Should Victims of the BP Oil Spill Be Unsettled by Recent Settlement Agreement?

April will mark the two-year anniversary of the BP Deepwater Horizon oil spill disaster that killed eleven people, injured seventeen others, and released an estimated 4.9 million barrels of oil into the Gulf of Mexico. On March 16, the Senate passed a widely supported measure that would section off 80 percent of the fines BP has paid and direct those funds to the five Gulf states impacted by the spill.

The RESTORE Act, introduced in July 2011 and similar to National Oil Spill Commission recommendations, was attached as an amendment to the Senate transportation bill passed March 14. Approved by an overwhelming vote of 76 to 22, the amendment directs 80 percent of the Clean Water Act (CWA) fines paid by BP straight to the Gulf states damaged by the spill instead of allowing them to go into the general Oil Spill Liability Trust Fund. Experts at the Center for American Progress wrote that "[n]early two years after the explosion aboard the Deepwater Horizon and without a single piece of legislation to aid the families, businesses, and ecosystems that continue to suffer as a result of the spill, [the RESTORE Act] can’t come soon enough."

Even if the measure is signed into law, the financial claims against BP are still far from finalized. A trial was expected to begin Feb. 27 but was postponed for settlement negotiations. In early March, BP announced it had reached an agreement with a group of businesses and individual plaintiffs. Claims brought by the federal government and Gulf states, however, will proceed in the coming weeks unless another settlement is reached. While settling may be in the best interests of the responsible parties and could ensure more timely compensation for victims, many worry that BP is merely buying its way back into public favor.

The March settlement with a plaintiffs’ group is estimated at $7.8 billion; this money would come out of the $20 billion compensation trust fund set up in August 2010. Bloomberg News reported that while a representative for the plaintiffs’ group described the settlement as doing "the greatest amount of good for the greatest number of people," other victims have argued in court that they are being coerced to settle and accept payouts to give up their claims. The settlement appears to have increased investor confidence in BP, and some see the settlement as a way for the company to avoid more public scrutiny during a trial.

The National Oil Spill Commission found that BP, Halliburton, and Transocean created an unacceptable risk by making a series of money-saving and time-saving decisions, and BP has accepted some responsibility for the spill. The settlement, however, allows BP to avoid paying punitive damages to victims for willful negligence. Greg Palast, an economist who has investigated the BP spill, likens this to "telling a bank robber, 'Hey, just put back the money in the vault and all's forgiven.'"

But forgiveness may not come so easily. The Department of Justice said that while it is "open to a fair and just settlement," it is "fully prepared to try the case." Under the CWA, BP could face penalties of $1,100 for each barrel of oil spilled and up to $4,300 per barrel if the court finds gross negligence on the part of the company. With 4.9 million barrels spilled, the total maximum penalty would be $21 billion.

"[A]s we move forward with trial and the rest of this trial unfolds," investigative journalist Antonia Juhasz told Democracy Now!, "it’s critical that there’s public pressure and public attention so that BP truly has to pay, we make sure this never happens again, and all the people and all the places of the Gulf have the opportunity for restoration, which right now isn’t happening."

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