NEW ORLEANS (AP) — BP's settlement with plaintiffs suing the company over the 2010 oil spill disaster in the Gulf of Mexico may address harm to individuals and businesses, but there is nothing in it that compensates the public for damage to its natural resources and environment, the Justice Department said Saturday.
That's a potentially critical issue because a separate victims' claims fund that was set up months after the Deepwater Horizon rig explosion was also meant to cover environmental damages, but it's now expected to be used to cover the BP settlement with plaintiffs. BP said it expects to pay out $7.8 billion in the settlement with the plaintiffs that was announced Friday.
It's not clear whether environmental claims will now have to be addressed separately between BP and the U.S. government, or whether it will be rolled up into their ongoing discussions over settling the fines and penalties that the British company faces. Both issues also could be resolved at an eventual civil trial, which has now been postponed indefinitely.
The Justice Department noted that the settlement doesn't address "significant damages" to natural resources and the environment.
"While we are pleased that BP may be stepping up to address harms to individual plaintiffs, this by no means fully addresses its responsibility for the harms it has caused," the agency said in a statement to The Associated Press.
The spill soiled sensitive tidal estuaries and beaches, killed wildlife and closed vast areas of the Gulf to commercial fishing for months. Dispersants and siphoning equipment and other methods were successful in getting rid of much of the oil in the ocean, but some environmentalists believe oil beneath the surface could return one day to Gulf shores.
David Uhlmann, a University of Michigan Law School professor who previously served as chief of the Justice Department's environmental crimes section, estimates that a deal between BP, the federal government and the states — one that includes criminal and civil penalties and resolves natural resource damage claims — would be worth between $20 billion to $25 billion.
BP still has to resolve claims by the U.S. government, Gulf states and its partners on the doomed Deepwater Horizon rig, which exploded and sank 50 miles off Louisiana after a BP oil well a mile below the ocean's surface blew out. Eleven rig workers were killed and, according to the government, more than 200 million gallons of oil spewed before the well was capped nearly three months later.
Rig owner Transocean and cement contractor Halliburton have rejected recent overtures to settle their claims with BP and pay billions of dollars, according to two people close to the case who spoke on condition of anonymity because the talks are confidential.
But legal observers expect that could change now that BP and the Plaintiffs Steering Committee have reached a settlement.
BP anticipates that the separate claims fund run by Ken Feinberg will cease at some point. It says it expects money from the fund will be used to pay the settlement. According to the Deepwater Horizon Oil Spill Trust, current total trust assets are approximately $9.5 billion.
Clara Gerica, a shrimp vendor at a downtown farmers' market in New Orleans, said she hoped the new deal would be better than the process run by Feinberg. She and her husband, a commercial fisherman, didn't get compensated even though they filed claims after taking a loss from the spill, she said.
"We got four deficiency letters from Feinberg," she said.
She said she hoped the new payment process would be fair.
"I'm going to put up a fight," she said.
New vehicles will be set up and supervised by the court to pay claims as part of Friday's settlement.
People waiting for money from Feinberg's Gulf Coast Claims Facility can take what the settlement vehicles offer them or opt out and make a claim directly to a BP-run entity. If they don't like what they get from that entity, they can sue.
And many just might.
BP's payout estimate includes what the company internally predicts legal fees for the numerous plaintiffs lawyers in the case will be, though the issue has not yet been discussed between the two sides, according to a person with direct knowledge of the settlement terms who spoke on condition of anonymity because those details are confidential.
That could be a deal-breaker for people who have spent nearly two years trying to get money directly from BP or through the Feinberg-run fund that took over the claims process in August 2010, four months after the Deepwater Horizon disaster. Many have been pursuing their claims without a lawyer and therefore have not had to pay such fees. They also could balk at the idea of potentially having to start their entire claims process over again.
During the transition period, people and businesses with pending settlement offers from the GCCF will be able receive 60 percent of that existing offer. If they opt out of the settlement, they automatically receive the remaining 40 percent. If they opt in, the court-supervised process will decide if they are entitled to more than what the GCCF offered.
There are positives in the settlement for plaintiffs.
Among them is a provision that calls for paying legitimate claims from cleanup workers and others who say they suffered illnesses due to the fumes from the oil. Roughly 200 people filed claims with the GCCF asserting spill-related illnesses, but none were paid. The fund set up after the 9/11 attacks paid claims to responders who became ill after breathing in Ground Zero dust, but in that case it was easier to prove causation.
Ervin Gonzalez, a Miami-based lawyer who is a member of the PSC, said the settlement calls for court-approved health care practitioners to examine cleanup workers and other people who blame illnesses on exposure to oil and dispersants. A court-appointed claims administrator will determine which medical claims to pay.
The settlement also establishes a program to monitor the spill's health effects for a period of 21 years, allowing people whose physical symptoms haven't developed yet to pursue claims.
Plaintiffs' co-liaison counsel Steve Herman said BP and the steering committee members have up to 45 days to present U.S. District Judge Carl Barbier with a formal settlement for his approval.
"A lot of people thought this was going to be another Exxon Valdez and that it was going to drag on for 20 years," Herman said. "In less than two years, we've come up with what we think is a fair, comprehensive (resolution) for the people on the Gulf Coast."
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Weber reported from Atlanta. Associated Press writer Cain Burdeau in New Orleans contributed to this report.
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