BP Is Still Paying for the Deepwater Horizon Spill

Bookmark

(Bloomberg Businessweek) -- BP Exploration et al. v. Claimant ID 100354107
Cases #18-31115 and 31275

The Origin

On April 20, 2010, the Deepwater Horizon oil well, operated by BP Plc in the Gulf of Mexico, suffered an enormous explosion, killing 11 workers and spewing 130 million gallons of oil. Knowing it would soon be inundated with lawsuits, the company quickly set up a settlement fund and hired Ken Feinberg to administer it. Over the next two years, Feinberg paid out $6.1 billion to 220,000 claimants, thus avoiding thousands of suits. But he also turned down many claims on the grounds that the claimants hadn’t shown they had been damaged by the accident. This didn’t make the plaintiffs’ bar happy.

The Switch

Some of the heavyweight plaintiffs’ lawyers eschewed the claims process and pressed on with lawsuits. In March 2012, BP settled with them for $7.8 billion. As part of the settlement, it agreed to replace Feinberg with Patrick Juneau, a lawyer from Lafayette, La. The settlement made it much easier for companies and people to get compensation without any serious documentation. Suddenly all kinds of companies were filing claims. One of them was Claimant ID 100354107: Walmart Inc.

The Claims

Walmart said that it was owed $15 million for damage done to five stores. BP said that Walmart was using an accounting change to inflate the claim. Walmart made an additional claim for a store in Mississippi that it said qualified as a “startup” (thus eligible for more money) because it had recently reopened after being damaged during Hurricane Katrina. Juneau approved both claims. So BP sued.

The Finale

Federal Judge Carl Barbier, who’s overseeing the BP litigation, is a former plaintiffs’ lawyer. He’s been largely unsympathetic to BP’s objections. After all, BP did agree to the 2012 settlement that opened the door for more questionable claims. Sure enough, he ruled for Walmart in both cases. And in two separate decisions last month, the U.S. Court of Appeals for the 5th Circuit agreed with him. A decade after the Deepwater Horizon explosion, BP is still paying up.

 
Has the 5th Circuit rejected any claims?
Yes. Tampa Bay’s football team, the Buccaneers, tried to get $19.5 million, claiming economic damage, despite being 300 miles from the accident site. In its ruling, the court noted the team went 10-6 that season. “The Bucs have not had a 10-win season since,” the ruling said.

 
How much has the spill cost BP?
In addition to the money it’s paid to Gulf Coast residents and businesses, it has paid $20 billion to settle suits brought by states and the federal government; a $4 billion fine levied by the U.S. Department of Justice; and $32 billion toward the cleanup. That comes to about $70 billion—so far.
 
Nocera is a columnist for Bloomberg Opinion.

To contact the editor responsible for this story: Eric Gelman at egelman3@bloomberg.net

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.