larry Schweiger, president of the National Wildlife Federation, called the settlement a “good down payment” on what BP should ultimately pay, which the environmental group argues is tens of billions of dollars more.

BP said the payments would be spread over six years, adding it expected to be able to handle the payments “within BP’s current financial framework”.

The company has sold $35 billion worth of assets to fund the costs of the spill. Matching that, it has paid $23 billion already in clean-up costs and claims, and has a further $12 billion earmarked for payment in its spill trust fund.

The oil company said it has not been advised of any government authority that intends to debar BP from federal contracting activities as a result of the deal.

‘RECKLESS MANAGEMENT’

BP’s settlement does not resolve civil litigation brought by the U.S. government and U.S. Gulf Coast states, which could be considered when the case convenes in February 2013.

Alabama Attorney General Luther Strange, who represents other spill-hit states in the case, said he intends to prove that BP’s actions were grossly negligent – a charge that would bring billions of dollars in extra liability if upheld.

Holder said at a news conference to discuss the criminal settlement that while the government and BP had held talks to resolve the civil claims, the sides had not been able to agree on a “satisfactory” number. He said a deal was still possible but the government was moving ahead to the February trial.

Negligence is a key issue. A gross negligence finding could nearly quadruple civil damages owed by BP under the Clean Water Act to $21 billion in a straight-line calculation.

Chief Financial Officer Brian Gilvary said the company’s provisions should be enough to cover liabilities, provided it avoids a conviction for gross negligence, and that it had shareholder support to fight the case should that happen.

“I can boldly defend where we are in the provisions today. If something were to happen in the trial that read across to gross negligence … then we would certainly take that to appeal,” he said on a conference call with analysts.

Still unresolved is potential liability faced by Swiss-based Transocean Ltd, owner of the Deepwater Horizon vessel, and Halliburton Co, which provided cementing work on the well that U.S. investigators say was flawed.

Halliburton said it “remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP’s specifications for its well construction plan and instructions. Halliburton has cooperated with the DOJ’s investigation.” Transocean was not available to comment.

According to the Justice Department, errors made by BP and Transocean in deciphering a pressure test of the Macondo well are a clear indication of gross negligence.

Transocean disclosed in September that it is in discussions with the Justice Department to pay $1.5 billion to resolve civil and criminal claims.

BP has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost $7.8 billion to resolve litigation brought by over 100,000 individuals and businesses claiming economic and medical damages from the spill.

(Additional reporting by Anna Driver in Houston, Braden Reddall in San Francisco, Roberta Rampton in Washington, Verna Gates in Birmingham, Ala. and Andrew Callus in London; Writing by Ben Berkowitz; Editing by David Gregorio and Dale Hudson)

The settlement includes a $1.256 billion criminal fine, the largest such levy in U.S. history, the company said. A settlement with the U.S. Securities and Exchange Commission is also part of the deal, as are payments to the National Fish & Wildlife Foundation and the National Academy of Sciences.

The April, 2010 explosion on the Deepwater Horizon rig in the Gulf of Mexico killed 11 workers. The mile-deep Macondo oil well then spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska.

The oil company said Thursday it would plead guilty to 11 felony counts related to the workers’ deaths, a felony related to obstruction of Congress and two misdemeanors.

BP, which replaced its chief executive after the spill as its market value plummeted, still faces economic and environmental damage claims sought by four Gulf Coast states and other private plaintiffs.

BP has been negotiating for months with the U.S. government and Gulf Coast states to settle billions of dollars of potential civil and criminal liability claims.

BP’s U.S. shares were up about 1.3 percent on Thursday while its London-traded shares were 0.3 percent higher.

Wall Street analysts were encouraged that the plea deal could resolve a significant share of the liability BP faces. But it is not a “global” deal to resolve all outstanding civil and criminal liability with the U.S. government and Gulf Coast states.

“It certainly is an encouraging step,” said Pavel Molchanov, oil company analyst with Raymond James. “By eliminating the overhang of the criminal litigation, it is another step in clearing up BP’s legal framework as it relates to Macondo.”

POTENTIAL LIABILITY

BP has sold over $30 billion worth of assets to fund the costs of the spill. Matching that, it has already spent about $14 billion on clean-up costs and paid out, or agreed to pay out, a further $16 billion on compensation and claims. The disaster has dragged it from second to a distant fourth in the ranking of top western world oil companies by value.

In an August filing, the Justice Department said “reckless management” of the Macondo well “constituted gross negligence and willful misconduct” which it intended to prove at a civil trial set to begin in New Orleans in February 2013.

