Two years ago, the vessel Deepwater Horizon
exploded at British Petroleum’s Gulf of Mexico Macondo well, killing 11 oil
workers and spilling over 200 million gallons of crude oil into the seafood
rich waters of the Gulf. A National Commission on the BP Deepwater Horizon Oil
Spill and Offshore Drilling was promptly appointed to investigate the disaster
and recommend meaningful government corrective actions. One year ago that
Commission issued its report and recommendations.
Last week the Commission issued a report card and
progress report on federal government and industry response its report, and to
the human, economic and environmental impacts of the spill, and the grades were
not pretty. The Obama administration got a B for reorganizing and improving
federal agency response to spills, strengthening environmental review of
offshore drilling permit applications, and eliminating conflicts of interest in
the regulation of offshore well drilling and operation. The petroleum industry
got a C+ for creating two consortia to respond to and contain offshore oil
spills.
Congress got a D for lacking the ability or
gumption to enact any legislation whatsoever in response to the
disaster. Specifically, the Commission report card notes that Congress has done
nothing at all in response to Commission recommendations that offshore oil and
gas companies be required to bear the costs of federal oversight through fees
imposed on leasing and permit applications, and that the $75 million liability
cap on liability for oil spills be significantly increased. This Congressional inaction is especially
galling in light of three more significant offshore oil and gas rig leaks in
the past ten months.
Remarks in the report on lack of Congressional response
include the following: “Risks will only increase as drilling moves into deeper
waters with harsher, less familiar environmental conditions.”
Meanwhile, the same day the disgusting two year
report card came out, lawyers for BP and over 100,000 class action litigants
petitioned U. S. District Judge Carl Barbier in New Orleans for approval of a $7.8
billion dollar settlement which would resolve claims arising out of the
disaster. If approved, the settlement would be one of the largest class action
settlements in the history of the federal courts. The figure of $7.8 billion is the estimated
cost to BP of the proposed agreement, but the settlement would not cap BP’s
exposure at any specific overall amount. Under the proposal, oil cleanup
workers would be eligible for up to $60,700.00 each, plus actual hospital and
medical bills caused by exposure to the toxic crude. Shoreline residents
exposed to the spilled crude or its fumes could get compensation up to
$5,450.00 each, plus health care expenses incurred as a result of their
exposure. In addition, BP would set up a fund of $105 million to establish medical
expenses and health monitoring programs for the next five years.
Lawyers for the plaintiff class want an interim
award of fees and expenses of $75 million, plus future fees and costs capped at
an additional $535 million. BP agrees to pay $57 million to promote Gulf Coast
tourism and an additional $5 million for publicity on how businesses and
residents can participate in settlement funds.
The proposed settlement agreement does not include
the $6.2 billion BP has already paid out on 221,000 claims submitted to the
Gulf Coast Claims Facility which was established shortly after the spill. It
also excluder claims by federal and state governments for environmental
damages, claims by banks, casinos and racetracks for lost tourism revenues, and
claims of competing oil industry businesses for losses caused by the federal
moratorium on deep water drilling.
Some seafood businesses expect to opt out of the
settlement and proceed individually against BP if the proposed class agreement
is approved by Judge Barbier. They argue that the proposed settlement
shortchanges businesses losing millions of dollars in seafood sales as a result
of the oil pollution in the Gulf. Judge Barbier has not yet scheduled any date
for a fairness hearing on the settlement proposal.
