The Latest BP Oil Spill Settlement

Oil Refinery in Nova Scotia, from Flickr user Iguanasan, licensed via Creative Commons

An oil refinery in Nova Scotia

The big news this weekend was the announcement that BP has settled the set of civil suits by residents and businesses against the company.  The settlement does not have a fixed amount, but BP claims it will likely pay around $7.8 billion.  While that may seem like a big number, this is only the most recent settlement.  In addition to this lawsuit, which covers economic and medical claims, BP has already spent about $22.1 billion on other settlements and, of course, the initial clean up of the spill.  And more is yet to come: the company still faces the US federal government and the individual states affected by the spill in court, potentially seeing criminal charges applied.  Analysts place the total amount in these cases to be anywhere between $17- and $40 billion.  BP itself has set aside $37.5 billion in anticipation of the cases.  There are a few variables in this number, which causes the range to vary so widely.  For one thing, the environmental fines depend on whether or not BP is found to have been grossly negligent, which some see as unlikely in the wake of these latest settlements.  Additionally, if the government levies criminal charges against the company, which it most likely will, the individual fines for that might be $10 billion (the highest amount of criminal fines paid by a corporation so far have only been $2 billion).  For more analysis of the numbers, check out this Wall Street Journal article that gives an excellent rundown.

The ultimate question this whole catastrophe asks is: does money really resolve the environmental problems caused by the company?  Some 5 billion barrels of oil were spilled, possibly because the company ignored safety checks in its rush to pump more oil out of the Earth.  When numbers get that high, humans have an inability to really grasp how huge they are, so use this tool to get a sense of just how much of an impact this spill had on the Gulf.  The city of Chicago and the surrounding area would be drenched in crude if the Magnificent Mile suddenly erupted.  The entirety of South Carolina would need to be cleaned if Columbia opened up and started gushing.  So does $5.4 billion, the lowest in environmental fines BP could pay, really fix anything?  I for one am looking forward to the criminal trial — let’s see if anyone will actually be held accountable for ruining a bit of the Earth.

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Legal News to Watch

Check out the Wall Street Journal for a list of legal news to watch this week.  Of note to us here at the Settlements blog is the news that the Deepwater Horizon trial was delayed by a week for settlement talks.  Last week, MOEX settled with the US government and five states for $90 million concerning its 10% stake in the doomed oil rig.  The company paid part in civil penalties and agreed to drop its suits against BP and other partners.  Earlier in the year, they settled with BP to the tune of $1 billion.  The trial that has been set back will be enormously complicated and most likely involve monstrous fines for the oil company.  Some 75 million pages of court documents have been created already in what was one of the biggest environmental catastrophes in all history.  We’ll be looking out for news of this trial, which will certainly be a landmark case.