Negligence is a central issue to BP’s potential liability. A gross negligence finding could nearly quadruple the civil damages owed by BP under the Clean Water Act to $21 billion in a straight-line calculation.

Still unresolved is potential liability faced by Swiss-based Transocean Ltd, owner of the Deepwater Horizon vessel, and Halliburton Co, which provided cementing work on the well that U.S. investigators say was flawed. Both companies were not immediately available for comment.

According to the Justice Department, errors made by BP and Transocean in deciphering a pressure test of the Macondo well are a clear indication of gross negligence.

“That such a simple, yet fundamental and safety-critical test could have been so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence,” the government said in its August filing.

Transocean disclosed in September that it is in discussions with the Justice Department to pay $1.5 billion to resolve civil and criminal claims.

BP has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost $7.8 billion to resolve litigation brought by over 100,000 individuals and businesses claiming economic and medical damages from the spill.

(Additional reporting by Anna Driver in Houston and Andrew Callus in London; Editing by David Gregorio)

The settlement includes a $1.256 billion criminal fine, the
largest such levy in U.S. history, the company said. A
settlement with the U.S. Securities and Exchange Commission is
also part of the deal, as are payments to the National Fish &
Wildlife Foundation and the National Academy of Sciences.

The April, 2010 explosion on the Deepwater Horizon rig in
the Gulf of Mexico killed 11 workers. The mile-deep Macondo oil
well then spewed 4.9 million barrels of oil into the Gulf over
87 days, fouling shorelines from Texas to Florida and eclipsing
in severity the 1989 Exxon Valdez spill in Alaska.

The oil company said Thursday it would plead guilty to 11
felony counts related to the workers’ deaths, a felony related
to obstruction of Congress and two misdemeanors.

BP, which replaced its chief executive after the spill as
its market value plummeted, still faces economic and
environmental damage claims sought by four Gulf Coast states and
other private plaintiffs.

BP has been negotiating for months with the U.S. government
and Gulf Coast states to settle billions of dollars of potential
civil and criminal liability claims.

BP’s U.S. shares were up about 1.3 percent on
Thursday while its London-traded shares were 0.3 percent
higher.

Wall Street analysts were encouraged that the plea deal
could resolve a significant share of the liability BP faces. But
it is not a “global” deal to resolve all outstanding civil and
criminal liability with the U.S. government and Gulf Coast
states.

“It certainly is an encouraging step,” said Pavel Molchanov,
oil company analyst with Raymond James. “By eliminating the
overhang of the criminal litigation, it is another step in
clearing up BP’s legal framework as it relates to Macondo.”

POTENTIAL LIABILITY

BP has sold over $30 billion worth of assets to fund the
costs of the spill. Matching that, it has already spent about
$14 billion on clean-up costs and paid out, or agreed to pay
out, a further $16 billion on compensation and claims. The
disaster has dragged it from second to a distant fourth in the
ranking of top western world oil companies by value.

In an August filing, the Justice Department said “reckless
management” of the Macondo well “constituted gross negligence
and willful misconduct” which it intended to prove at a civil
trial set to begin in New Orleans in February 2013.

Negligence is a central issue to BP’s potential liability. A
gross negligence finding could nearly quadruple the civil
damages owed by BP under the Clean Water Act to $21 billion in a
straight-line calculation.

Still unresolved is potential liability faced by Swiss-based
Transocean Ltd, owner of the Deepwater Horizon vessel,
and Halliburton Co, which provided cementing work on the
well that U.S. investigators say was flawed. Both companies were
not immediately available for comment.

According to the Justice Department, errors made by BP and
Transocean in deciphering a pressure test of the Macondo well
are a clear indication of gross negligence.

“That such a simple, yet fundamental and safety-critical
test could have been so stunningly, blindingly botched in so
many ways, by so many people, demonstrates gross negligence,”
the government said in its August filing.

Transocean disclosed in September that it is in discussions
with the Justice Department to pay $1.5 billion to resolve civil
and criminal claims.

BP has already announced an uncapped class-action settlement
with private plaintiffs that the company estimates will cost
$7.8 billion to resolve litigation brought by over 100,000
individuals and businesses claiming economic and medical damages
from the spill.

The company will also pay $525 million to settle securities
claims with U.S. regulators. In aggregate BP said it will pay
$4.5 billion over six years for the various resolutions.

BP’s penalties for the April, 2010, explosion on the
Deepwater Horizon rig in the Gulf of Mexico in which 11 workers
died, and subsequent leak from the Macondo oil well, will far
exceed the previous record for largest criminal penalty in U.S.
history.

