BP Oil Spill Claims and Compensation

On April 20, 2010, a well blowout led to an explosion aboard the BP-leased Deepwater Horizon drilling platform in the Gulf of Mexico. Eleven human lives were lost, along with the drilling rig. What followed was one of the worst environmental disasters in United States history. More than 200 million gallons of crude oil poured into the Gulf for almost three months before the well could be capped.

In September 2014, the federal court overseeing lawsuits against BP and others found that BP was 67% responsible for the blowout, explosion, and spill. Transocean, the rig's owner, was found 30% to blame. The remaining 3% of fault was attributed to Halliburton, a contractor. ("Findings of Fact and Conclusions of Law - Phase Two Trial," at ¶ 9, In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico on April 20, 2010 (Jan. 15, 2015).)

What's the present status of the lawsuits? What claims against BP and the other responsible parties have been settled, and what claims are ongoing? We begin with a review of the case history, along with a brief summary of the settlements that have been finalized. From there, we'll discuss the outstanding claims and explain where the case is headed.

Background on Legal Claims and Lawsuits

Unsurprisingly, lawsuits began pouring into federal and state courts within days of the disaster. In a mass tort case like this, it's common practice to consolidate cases into what's known as "multidistrict litigation." On August 10, 2010, 77 then-pending federal suits were consolidated in the United States District Court for the Eastern District of Louisiana in Multidistrict Litigation 2179: Oil Spill by the Oil Rig "Deepwater Horizon." Judge Carl J. Barbier is presiding over the MDL.

What Is Multidistrict Litigation?

Multidistrict litigation (MDL) is a way to manage litigation when there are lots of cases involving similar facts and injuries. Cases that qualify are transferred to one federal trial court—in this instance, a federal district court in Louisiana—so that the same judge can preside over pretrial matters like motions, discovery, and preparing cases for trial.

In most MDLs, the court will also conduct one or more "bellwether trials." Representative cases are selected and tried to the court or a jury. The goal is to give the parties and their lawyers a better idea of how the remaining cases will play out, hoping that they'll settle without the need for trials.

What Kinds of Legal Claims Were Filed?

According to the court, the MDL has involved in excess of 3,000 lawsuits and more than 100,000 claims. ("Findings of Fact and Conclusions of Law," In re Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, 148 F.Supp. 3d 563, 566 (E.D. La. 2015).) For ease of discussion, we can group the claims into these three categories:

• environmental claims
• economic loss claims, and
• personal injury and medical benefits claims.

Environmental claims. The United States, impacted Gulf states (Texas, Louisiana, Mississippi, Alabama, and Florida), and more than 400 localities brought claims for the costs of environmental cleanup and remediation. The scope of the damage was staggering. Oil slicks covered 43,000 square miles in the Gulf. More than 1,300 miles of coastline and 400 square miles of sea floor were covered in gobs of oil, much of it mixed with toxic chemical dispersants.

According to the National Oceanographic and Atmospheric Administration the spill resulted in the loss of:

• over 100,000 sea birds
• nearly 170,000 adult and juvenile sea turtles, and
• as many as 8.3 billion adult oysters.

Economic loss claims. State and local economies across the Gulf region were devastated by the spill. Businesses and workers in the commercial fishing, shrimp, oyster and other seafood industries saw their livelihoods threatened by the spill. So did charter boat operators, hotels, tourist attractions, rental property owners, and other businesses in popular resort and coastal areas.

Personal injury and medical benefits claims. Given the sheer size of the spill, containment and cleanup was a massive undertaking that involved tens of thousands of contractors and workers. They were exposed to crude oil—containing, among other things, volatile organic compounds like benzene, xylene, toluene, and hydrogen sulfide—and a dispersing (cleanup) product called Corexit.

Within a short time after the cleanup started, workers began to report health problems. Common complaints included:

• respiratory symptoms like asthma, cough, wheezing, and difficulty breathing
• hypertension (high blood pressure) in workers who were exposed to burning oil and gas
• heart disease
• difficulty concentrating
• depression and post traumatic stress disorder
• blurred vision and red, itchy, and watering eyes
• headache
• nasal congestion and runny nose
• dizziness
• skin irritation
• fatigue, and
• difficulty sleeping.

Settlements

The environmental and economic loss claims have settled. The parties also agreed to settle the personal injury and medical benefit claims, but—as discussed below—thousands of those claims are still being fought over in court.

Environmental Claims Settlements

In April 2016, BP agreed to settle the environmental claims for $20.8 billion, the largest environmental damage settlement in the nation's history. This settlement included:

• a $5.5 billion federal Clean Water Act penalty, the largest in the history of environmental law
• a total of $8.8 billion for damages to natural resources
• $600 million for other claims, and
• $5.9 billion to compensate states and localities for their economic losses.

Separately, BP paid $4 billion in criminal fines and penalties, including $2.4 billion to restore damaged natural resources.

Finally, other responsible parties also resolved claims brought against them. For example, Transocean pled guilty to violating the federal Clean Water Act and paid a $400 million criminal fine, in addition to a $1 billion civil penalty.

Economic Losses Settlement

In 2012, BP agreed to settle with individuals and businesses that experienced economic and property damage losses. The settlement agreement covered:

• business economic losses suffered by firms in affected industries, including startups only in business for a brief time before the disaster
• lost individual wages and earnings
• losses and expenses paid by those who relied on subsistence harvesting to meet their own and their families' dietary needs
• owners of vessels who signed up to assist with cleanup and reclamation activities, and
• coastal and wetland property owners whose properties were damaged or that decreased in value because of the spill.

For most losses, the agreement didn't cap BP's financial liability, and multiple claims were allowed. The claim filing deadline was June 8, 2015.

Personal Injury and Medical Benefits Claims