BP Settlement Sells Out Victims
Sunday 4 March 2012
by: Greg Palast, Truthout | News Analysis
Following the Deepwater Horizon explosion, Greg Palast led a four-continent investigation of BP PLC for Britain's television series Dispatches. From 1989-91, Palast directed the investigation of fraud charges in the Exxon Valdez grounding for Alaska Native villages.
Some deal. BP gets the gold mine and its victims get the shaft. And a few lawyers will get vacation homes - though they won't be so stupid as to build them on the Gulf Coast.
On Friday night, the judge-picked lawyers for 120,000 victims of the Deepwater Horizon blow-out cut a back-room deal with oil company BP PLC which will save the lawyers the hard work of a trial and save the oil giant billions of dollars. It will also save the company the threat of exposing the true and very ugly story of the Gulf of Mexico oil platform blow-out.
I have been to the Gulf and seen the damage -- and the oil that BP says is gone. Miles of it. As an economist who calculated damages for plaintiffs in the Exxon Valdez oil spill case, I can tell you right now that there is no way, no how, that the $7.8 billion BP says it will spend on this settlement will cover that damage, the lost incomes, homes, businesses and boats, let alone the lost lives -- from cancers, fetal deformities, miscarriages, and lung and skin diseases.
Two years ago, President Barack Obama forced BP to set aside at least $20 billion for the oil spill's victims. This week's settlement will add exactly ZERO to that fund. Indeed, BP is crowing that, adding in the sums already paid out, the company will still have spent less than the amount committed to the Obama fund.
Watch a video from Greg Palast's investigation into BP below, or read an excerpt from his book Vulture's Picnic here.
There's so much corrosion, mendacity and evil here in this settlement deal that I hardly know where to begin.
So, let's start with punitive damages.
I was stunned that there is no provision, as expected, for a punishment fee to by paid by BP for it's willful negligence. In the Exxon Valdez trial, a jury awarded us $5 billion in punitives - and BP's action, and the damage caused in the Gulf, is far, far worse.
BP now has to pay no more than proven damages. It's like telling a bank robber, "Hey, just put back the money in the vault and all's forgiven."
This case screamed for punitive damages. Here's just a couple of facts that should have been presented to a jury:
For example, the only reason six hundred miles of Gulf coastline has been slimed by oil was that BP failed to have emergency oil spill containment equipment ready to roll when the Deepwater Horizon blew out. BP had promised the equipment's readiness in writing and under oath.
And here's the sick, sick part. This is exactly the same thing BP did in the Exxon Valdez case. It was BP, not Exxon, that was responsible for stopping the spread of oil in Alaska in 1989. In Alaska, decades ago, BP told federal regulators it would have oil spill "boom" (the rubber that corrals the spreading stuff) ready to roll out if a tanker hit. When the Exxon Valdez struck Bligh Reef, BP's promised equipment wasn't there: BP had lied.
And in 2010, BP did it again. Instead of getting the oil contained in five hours as promised as a condition of drilling, it took five days to get the equipment in place (and that was done by the US Navy on orders of the President).
This was more than negligence: it was fraud, and by a repeat offender. Now BP is laughing all the way to the bank.
And there's more. BP mixed nitrogen into the cement which capped the well-head below the Deepwater Horizon. BP claimed to be shocked and horrified when the cement failed, releasing methane gas that blew apart the rig. BP accused the cement's seller, Halliburton, of hiding the fact that this "quick-set" cement can blow out in deep water.
But, in an investigation that took me to Central Asia, I discovered that BP knew the quick-set cement could fail - because it had failed already in an earlier blow-out which BP covered up with the help of an Asian dictatorship.
The lack of promised equipment, the prior blow-out -- it all could have, should have, come out in trial.
Think about it: BP knew the cement could fail but continued to use it to save money. Over time, the savings to BP of its life-threatening methods added up to billions of dollars worldwide. BP will get to keep that savings bought at the cost of eleven men's lives.
Other investigators have uncovered more penny-pinching, life-threatening failures by BP and its drilling buck-buddies, Halliburton and TransOcean. These include bogus "blow-out preventers" and a managerial system that could be called, "We-Don't-Care Chaos."
As BP had no choice but to pay proven damages and conceded as much, what exactly are the lawyers getting paid for? (Don't be surprised if the fee requests hit a billion dollars.)
How could these lawyers let BP walk away on the cheap? The judge picked the lawyers that would settle or try the case for the 120,000 plaintiffs. His Honor side-lined the legal "A-Team," like Cajun trial lawyer Daniel Becnel, guys with the guts, experience and financial wherewithal to go eyeball-to-eyeball with BP and not blink. Welcome to Louisiana, oil colony.
So BP walks without the civil punishment that tort law and justice demand, grinning and ready to do it again: drill on the cheap with the price paid by its workers and the public.
But stopping a trial denies the public more than the full payment due: it denies us the truth, the whole truth and nothing but the truth.
The President has just opened up the arctic waters of Alaska for drilling, has reopened the Gulf to deepwater platforms, and is fiddling with the idea of allowing the XL Pipeline to slice America in half.
