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The Worst May Be Yet to Come for BP and Its Partners in the Gulf of Mexico Disaster The Worst May Be Yet to Come for BP and Its Partners in the Gulf of Me...

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ENVIRONMENT

The Worst May Be Yet to Come for BP and Its Partners in the Gulf of Mexico Disaster

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Fire boat response crews spray water on the burning remnants of BP's Deepwater Horizon offshore oil rig in 2010.(AP Photo/US Coast Guard, File)

The massive settlement reached on Friday night between BP and thousands of businesses and individuals who sought damages in the wake of the 2010 Gulf of Mexico oil spill may close one chapter in the saga of one of the nation’s worst environmental catastrophes.

But the biggest dramas must still be played out in the aftermath of the disaster, including the continued restructuring of the nation’s offshore drilling industry and the rebuilding of BP—the largest oil producer in the United States—and its two major partners on the doomed Deepwater Horizon drilling rig, Transocean and Halliburton. The settlement also does nothing to address the environmental devastation of the spill.  

 

The proposed deal requires BP to pay out compensation to over 100,000 fishermen, tourism businesses and others who suffered economic hardship in the wake of the spill, as well as resolve medical claims by those who say they were harmed by oil or chemical dispersants during the spill cleanup. BP estimates those settlement costs at about $7.8 billion. The money will be paid out from a $20 billion compensation fund established by the company in 2010 under pressure from President Obama.

But the federal government is still pursuing a criminal case against BP and all other parties in the accident, which resulted in 11 deaths on the drilling rig and the release of more than 200 million gallons of oil into one of the world’s richest ocean resources. Nor does the settlement with private plaintiffs include the biggest parties in the civil case, the U.S. Justice Department and attorneys general from the Gulf states. Some analysts say the federal government alone could demand that BP pay fines and penalties of more than $20 billion for violations of the Clean Water Act.

“This takes away some of the noise, the masses of claims that are more about economic damages to third parties,” said Eric Smith, an expert on energy law at Tulane University. “This will help make the shrimpers and hotel owners whole. But the really interesting debate, the meat and potatoes, is going forward.”

 

The settlement with Gulf Coast fishermen and tourism businesses could help those industries financially recover from the disaster.  But the federal and state prosecutions could severely impact some of the biggest drilling companies in the world and set legal precedents that would reshape the oil industry’s future.

In addition, Congress has yet to act on a series of recommendations put forth by a White House commission following the spill, which, if enacted, could impose stiff new regulations and liability fees on offshore drillers. Environmental groups fear that as companies drill deeper and deeper for offshore oil and gas, the risks of another uncontrolled blowout won’t be reduced without sweeping changes in the regulatory framework for offshore drilling.

BP said in a statement announcing the settlement that it does not expect to need to increase the $37.2 billion charge it has recorded in its financial statements to cover all costs associated with the Gulf disaster. That was a message intended for BP investors, but it is far from a guarantee.

Attorneys for fishermen and other business owners in the case said the settlement could eventually help their clients receive more compensation from BP – though they said the terms of the deal make it unclear how and when the payments would be made.

 

“It’s good news that the claims will be resolved,” said Camilo Salas, an attorney who represents sport fishermen and coastal property developers in the case. “This settlement provides that property owners will be compensated. But we have to see the details, what benefits will be conferred on my clients.”

Salas added: “On its face, it appears that there will be no new benefits – unless the level of proof we must meet in order to be compensated is lower than what’s already required.”

Daniel Becnel, an attorney for dozens of individuals and businesses hurt by the spill, said, “This helps the lawyers of the plaintiffs. And long term, it might help some of the plaintiffs. But how long will they have to wait?” Becnel estimated that the payouts are unlikely to begin before 2014, and said that the terms of the settlement don’t include clear criteria for evaluating damages.

Meanwhile, environmental cleanup continues on a daily basis in the region, where oil mats and tar balls are still turning up on Gulf shores, with the ultimate restoration plan still to be determined by a federal task force.  BP has already agreed to put at least $1 billion into restoration projects, but the costs are expected to go much higher as researchers monitor long-term damages to the Gulf.

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