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Gulf Oil Spill Legal Processes Wind Down

On March 3rd, a major development occurred in the ongoing legal fallout from the Deepwater Horizon oil rig explosion and oil spill, when a mass settlement was reached between BP and the Plaintiffs’ Steering Committee. 

The settlement occurred nearly two years after an explosion on the rig leased to and operated by BP killed eleven workers, injured seventeen more, and unleashed a torrent of oil into the Gulf of Mexico.  In the spring and summer of 2010, the world watched as over 200 million gallons of oil flowed for almost three months, pouring into the open water, damaging economic livelihoods and the coastal environment in profound ways.  Additionally, BP released 1.84 million gallons of chemical dispersants, with the eventual impact on health and jobs impossible to know with certainty.

The Deepwater Horizon spill caused injuries all along the Gulf coast, and prompted countless lawsuits by all sorts of entities, including individuals and businesses.  As one might expect, a great many of these lawsuits involved claims by private individuals for adverse health effects caused by the spill and its aftermath, damage to property, and damage to economic livelihoods by everyone from oyster fishers to tourism industry workers.  These private suits were compiled together in Multi-District Litigation 2179 in New Orleans, with a Plaintiffs’ Steering Committee appointed by the court to handle the cases.  This past week, BP, with the Plaintiffs’ Steering Committee, announced a settlement of a “substantial majority” of such claims, subject to final written agreement.

In total, BP has estimated that the settlement will cost roughly $7.8 billion, though plaintiffs note that there is no cap for plaintiffs’ recovery.  This settlement is divided into two separate agreements, one that covers medical costs, and the other that covers economic costs.  Both agreements would resolve claims on an individual basis, meaning that each claim will be looked at individually, and a formula will be applied to calculate the value of each claim.  As for the medical claims, BP would cover costs to clean-up workers and individuals harmed by exposure to the oil and dispersants.  It would also cover people whose physical symptoms have not yet developed, for 21 years of monitoring, and $105 million for improved access to health care in the region.

BP will also cover various economic claims, including lost profits, property damage, loss of subsistence and other use of property and land, and boat owner claims whose vessels aided in the cleanup efforts.  The deadline for filing claims will be extended by a year, into 2014 (under the Oil Pollution Act, the three-year statute of limitations for bringing claims would otherwise have expired in 2013), and economic loss will be calculated by looking at a broad range of pre-disaster yearly data, not just at the pre-disaster period in 2010.  Claimants who suffered economic loss due to the drilling moratorium put in place by the Obama Administration following the Deepwater Horizon disaster are not included in this settlement.

Fortunately, it appears that the settlement process will be significantly more transparent than the heavily criticized GCCF process. (.pdf link)  All claims pending before the GCCF will be automatically transferred to the new settlement system, and the PSC lawyers believe the calculation of damages will be more transparent and flexible.  BP can appeal awards of over $25 thousand, but if BP loses that appeal, BP will owe the claimant a 5% penalty.  Additionally, claimants may still opt out of this settlement architecture and take their chances in individual litigation.

This settlement does not resolve all legal claims in connection with the explosion and spill.  Most notably, the federal government still has open investigations into BP under the Clean Water Act and other statutes, including perhaps criminal investigations.  (Federal law may require BP to pay fines of up to $4300 per barrel, adding up to tens of billions of dollars.)  Nevertheless, this settlement has the potential to resolve a vast number of claims for personal and economic injury caused by the Deepwater Horizon catastrophe.

Alliance for Justice has played a substantial role in bringing public attention to the critical issues surrounding the Deepwater Horizon accident, its effects, and the search for justice.  In 2010, we devoted our yearly “First Monday” film project, the award-winning documentary film Crude Justice, to looking at the fight for fairness for communities and individuals adversely affected by the oil spill. 

AFJ was instrumental in helping to secure $2 million to pay for legal aid attorneys to assist victims of the spill.  A year after the spill, we published an in-depth report (.pdf link) on how the legal process was and wasn’t working to help victims achieve justice.  In February of 2011, we submitted comments (.pdf link) to the GCCF, analyzing its methods of calculating damages for claimants. 

Although this chapter of the BP litigation may finally be closing, the fallout from the Deepwater Horizon disaster will continue to affect Gulf Coast communities for years to come.