BP is preparing to offer compensation to business owners and residents directly affected by the Gulf Coast oil spill if they agree not to sue the beleaguered oil company for additional damages.
The one-time BP oil spill settlements would come from a $20 billion fund BP pledged to the Obama Administration several weeks ago. The claims would be administered by Ken Feinberg, who has been appointed by the White House to oversee the claims process.
The lump sum payments would be based on future lost earnings and would require the claimants to promise not to sue BP over damages they suffered from the oil spill, according to a report by The Guardian. While it is clear that people directly affected, such as fishermen, shrimpers and oyster farmers, would qualify, it is unclear whether people more indirectly affected would be eligible for the settlements.
Processing of claims is not expected to begin for about three weeks, when Feinberg is scheduled to take over. The company is hoping to save money by getting potential plaintiffs to settle oil spill claims now. Business owners and others in the gulf region, many of whom are facing potential bankruptcy as a result of the financial harm caused by the oil spill, would also be able to receive guaranteed sums of money faster than if they pursued lengthy litigation. However, they may end up getting substantially less than they actually deserve if they settle their claims at a compromised values at this time, without fully knowing the extent of their damages.
The gulf coast oil spill started shortly after the April 20 explosion and fire on the Deepwater Horizon sent the oil drilling rig to the bottom of the Gulf and unleashed an oil spill in the Gulf that is shaping up to be the worst environmental disaster in history. The blast killed 11 workers and sent tens of thousands of gallons of oil gushing from a mile-deep well in the ocean floor.
It took more than two months for BP to begin to get the spill under some semblance of control, but by then millions of gallons of oil had fouled the Gulf of Mexico, causing massive environmental damage to several gulf coast states, including Louisiana, Mississippi and Florida. The company hopes to seal the well, known as the Macondo well, permanently this week with a technique known as a “static kill.”
Oil spill lawsuits have been filed by shrimpers, oyster farmers, resorts and other businesses claiming that the man-made catastrophe has caused them to suffer economic loss. There are also lawsuits filed by states and environmental groups who are suing for damages over the environmental impact, and lawsuits from property owners whose beaches are now covered with tar balls and the corpses of fish and fowl dying as a result of the contamination from oil and dispersants used to break it up. In addition, there have been a number of Deepwater Horizon wrongful death lawsuits filed by family members of workers who died on the rig.
Last week the U.S. Judicial Panel on Multidistrict Litigation met to consider whether all federal lawsuits filed against BP and other companies over the economic and environmental effects of the oil spill should be centralized before one judge for pretrial litigation. While the majority of the media attention and government focus has been on BP, formerly known as British Petroleum, most of the lawsuits also name Transocean Ltd., Cameron International Corp. and Halliburton Energy Services Inc. as defendants.