Gulf Coast Residents File Hundreds of Lawsuits Against BP Amid Delayed Compensation

Strategic Insights -

Residents along the Gulf Coast who were affected by the Deepwater Horizon oil spill have filed hundreds of lawsuits against oil company BP and its contractors since April, amid a complex and evolving legal landscape. The spill has raised serious questions about the effectiveness of existing maritime law and the speed at which compensation can be provided to those harmed. Attorneys say many questions remain about how far the protections will go and how long it will take to compensate the fishers, landholders, and beachside cities that have suffered from the spill.

Key Takeaways:

  • The Oil Pollution Act of 1990, passed in response to the Exxon Valdez spill, provides up to $1 billion for clean-up and natural resource damage, and up to $75 million in economic damages to compensate victims for lost income.
  • BP and its contractors could be forced to pay even more than $1 billion if the federal government finds widespread negligence, deliberate misconduct, or violations of federal regulations.
  • The company expects to "exceed" the $75 million in damages required by law, but its obligations are not limitless, according to BP American Vice President Darryl Willis.
  • Nearly 12,000 people have received payments from BP, which has a team of 700 people processing claims and has paid $36 million so far.
  • Transocean, the owner of the Deepwater Horizon drilling rig, has asked a judge to limit claims against it to $27 million under an 1851 law that limits liability.
  • The lawsuits may take years to resolve due to the number of victims and the multiple jurisdictions involved.
  • Mississippi Attorney General Jim Hood is prepared to sue BP under state environmental laws if the company does not resolve state claims without a lawsuit.
  • Shrimpers, oystermen, and others can first take their claims to BP, and then seek money from a trust fund established under the 1990 law if their claims are denied.

Statistics:

  • Over 12,000 people have received payments from BP.
  • BP has paid nearly $36 million to date.
  • The 1990 Oil Pollution Act provides up to $1 billion for clean-up and natural resource damage.
  • The trust fund established under the 1990 law is financed by a federal 5-cents-per-barrel tax on petroleum produced in or imported to the USA.
  • 5 states have jurisdiction over the lawsuit, including Louisiana, Mississippi, Alabama, and Florida.

Sources:

  • Leinwand, D. (2010). "Gulf Coast residents face long road to compensation in BP oil spill cases." USA Today, April 30.
  • "BP, contractors face flood of lawsuits over Gulf oil spill." CNN, May 1, 2010.
  • "Transocean seeks to limit liability in BP oil spill." The New York Times, May 2, 2010.
  • "Oil spill victims to get expedited payments from BP." Reuters, May 3, 2010.