That record was held by pharmaceutical company Pfizer Inc,
which paid a $1.3 billion fine in 2009 for marketing fraud.

BP, which replaced its chief executive after the spill as
its market value plummeted, still faces economic and
environmental damage claims sought by four Gulf Coast states and
other private plaintiffs.

The mile-deep Macondo well spewed 4.9 million barrels of oil
into the Gulf over 87 days, fouling shorelines from Texas to
Florida and eclipsing in severity the 1989 Exxon Valdez spill in
Alaska.

BP has been negotiating for months with the U.S. government
and Gulf Coast states to settle billions of dollars of potential
civil and criminal liability claims.

A deal could resolve a significant share of the liability
the oil company faces, but is not the “global” deal to resolve
all outstanding civil and criminal liability with the U.S.
government and Gulf Coast states.

BP’s U.S. shares were up about 1.3 percent on
Thursday while its London-traded shares were 0.3 percent
higher.

They told Reuters that a plea deal with the Justice Department over the 2010 disaster, in which 11 workers died, may be announced as soon as Thursday.

London-based BP confirmed on Thursday that it was in “advanced discussions” with the Justice Department and U.S. Securities & Exchange Commission (SEC).

Three sources, who spoke on condition of anonymity, said BP would plead guilty in exchange for a waiver of future prosecution on the charges. The Justice Department declined to comment.

The sources did not disclose the amount of BP’s payment for the explosion on the Deepwater Horizon rig in the Gulf of Mexico and leak from the Macondo oil well, but one said it would be the largest criminal penalty in U.S. history.

That record is now held by Pfizer Inc, which paid a $1.3 billion fine in 2009 for a marketing fraud.

BP said the talks were about “proposed resolutions of all U.S. federal government criminal and SEC claims against BP in connection with the Deepwater Horizon incident”, but added that no final deals had been reached. Its shares were down 0.9 percent on Thursday morning.

The mile-deep Macondo well spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska.

The oil giant has been negotiating for months with the U.S. government and Gulf Coast states to settle billions of dollars of potential civil and criminal liability claims. A deal could resolve a significant share of the liability that BP faces.

BP, which saw its market value plummet and replaced its chief executive after the spill, still faces economic and environmental damage claims sought by four Gulf Coast states and other private plaintiffs.

A record fine would far outstrip BP’s last major settlement with the Justice Department in 2007, when it payed about $373 million to resolve three separate investigations into a deadly 2005 Texas refinery explosion, an Alaska oil pipeline leak and fraud for conspiring to corner the U.S. propane market.

BP has sold over $30 billion worth of assets to fund the costs of the spill. Matching that, it has already spent about $14 billion on clean-up costs and paid out, or agreed to pay out, a further $16 billion on compensation and claims. The disaster has dragged it from second to a distant fourth in the ranking of top western world oil companies by value.

A week after the U.S. presidential election, a massive Deepwater Horizon settlement could prompt a debate in Congress about how funds would be shared with the Gulf Coast states, depending on how the deal is structured.

Congress passed a law last year that would earmark 80 percent of BP penalties paid under the Clean Water Act to Louisiana, Mississippi, Alabama, Florida and Texas.

POTENTIAL LIABILITY

In an August filing, the Justice Department said “reckless management” of the Macondo well “constituted gross negligence and willful misconduct” which it intended to prove at a civil trial set to begin in New Orleans in February 2013. The U.S. government has yet to file any criminal charges in the case.

Given that the deal will not resolve any civil charges brought by the Justice Department, it is also unclear how large a financial penalty BP might pay to resolve the charges, or other punishments that the company might face.

Negligence is a central issue to BP’s potential liability. A gross negligence finding could nearly quadruple the civil damages owed by BP under the Clean Water Act to $21 billion in a straight-line calculation.

Still unresolved is potential liability faced by Swiss-based Transocean Ltd, owner of the Deepwater Horizon vessel, and Halliburton Co, which provided cementing work on the well that U.S. investigators say was flawed. Both companies were not immediately available for comment.

According to the Justice Department, errors made by BP and Transocean in deciphering a pressure test of the Macondo well are a clear indication of gross negligence.

“That such a simple, yet fundamental and safety-critical test could have been so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence,” the government said in its August filing.

Transocean disclosed in September that it is in discussions with the Justice Department to pay $1.5 billion to resolve civil and criminal claims.

BP has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost $7.8 billion to resolve litigation brought by over 100,000 individuals and businesses claiming economic and medical damages from the spill.

