Oil Spill: Why the BP Settlement Is Just the Beginning of the End

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Lawyers representing the oil giant BP on one side, and more than 100,000 Gulf Coast residents on the other, were set to show up at the court of U.S. District Judge Carl Barbier on Monday morning. There they would have begun contesting one of the biggest class-action lawsuits in American history, fighting over the responsibility BP still had towards the individuals and businesses affected by the 2010 Deepwater Horizon oil spill. Preparations for the trial produced an astounding 72 million pages of documents and included the depositions of more than 300 witnesses. As lawsuits go, this was going to the Super Bowl wrapped up in the World Series—only with much, much more money at stake.

But now it might never happen. That’s the upshot of news that broke late Friday evening: BP and the lawyers representing Gulf Coast individuals and businesses affected by the spill reached a $7.8 billion settlement that should eliminate the threat of litigation. The money will be paid out of the $20 billion compensation fund—run for the past year and a half by the lawyer Kenneth Feinberg—and it should resolve most private claims of economic loss, property damage and injury from the spill. “This settlement will provide a full measure of compensation to hundreds of thousands,” Stephen J. Herman and James P. Roy, the plaintiffs’ co-liaison counsel, said in a statement. “It does the greatest amount of good for the greatest number of people.”

But while the settlement might head off some of the massive litigation BP is still facing over the oil spill, the company’s legal woes are likely far from over.

MORE: Understanding the Psychic Toll of the Spill

That’s because Gulf Coast residents will still need to decide whether the settlement is right for them. Many individuals have been waiting nearly two years to get their claims settled by the Feinberg fund, which was set up in the months following the oil spill. Feinberg—a lawyer who had run a similar compensation fund for the government after the 9/11 attacks—had broad latitude to decide on settlements for anyone impacted by the spill: fishermen who lost a season, hotel owners along the Gulf Coast, waitresses in restaurants that went under during the spill. The fund—which has doled out about $6 billion so far to more than 200,000 businesses and individuals—had the benefit of avoiding litigation and lawyer’s fees, but many Gulf Coast residents were unhappy with the amount of money they were eligible to receive, as well as the fact that they had to forswear any further lawsuits against BP if they participated in the fund. The sheer number of people the fund had to serve also meant that many residents are still waiting for their checks.

Under the terms of the settlement, plaintiffs who haven’t received compensation yet can take money from the settlement or opt out and apply to a BP-run entity. And if neither option appeals, they can still sue—which means we may not have seen the end of litigation over the oil spill.

And that’s just private individuals. BP is still facing suits from the federal government and from affected states, and it’s not clear how Friday’s settlement will impact those ongoing cases. The $20 billion Feinberg had been given to hand out as compensation was also meant to cover environmental damages and the costs to state and local governments—and it’s not clear if those damages have yet been recovered.

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In a statement, the U.S. Justice Department said:

The United States will continue to work closely with all five Gulf states to ensure that any resolution of the federal law enforcement and damage claims, including natural resources damages, arising out of this unprecedented environmental disaster is just, fair and restores the Gulf for the benefit of the people of the Gulf states.

The remaining government claims could add billions more to BP’s bill, depending on how fines under the Clean Water Act and other environmental rules are calculated. (BP has said that it has already spent more than $22 billion on the spill.) A settlement might be possible there, but the Justice Department has said there is a strong case to be made for BP’s liability for the accident aboard the Deepwater Horizon that led to the blowout and oil spill. “We are prepared to go to trial, we were ready to go to trial yesterday,” Holder said during Congressional testimony on Feb. 28.

BP is also embroiled in ongoing litigation with its Deepwater Horizon partners Transocean—which actually ran the rig—and Halliburton, which was involved in a faulty cementing job that likely helped lead to the blowout. So the legal saga here is far from over, which is good news for the lawyers—and the journalists as well, as any lawsuits that actually go to court could bring new evidence to light over the events on the Deepwater Horizon and in the months that followed.

But ordinary Gulf Coast residents might be wise to get out of the litigation game as soon as possible. Studies done on the victims of the Exxon Valdez spill—many of whom were involved in lawsuits against the company that ran for years—found that being involved in ongoing litigation was a major source of stress and mental anguish. Lawsuits keep traumatic events fresh in the minds of plaintiffs, forcing them to relive some of the darkest days of their lives—all while absorbing legal body blows from a company that has endless amounts of money to spend on lawyers, as I wrote in 2010:

Like southern Louisiana, Alaskan towns were full of fishermen whose way of life was threatened. Residents saw coastal waters fouled by millions of barrels of oil, and they raged against an incompetent response from government and industry. Previously close-knit communities were divided — those who took well-paying cleanup jobs with Exxon were decried as “spillionaires” profiting from the catastrophe. And the wounds did not heal with time: a recent study found that stress levels among Alaskans involved in the oil-spill litigation were as high in 2009 as they were in 1991. “There are still significant levels of depression and posttraumatic stress,” says J. Steven Picou, a sociologist at the University of South Alabama. “It was a constantly renewing disaster.”

The faster Gulf Coast residents can move on with their lives, the better—and if the settlement can help speed that process along, it’s a win. I’m reminded of something I heard Feinberg tell a group of angry fishermen at the Louisiana village of Port Sulphur just a few months into the spill. “The people of Louisiana are pretty resilient,” he said. “Get a check, and move on as best as you can.” It may not seem fair—but it’s still good advice.

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