So we need to know: Can we trust this industry?
Without a trial in the Deepwater Horizon case, we may never get the answer, never get the the full story of the prior blow-outs, the fakery in the spill response system, and other profits-first kill-later trickery that bloats the bottom line of BP and the entire drill-baby-drill industry. http://www.truth-out.org/bp-settlement-sells-out-victims/1330883960
BP Settlement Leaves Most Complex Claims Unresolved
by Abrahm Lustgarten
ProPublica, March 3, 2012, 4:53 p.m.
BP’s announcement that it will pay $7.8 billion to compensate thousands of Gulf Coast residents harmed in the Deepwater Horizon disaster ends one chapter of legal wrangling over the 2010 oil spill, but leaves other, potentially far more expensive, issues unresolved.
The tentative deal, announced late Friday, does not address state lawsuits and federal claims under the Clean Water Act and Oil Pollution Act, which could cost BP as much as $21 billion more. It has little to do with efforts to assess the extent of environmental damage and to pay for them; that will come later. And BP could still face criminal charges related to the oil spill and be barred from receiving federal contracts.
The payout agreed to Friday is BP’s best estimate of what it will cost to meet outstanding claims, but is not capped and could wind up being higher. As of now, though, the amount is significantly less than many had expected and does not appear to require BP to spend any money that it had not already agreed to pay. The settlement will come out of a $20 billion fund set aside in June 2010 by BP at the behest of President Obama to cover claims from disaster victims. The settlement amounts to less than one-third of BP’s 2011 profits, which were nearly $26 billion.
BP officials portrayed the settlement as one of a number of programs the company has undertaken to repay Gulf Coast residents, while assuring investors that the company has anticipated liabilities from the explosion and sinking of the Deepwater Horizon oil rig. Eleven men died in the accident and more than 200 million gallons of oil spilled into the Gulf.
"From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region, and we've worked hard to deliver on that commitment for nearly two years,” said Bob Dudley, BP’s CEO, in a statement issued Friday night. "The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast."
Others are already questioning whether the settlement terms are fair, however.
The lawsuits were filed mostly by people who sought greater damages than were likely to be met by the Gulf Coast Claims Facility, the BP fund that has compensated residents for economic losses since mid-2010. But because the settlement will be paid out of the same fund, and amounts to a little more than half of what remains in it, it’s not yet clear how much plaintiffs will receive or what will happen to other claimants if the fund runs dry.
A portion of the settlement also will go to lawyers involved in the case, whereas previously money in the BP fund had gone only to claimants.
“How does that advance the ball at all?” asked Anthony Buzbee, a Houston attorney representing 12,000 plaintiffs against BP, but who was not on the committee that negotiated the settlement. “The lawyers on that committee wanted to settle because it means huge fees.”
Even with Friday’s settlement, BP has several significant legal and financial hurdles left to cross.
Nearly two years after the disaster, perceptions are still shifting about how much damage it has done. As oil washed ashore on hundreds of miles of coastline and the Gulf’s tourism and fishing industries faltered, President Obama called the spill “the worst environmental disaster America has ever faced.” Since then, some experts have said the oil dissipated faster than expected and the long-term harm was less than predicted.
Yet even now, tar balls are still turning up on beaches, residents complain of health problems due to the spill or chemical dispersants used to clean it up, and an increasing number of dolphin deaths have raised biologists’ concerns.
Environmental scientists say it will be years before the true extent of the disaster can be known, making the next round of litigation for BP even more complicated.
Friday’s settlement effectively split off individual claims from the thornier issues of assessing and paying for long-term environmental damage. Those questions will begin to be addressed in the civil suits brought by several states and the U.S. government under the Clean Water Act and Oil Pollution Act alleging BP acted negligently.
After the spill, several government investigations found that BP and its contractors made careless missteps in the final hours of drilling its complex oil well in mile-deep water.
The Department of Justice also is conducting a criminal investigation into the Gulf spill and may bring charges under the Clean Water Act. Officials have said that they are weighing whether to prosecute individual BP executives for decisions made in the days leading up to the deadly explosion, as well as charges against the corporation itself.
The actions triggered by the Gulf spill capped more than a decade of accidents and criminal and civil cases brought against BP, following several oil spills in Alaska, the deadly explosion of the company’s refinery in Texas City, and a scandal in which BP was accused of manipulating propane prices.
BP’s track record may make it vulnerable to the ultimate civil sanction: a decision by the Environmental Protection Agency to disqualify the company from future federal contracts including leases to drill, a penalty called debarment.
BP’s facilities in Prudhoe Bay, where the company spilled 200,000 gallons of oil in 2006, as well as the company’s aging Texas City refinery, where an explosion killed 15 workers in 2005, already have been debarred. At issue now is whether the federal government will cancel contract eligibility for the entire company, penalizing it for a pattern of wrongdoing and exhibiting a “culture of corporate non-compliance.”