(Additional reporting by Andrew Callus in London; Editing by David Stamp)

The sources, who spoke to Reuters on condition of anonymity,
said that BP will plead guilty in exchange for a waiver of
future prosecution on the charges.

BP and the Justice Department declined to comment.

BP has been locked in months-long negotiations with the U.S.
government and Gulf Coast states to settle billions of dollars
of civil and criminal liability claims resulting from the April
20, 2010, explosion aboard the Deepwater Horizon rig that killed
11 workers and fouled the shorelines of four Gulf Coast states
in the worst offshore spill in U.S. history.

It is unclear what form of criminal misconduct BP will plead
guilty to. In an August filing, the Department of Justice said
“reckless management” of the Macondo well “constituted gross
negligence and willful misconduct,” which it intended to prove
at a pending civil trial set to begin in New Orleans in February
2013.

It is also unclear whether the deal will resolve any civil
charges brought by the Justice Department, and how large a
financial penalty BP might pay to resolve them.

BP has previously adamantly denied any suggestion that it
was grossly negligent in the disaster, a charge that could
trigger billions of dollars in penalties under the Clean Water
Act.

U.S. District Judge Carl Barbier initially approved the deal
in May, but called the “fairness hearing” to weigh objections
from about 13,000 claimants challenging the settlement to
resolve some of BP’s liability for the worst offshore oil spill
in U.S. history.

BP still faces civil and potential criminal liability
charges brought by the U.S. government and U.S. states.

Barbier did not issue a final ruling at Thursday’s hearing
in a New Orleans court, but he appears poised to grant final
approval to the deal in the coming days, legal experts said.

“We shouldn’t lose sight of the forest for the trees,”
Barbier said at the end of the hearing, saying that some
objections “were not frankly made in good faith and bordered on
being frivolous.”

London-based BP’s Macondo well spewed 4.9 million barrels of
oil into the Gulf of Mexico over a period of 87 days. The
torrent fouled shorelines from Texas to Alabama and eclipsed the
1989 Exxon Valdez spill in Alaska in severity.

Lawyers for some affected parties say they will “opt out” of
the deal, reached in March between BP and lawyers representing
plaintiffs ranging from restaurateurs, hoteliers, and oyster men
who lost money from the spill to recovery workers and coastal
residents claiming medical damages from the cleanup.

“The settlement zones are inherently unfair,” said Stuart
Smith, a lawyer for Florida business owners, referring to
boundaries set by the deal which are meant to compensate
businesses and homeowners based on their proximity to the spill.

Barbier said he had no authority to tweak the deal as
written, but merely to approve or reject it.

“It sounds to me that maybe your gripe is that you weren’t
in the room and that you would have done things differently,”
Barbier told one of the objectors’ lawyers. “I don’t think there
is such a thing as a perfect settlement.”

Jim Roy, a lead plaintiffs’ attorney, said the deal would
resolve “well in excess of 100,000 claims.” BP in March
estimated the deal’s cost at $7.8 billion, but damages are
uncapped and could rise to far exceed that, Roy said.

“This is not a bunch of insurance adjustors trying to save
money for BP,” Roy said of the deal, but rather “a way to
quickly get a fair and objectively determined settlement and to
avoid litigating for potentially 20 or more years such as what
happened in the Exxon Valdez.”

Rick Godfrey, an attorney for BP, said the settlement should
not be delayed by the “miniscule” number of objectors.

“BP has no intent of allowing justice to be delayed, much
less denied, as a result of this tragic event,” he said.

Barbier is likely to approve the settlement in coming days,
said Blaine LeCesne, a law professor at Loyola University,
citing the judge’s initial approval of the deal as the strongest
signal of its eventual fate.

“It’s inevitably going to leave some people unsatisfied,”
LeCesne said. “But it casts a very wide net and includes a
remarkably high number of potential claimants.”

BP has been locked in a year-long legal battle with the U.S.
government and Gulf Coast states to settle billions of dollars
in civil and potential criminal liability from the explosion
aboard the Deepwater Horizon rig that killed 11 workers and
caused the massive spill that soiled the shorelines of four Gulf
Coast states.

Absent a far-reaching settlement, Barbier will preside over
a sprawling three-part non-jury hearing to decide BP’s liability
for the spill, now set to begin on Feb. 25, 2013.

Yet a last-minute settlement with London-based oil giant BP is unlikely before the election, experts say. Neither the Justice Department or President Barack Obama, whose race with challenger Mitt Romney is deadlocked in most polls, want to appear to politicize a deal. And Obama appears to face more potential risks than benefits from any settlement at this point.

