BP settlement doesn't address environment

Individual claims expected to exhaust fund set up for it.

Posted: March 04, 2012

NEW ORLEANS - BP P.L.C.'s settlement with plaintiffs suing the company over the 2010 oil spill 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 is 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 is now expected to be used to cover the BP settlement with plaintiffs. BP said it expected to pay out $7.8 billion in the settlement with the plaintiffs that was announced Friday.

It is 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 continuing 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 announced Friday does not 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," Justice said in a statement e-mailed 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, siphoning equipment, and other methods were successful in getting rid of much of the oil in the gulf, but some environmentalists say they believe oil beneath the surface could return one day to gulf shores depending on the weather and other factors.

David Uhlmann, a University of Michigan Law School professor who previously was 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 damage claims involving natural resources - would be worth between $20 billion and $25 billion.

"I doubt anybody is going to be better off litigating at this point," Uhlmann said.

BP still has to resolve claims by the U.S. government, Gulf Coast 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 about $9.5 billion.

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 or opt out and make a claim directly to a BP-run entity. If they do not like what they get from that entity, they can sue.

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