The case partially settled Friday consolidated thousands of individual, state and federal lawsuits brought against the company into one mammoth case that was to be tried in U.S. District Court in New Orleans. Judge Carl Barbier – who delayed the trial’s Feb. 27 start so that a settlement could be reached -- had planned for the case to unfold in three stages: the first to establish BP’s liability and whether the company was negligent, factors that would have dictated the severity of damages under the Clean Water Act and the Oil Pollution Act; and later stages assessing mistakes made in drilling operations and the spill’s environmental toll on Gulf ecosystems. At one point, BP said a trial could go on for more than a year.
The federal suits that remain unresolved may turn out to be the most expensive. They depend largely on whether BP is found to have been grossly negligent in its handling of the Deepwater Horizon disaster, and on how much oil is determined to have seeped into the Gulf. Federal law allows for the company to be fined $1,100 per barrel under normal circumstances, and as much as $4,300 per barrel if it was grossly negligent. Under the current estimate, 4.9 million barrels of oil spilled, BP could face up to $21 billion in additional fines.
The exact amount of oil spilled continues to be a matter of debate, however. The Coast Guard initially estimated that the amount of oil flowing into the Gulf was about 42,000 gallons a day. Eventually, the government concluded the number was much higher -- 2.4 million gallons a day, or 206 million gallons total -- but BP disputed those figures.
In January, e-mails released as part of the court proceedings showed that in the first days of the spill, BP’s own estimates of the potential flow rate were higher still – up to 3.4 million gallons a day, according to a report by the Associated Press. BP endeavored to keep its estimates secret, telling its staff “not to communicate to anyone on this.”
BP has said that it has set aside a total of $37.2 billion to pay for damages related to the spill. Of that, the company estimates it has already spent $22 billion on Gulf coast cleanup and restoration, including at least $6.1 billion through the claims facility. The latest $7.8 billion settlement includes $2.3 billion slated to help resolve issues related to the Gulf seafood industry, and appears to bring the company within about $7 billion of its stated budget, a figure that could be eclipsed as the remaining components of the lawsuits go forward.
The deal is divided into a fund for economic claims, and one for health-related issues, which covers plaintiffs’ current medical conditions and also provides funds for a 21-year program to address future health care claims and issues as they arise. It provides $105 million to support health care in Gulf communities that is payable immediately, even though the settlement overall is still subject to review and approval.
Abrahm Lustgarten is the author of “Run to Failure: BP and the Making of the Deepwater Horizon Disaster,” which will be published on March 26. http://www.propublica.org/article/bp-settlement-leaves-most-complex-claims-unresolved
Mr. Tony "I Want My Life Back" Hayward may not be entirely responsible for the disater that effected the Gulf during the oil spill, though he did get a nice benefit package from saving money by not installing the safety valve and then was demoted to a position somewhere in Russia, "out of harm's way" as his corporate mentors would claim.
Gulf residents who are outraged at the pollution and the quick escape made by Mr. Tony Hayward may be interested in pursuit of some benefit packages of their own that Pres. Barack "Let Bygones be Bygones" Obama is unable or unwilling to pursue.
The pelicans are the Angels of the Gulf and had their wings soiled with the oil that BP could not contain. All this waste of life and oil just for some short term profit, by not installing the correctly functioning safety valve. What is their means of obtaining justice for their lost loved ones?
IF i were Mr. Tony Hayward i would reconsider my position in Russia as there may be some folks interested in your personal whereabouts. Many people feel that justice would be served if another few billion were added on the the settlement claims, and that could be obtained by having Mr. Tony Hayward over to the house for a tea and crumpets party for an indefinite duration until the remaining settlement funds are paid.
Seems like some CEOS like Mr. Tony Hayward may need some kidnap and ransom insurance;
"Kidnap and ransom insurance for CEOs is a separate consideration in most large companies. Large companies and non-profit organizations that have employees traveling or working internationally as expatriates, typically have an existing kidnap and ransom insurance policy in place today.
When McKinley International is asked to provide consultation on kidnap and ransom insurance for these companies, it is not because they do not have an existing policy; it is usually because the existing kidnap for ransom insurance policy is inadequate for the situation and CEO travel. One size does not fit all.
Even when we find an adequate kidnap and ransom insurance policy for the employee group as a whole, we sometimes take a different approach for kidnap and ransom insurance for CEOs and senior executives. For example, the kidnap and ransom insurance for CEOs may require a policy with much higher limits that say, the $500,000 limit on the general employee population.
International security consultants are often asked to write a named policy for kidnap and ransom insurance for CEOs and senior executives, even when and an existing international kidnap and ransom insurance policy exists. Other reasons beyond the need to provide an additional kidnap and ransom insurance benefit include a better consulting company for the region, additional benefits attached to the policy, and no need to front the ransom money." http://www.kidnapandransom.net/blog/2012/02/kidnap-ransom-insurance-ceos-senior-executives/
So Mr. Tony Hayward;
"Just keep looking over your shoulder, because from now on...." http://www.youtube.com/watch?v=pKGvPRXiNFk