BP has been locked in a year-long legal battle with the U.S. government and Gulf Coast states to settle billions of dollars in civil and potential criminal liability from the April 20, 2010, explosion aboard the Deepwater Horizon rig that killed 11 workers and soiled the shorelines of four Gulf Coast states in the worst offshore spill in U.S. history.

BP and the Justice Department have had protracted closed-door negotiations on a settlement to avoid a potentially years-long court battle. But experts say that any settlement with BP would be complex enough to allow Obama’s critics to attack him. And as they say in Washington: If you’re explaining, you’re losing.

“No matter what the President does, he can’t win on this one because it’s not going to be good enough for someone,” said James Lucier, managing director at Capital Alpha Partners LLC in Washington.

“A TERRIBLE IDEA”

To date, the spill’s profile in the 2012 presidential campaign has been slim. And inking a settlement with BP at this point could open Obama up to attacks as someone who buckles to Big Oil. A pre-election settlement of the Justice Department’s biggest ongoing case could also be seen as playing politics with the law, said David Uhlmann, a University of Michigan law professor and former head of the Justice Department’s environmental crimes section.

“It would be a terrible idea for the Justice Department to announce a settlement over the last two weeks before the election,” Uhlmann said, predicting instead a deal before the civil trial next year.

U.S. District Judge Carl Barbier in New Orleans, presiding over a sprawling three-part non-jury hearing to decide BP’s liability for the spill, said on Friday the trial will begin on February 25, 2013. The trial, which had been delayed by nearly a year already due to a pending $7.8 billion BP settlement with private plaintiffs, had been set to start on January 14. The delay leaves more time for a pre-trial deal.

In big settlements, the Justice Department has striven to avoid the taint of politics, and the BP case is no different, Uhlmann said.

But politics has run through the BP spill from the day it happened. Gulf Coast states stand to reap billions of dollars in funds from a potential BP settlement, thanks to a law passed by Congress that would route 80 percent of funds to the states from violations of the Clean Water Act.

That amount could approach $17 billion if BP is found grossly negligent in the disaster, experts say. The well spewed 4.9 million barrels of oil into the Gulf of Mexico over a period of 87 days. The torrent fouled shorelines from Texas to Alabama and eclipsed in severity the 1989 Exxon Valdez spill in Alaska.

FLORIDA’S ELECTORAL VOTES

Florida and its potential 29 electoral votes are one of the key prizes seen as tipping the November 6 presidential election. So the temptation may be great for Obama’s advisers to gain favour with voters there by agreeing to a jumbo settlement before the election, said Kevin Book, managing director at ClearView Energy Partners LLC in Washington.

“We know the Administration wants one, and the best political timing for a final deal is probably right about now,” Book said.

But any political good will from the deal could be over-rated. Of the Gulf Coast states affected by the spill, Florida is the only one that appears to be within Obama’s reach, with polls in others leaning heavily toward Romney.

A pre-election settlement could also expose Obama to criticism for selling out Gulf Coast politicians and environmental groups. Rumours have been flying.

Gulf Coast lawmakers recently and loudly protested press reports that BP and the Justice Department have discussed shifting settlement payments based on the Clean Water Act – with their promised billions of dollars to Gulf state coffers – instead to payments based on natural resource statutes, which would not only go to the U.S. Treasury but also be tax-deductible for BP.

“BP, who is responsible for this, would also get a tax deduction that could write off millions,” Representative Jo Bonner, an Alabama Republican, told Reuters. “The audacity of giving BP a tax write-off!”

Environmentalists are also worried about press reports that peg BP’s settlement offer is as low as $18 billion — far short of penalties demanded by U.S. environmental and criminal statutes.

“We believe a full throated debate over the settlement amount needs to happen before any deal is done,” said John Kostyack, a vice president at the National Wildlife Federation, who estimates BP’s potential liability at more than $50 billion.

Given the prolonged and secretive negotiations, state officials have also warned the Obama administration not to rush headlong into a deal with BP.

“Personally I believe the Administration does have a desire to make an announcement, which has the potential to cloud their judgment,” said Garret Graves, senior environmental advisor to Louisiana Gov. Bobby Jindal.

After paying nearly $4 a gallon for gasoline over the summer, potential voters would also likely have no patience seeing Obama let a big oil company off the hook with a spill settlement that stops short of maximum potential penalties.

“A settlement that is not tough enough makes him look like he’s letting BP off the hook,” Lucier said. “It’s much better to do this outside of the context of a presidential election.”

(Additional reporting by Kathy Finn in New Orleans and Verna Gates in Birmingham, Alabama; Editing by Peter Bohan and Tim Dobbyn)