On March 2, the first agreement in the historic
trial against BP and all of the companies responsible for the largest
maritime oil spill in world history was announced. The settlement
proposal between BP and some 120,000 individuals and businesses includes
key provisions long sought by those most economically and physically
devastated by the Gulf oil disaster. It also entails a number of
critical unknowns, with vital details under negotiation for up to 45
What this settlement does not address, and what may yet go to
trial at any time in New Orleans, are all of the charges brought by
state governments and the federal government against the companies,
including penalities for harm and restoration to wildlife and the
environment, Clean Water Act penalities for the 4.9 million barrels of
oil and 500,000 tons of gaseous hydrocarbons BP released into the ocean,
the determinations of fault and neglience, and potential punitive
damages. Judge Carl Barbier is also set to consider potential criminal
charges at a later trial.
If the people and places of the Gulf Coast are to achieve full
justice and restoration, and if future disasters are to be prevented,
the public must remain vigiliant in demanding that the unfolding legal
process is transparent, fair, and rigorous, holding BP and all
responsible parties fully to account for their failures and crimes.
What is behind the pressure for a settlement?
There are four factors driving the parties away from a trial and toward a settlement: the “Valdez curse,” Big Oil’s fears, the Obama Administration, and BP’s bottom line.
After Exxon’s Valdez oil tanker ran aground in 1989, spilling
11 million gallons of crude oil into Prince William Sound, Alaska, the
legal suit launched by plaintiffs wound its way through the courts over
the course of nineteen years before the Supreme Court reached its
decision, during which time more than 3,000 of the claimants died. Exxon
whittled a $5 billion judgment down to just $507.5 million, leaving
most plaintiffs with little economic support. All plaintiffs facing BP
are wary of such an outcome.
For its part, Big Oil has no interest in a trial and has been pushing
BP to settle. The 72 million pages of documents and hundreds of
witnesses gathered for the trial are likely to reveal damning evidence
harmful not only to BP, Halliburton, and Transocean, but to every major
oil company working in offshore waters today. In my most recent book, Black Tide: the Devastating Impact of the Gulf Oil Spill (Wiley, 2011), I reveal that the kinds of catastrophic errors that led to the explosions on the Deepwater Horizon
drilling rig, killed eleven men, capsized the rig, and created a three
month long uncontrollable oil and gas spill are not only endemic
throughout the entire industry, they also remain largely unaddressed. It
is expected that even more damning evidence not previously made public
would come out at trial. A settlement deal, however, would likely seek
to require that all such evidence be kept from the public.
Gulf Coast organizations, including Alabama’s Mobile Baykeeper, call
for a moratorium on all offshore drilling until the entire industry can
prove that its operations are safe. Mobile Baykeeper and the Gulf
Restoration Network, among others, also call for the establishment of a
Citizens Advisory Council to oversee the oil industry’s continued Gulf
Evidence presented at trial could also prove damning to the Obama Administration. In Black Tide,
I document the Administration’s failure to adequately hold BP to
account for its catastrophic Macondo well operations and the subsequent
disaster, as well as the Administration’s own role in keeping the truth
about the scope of the disaster from the public. Again, it is
anticipated that even more damning evidence could come to light at
BP does not hold all the cards. It is the world’s fourth largest
company. But it is, like all of the oil industry, heavily dependent on
owning, producing, and selling oil to maintain that position. BP is the
largest producer of oil and gas in the U.S. Gulf Coast. BP is likely
willing to make sacrifices in order to maintain these leases and acquire
more. A long drawn-out trial revealing damaging evidence could renew
public calls to cancel or at least curtail these leases. BP also does
not want the economic uncertainty of a long trial. Finally, it does not
want what could easily be a $60 to $70 billion judgment—the amount I
believe it should ultimately be held liable for.
Just the rumors of settlement made BP shareholders downright giddy
with excitement. James Bevan, Chief Investment Officer at CCLA
Investment Management and a BP shareholder, told Bloomberg television
that settlement negotiations were “jolly good news” for BP because the
numbers proposed were simultaneously manageable for the company and too
large for smaller ones. Thus, rather than act as a detterent against
future disasters, such a ruling would instead price out the smaller
companies unable to afford such damages in the event of a disaster,
leaving the deep waters to those that can.
When BP released its statement on the March 2 settlement, it too made
clear that the numbers were well within its purview and would likely
have “no net impact to either the income or cash flow statements.”
How individuals and businesses could gain from the proposed settlement
The March 2 settlement includes several favorable provisions long
sought by Gulf Coast residents harmed by the disaster. Most critically,
while BP has reported that it expects its total payout under the deal to
reach just $7.8 billion, this is just BP’s estimate, designed to make
its investors happy. In fact, according to the Plaintiffs Steering
Committee, there is currently no cap on the amount that BP could be
required to pay.
There are other desirable provisions to allow claimants to recover
lost future earnings, to accept claims from those who live by the Coast
and/or are in the seafood industry that their loss was caused by the oil
spill “without further proof,” and a rejection of the standard one size
fits all metholodgy used in class action lawsuits. The Gulf Coast
Claims Facility (GCCF) administered by Kenneth Feinberg will also be
disbanded, with claims shifted to a court-supervised fund.
Critically, the settlement also allows parties to “opt out” if they
do not want to take the settlement, and to pursue their own individual
lawsuits against BP.
Another key win for plaintiffs is the inclusion of medical claims in
the settlement. This includes a 21-year medical consultation program, a
provision that people who do not have physical conditions caused by the
spill now, but who suffer them later, can pursue claims, and $105
million to “improve the availability, scope and quality of healthcare in
Gulf communities.” Such an outcome has long been pursued by the
Louisiana Environmental Action Network, among other Gulf groups.
Nonetheless, the GCCF also looked good on paper and also allowed for
health claims. It was, however, lambasted throughout the Gulf as a
dismal failure because, among many other reasons, it failed to pay out a
single heath claim because the standard of proof was so high that no
one was able to meet it.
Thus, while most Gulf community leaders and plaintiffs want their day
in court, they are also taking a wait and see attitude toward the
settlement, arguing that the “devil is in the details” and the test will
be the manner in which these beneficial frameworks are turned into
How to Ensure that Justice is Served?
In August 2010, much of the nation turned its attention away from the
disaster when the Obama Administration announced that “the vast
majority of the oil appears to be gone” from the Gulf, when in fact the
opposite was true. The same sense that all is resolved seems to be
prevailing in the media today, when, in fact, the opposite is once again
Only when all of the charges have been either brought to trial or
settled will we know if BP, Halliburton, Transocean, Cameron, and all of
the companies responsible for the largest ecological disaster in U.S.
history have been duly punished, if the people and places of the Gulf
are to be fully compensated for their losses, if the full truth of the
critical failures that led to this disaster —failures that stretch
across the entire oil industry and into the Obama administration — have
been both revealed and resolved, and if the fines and penalities are
large enough to ensure that such a disaster will never occur again.
The accounting for the Deepwater Horizon disaster is far from over; in many ways it has only just begun.