BP spill deal drops public and Gulf

2012-03-04 18:18

New Orleans - BP's settlement with plaintiffs suing the company over the 2010 oil spill disaster in the Gulf of Mexico may address harm to individuals and businesses, but there is nothing in it that compensates the public for damage to its natural resources and environment, the Justice Department said on Saturday.

That's a potentially critical issue because a separate victims' claims fund that was set up months after the Deepwater Horizon rig explosion was also meant to cover environmental damages, but it's now expected to be used to cover the BP settlement with plaintiffs.

BP said it expects to pay out $7.8bn in the settlement with the plaintiffs that was announced on Friday.

It's not clear whether environmental claims will now have to be addressed separately between BP and the US government, or whether it will be rolled up into their ongoing discussions over settling the fines and penalties that the British company faces.

Both issues also could be resolved at an eventual civil trial, which has now been postponed indefinitely.

The Justice Department noted that the settlement announced on Friday doesn't address "significant damages" to natural resources and the environment.

"While we are pleased that BP may be stepping up to address harms to individual plaintiffs, this by no means fully addresses its responsibility for the harms it has caused," Justice said in a statement e-mailed to The Associated Press.

The spill soiled sensitive tidal estuaries and beaches, killed wildlife and closed vast areas of the Gulf to commercial fishing for months. Dispersants and siphoning equipment and other methods were successful in getting rid of much of the oil in the ocean, but some environmentalists believe oil beneath the surface could return one day to Gulf shores depending on the weather and other factors.

David Uhlmann, a University of Michigan Law School professor who previously served as chief of the Justice Department's environmental crimes section, estimates that a deal between BP, the federal government and the states - one that includes criminal and civil penalties and resolves natural resource damage claims - would be worth between $20bn to $25bn.


"I doubt anybody is going to be better off litigating at this point," Uhlmann said.

BP still has to resolve claims by the US government, Gulf states and its partners on the doomed Deepwater Horizon rig, which exploded and sank 50km off Louisiana after a BP oil well 1.6km below the ocean's surface blew out.

Eleven rig workers were killed and, according to the government, more than 757 million litres of oil spewed before the well was capped nearly three months later.

Rig owner Transocean and cement contractor Halliburton have rejected recent overtures to settle their claims with BP and pay billions of dollars, according to two people close to the case who spoke on condition of anonymity because the talks are confidential.

But legal observers expect that could change now that BP and the Plaintiffs Steering Committee have reached a settlement.

BP anticipates that the separate claims fund run by Ken Feinberg will cease at some point. It says it expects money from the fund will be used to pay the settlement. According to the Deepwater Horizon Oil Spill Trust, current total trust assets are approximately $9.5bn.

New vehicles will be set up and supervised by the court to pay claims as part of Friday's settlement.

People waiting for money from Feinberg's Gulf Coast Claims Facility can take what the settlement vehicles offer them or opt out and make a claim directly to a BP-run entity. If they don't like what they get from that entity, they can sue.

And many just might.

Start all over again

BP's payout estimate includes what the company internally predicts legal fees for the numerous plaintiffs lawyers in the case will be, though the issue has not yet been discussed between the two sides, according to a person with direct knowledge of the settlement terms who spoke on condition of anonymity because those details are confidential.

That could be a deal-breaker for people who have spent nearly two years trying to get money directly from BP or through the Feinberg-run fund that took over the claims process in August 2010, four months after the Deepwater Horizon disaster.

Many have been pursuing their claims without a lawyer and therefore have not had to pay such fees. They also could baulk at the idea of potentially having to start their entire claims process over again, or at least the prospect of delaying the compensation they desperately need.

There are positives in the settlement for plaintiffs.

Among them is a provision that calls for paying legitimate claims from clean-up workers and others who say they suffered illnesses due to the fumes from the oil.

Ervin Gonzalez, a Miami-based lawyer who is a member of the PSC, said the settlement calls for court-approved health care practitioners to examine clean-up workers and other people who blame illnesses on exposure to oil and dispersants.

A court-appointed claims administrator will determine which medical claims to pay.

The settlement also establishes a program to monitor the spill's health effects for a period of 21 years, allowing people whose physical symptoms haven't developed yet to pursue claims.

Plaintiffs' co-liaison counsel Steve Herman said BP and the steering committee members have up to 45 days to present US District Judge Carl Barbier with a formal settlement for his approval.

"A lot of people thought this was going to be another Exxon Valdez and that it was going to drag on for 20 years," Herman said. "In less than two years, we've come up with what we think is a fair, comprehensive [resolution] for the people on the Gulf Coast."

Read more on:    bp  |  us  |  us oil slick

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