Eight years ago, the Macondo oil well erupted below British Petroleum’s (BP’s) Deepwater Horizon oil rig in the Gulf of Mexico. The explosion occurred about 100 miles off Alabama’s coast on April 20, 2010, killing 11 workers and releasing nearly a million gallons of fuel into the Gulf of Mexico’s waters. It was the biggest oil disaster in U.S. history. The effects reverberated across Gulf Coast towns and communities that were also dependent on the seafood industry, as well as revenue from tourism, which quickly dried up following the disaster.
Gulf Coast states and the federal government, along with local governments, businesses, and individuals filed lawsuits against BP and many were eventually combined to establish the BP Oil Spill Multi-District Litigation (MDL). Early on, Beasley Allen attorneys began helping oil spill victims. Rhon Jones, head of Beasley Allen’s Toxic Torts Section, has served on the MDL’s Plaintiffs’ Steering Committee (PSC) as well as class counsel in the economic and property class settlement against BP. That settlement has paid out more than $6 billion in claims to date and has been estimated to eventually pay out approximately $12 billion.
Beasley Allen was also heavily involved in the estimated $20 billion agreement to settle federal, state and local government claims against BP, securing more than $2 billion for its home state, Alabama. The firm represented Gov. Robert Bentley in the economic losses suffered by the state of Alabama from the oil spill, and worked cooperatively with the Attorney General’s office, who represented the state. The settlement included compensation for economic losses resulting from the spill, natural resource damages, and an apportionment of Clean Water Act civil fines and penalties. It holds the record for the largest environmental settlement in U.S. history.
Additionally, the firm also helped direct the settlement negotiations on behalf of 31 communities and organizations in Alabama and helped guide the state’s negotiations with BP’s co-defendant, Transocean. In 2015, the state settled with Transocean for $20 million.
It has been one of the largest and most complex legal sagas of recent times. As of January 2018, the catastrophic event has cost BP, alone, around $65 billion in settlements, according to Reuters. Here’s a look back at how the tragedy and its overwhelming impacts unfolded.
A perfect economic storm
The eruption and ensuing oil spill occurred at the peak season for both the commercial seafood and tourism industries along the Gulf Coast. It threatened birds, marine life and their natural habitats, creating a domino effect for those in the commercial fishing and shrimping operations who could no longer rely on their catch of the day, destroying their livelihoods. Without the fresh supply of seafood, restaurants and other hospitality industry businesses lost significant revenue, too. The area, like many other communities across the country, was already reeling from the fallout of a collapsed housing market. The environmental devastation socked an additional punch to the housing market as the effects crept further inland. Foreclosures soared as housing values plummeted.
The environmental disaster was exacerbated by the toxic dispersants applied in the days and months after the initial eruption. The goal was to keep the oil trapped below the ocean’s surface. Together, the various harms inflicted by the oil giant and its co-defendants shuttered valuable businesses and robbed people and families of their income and hope. A study released by Oceana six years after the oil spill estimates that by 2020, the impact of the oil spill on fisheries could total $8.7 billion, including the loss of 22,000 jobs. It also estimated 10 million user-days of beach, fishing and boating activity were sacrificed because of the tragedy.
Distressing effects linger
For years following the massive spill, oil blobs and tar balls escaped the toxic dispersants. In 2014, BP launched a slick advertising campaign declaring the recovery. Yet, five days before the fourth anniversary and the launch of BP’s ad campaign, the U.S. Coast Guard released a more somber update. It reported that since June 2013, its personnel had responded to 1,082 suspected Deepwater Horizon oiling reports, and managed the cleanup of more than 5,500 pounds of oily material. Cleanup crews in Fort Morgan, Alabama, reported earlier in 2014 that “significant amounts” of oil wash up on the bay side of Fort Morgan daily as well. It was part of a beach survey conducted by the Alabama Department of Environmental Management in February that year, which reported 200 instances of oiling during the four-week assessment. Workers removed nearly 400 pounds of tar.
The oil and toxic substances also took a toll on the health of residents who remained in the area, along with workers on cleanup crews. The workers experienced stomach problems, respiratory distress and skin rashes “after spending days at sea inhaling fumes… or walking the beaches along the coast” looking for oil and tar balls. The workers were recruited by BP and, unlike workers that were in direct contact with the oil and toxins, were not provided adequate protection. As Oceana discovered, 50,000 people involved in the cleanup efforts were exposed to chemicals that severely damage lung tissue. Workers and their spouses also reported increased depression and domestic disputes. Mental health problems not only affected the workers and those directly affected by the spill, problems, such as anxiety and depression, have also increased in Gulf residents indirectly affected by the spill. The group expects it to take a decade or longer for oil spill victims to recover from the physical and psychological effects of an oil disaster.
Settlement and its challenges
In May 2012, U.S. District Judge Carl Barbier, the federal judge overseeing the MDL, granted preliminary approval to two class action settlement agreements between BP and plaintiffs’ attorneys. The settlements would help to resolve more than 100,000 claims from businesses and individuals who say they were harmed by the massive oil spill. However, the next year BP challenged the agreement despite months of intense negotiations by the oil giant’s attorneys and a high level of transparency throughout the process. The agreement had begun to cost BP more than it expected and the company wanted out.
BP placed ads in national newspapers smearing the victims who were trying to enforce the agreement. It forced its victims to, once again, put their lives on hold as it attempted to back-pedal its way out of the settlement.
Yet, justice prevailed in December 2014, when the U.S. Supreme Court rejected BP’s claim and ruled that the class settlement was final. Earlier in the year, Judge Barbier apportioned fault among three defendants, based on federal investigators’ findings that a series of mistakes by the three companies resulted in the devastating incident. He found that BP was 67 percent responsible while Transocean, which owned the oil rig it was leasing it to BP, bore 30 percent of the fault. Halliburton, a BP contractor that conducted the botched cement job for the oil well and was charged with monitoring it, was culpable for three percent of the fault.
The following year, BP reached an estimated $20 billion settlement with the federal government, five Gulf States impacted by the oil spill – Alabama, Louisiana, Texas, Mississippi and Florida – and local government entities. Judge Barbier approved the settlement in April 2016. The company had previously reached agreement with the United States government to resolve all federal criminal charges and all claims by the Securities and Exchange Commission (SEC) against the company stemming from the oil rig explosion, oil spill and the company’s response. That deal included $4 billion paid in installments over a period of five years to the U.S. Department of Justice; $525 million paid in installments over a period of three years to the SEC; and approximately $41 billion charge against BP’s income.
As communities continue to recover, experts still aren’t sure of all the long-term effects. Yet, now that the urgent needs have been addressed and other issues have focused the nation’s attention elsewhere, the question remains whether the country holds on to the lessons learned as a result of the BP Oil Spill.