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What we need to see in a BP oil spill settlement

David Pettit

Posted February 13, 2012

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Rumors are flying that the feds and BP are about to announce a deal on what damages BP will pay for the April, 2010 blowout in the Gulf of Mexico.  I have zero inside information on what the settlement terms will be, but here are some terms I think should be included.

A Decent Reopener Clause.  A reopener clause is designed to deal with consequences of the oil spill that occur or come to light in the future.  In the Exxon Valdez matter, the feds (and the State of Alaska) agreed to a reopener clause that was limited in terms of how and when it could be invoked, and also in terms of how much total money Exxon could be forced to pay.  Exxon walked away with a pretty sweet deal, and the feds have learned a lot since.  Here, the reopener clause should be unlimited in time and should not be capped.  BP needs to pay to clean up the mess it made, no matter where or when, and no matter when the need for additional work comes to light. 

A Citizens’ Advisory Panel.  One thing the feds got right in the Exxon Valdez matter was setting up a citizens’ advisory panel that was funded by the Alyeska Pipeline Company.  The same thing should happen here, funded by BP.

Full Funding of the Trustees’ Restoration Plan.  The Trustees Draft Early Restoration Plan for eight projects is out now and more early plans are likely before the overall restoration is released.  We’re now hearing that the comprehensive restoration plan may not happen until the end of 2012.  I described the restoration plan process here.  BP should agree not to fight the preliminary or final plans in court and should commit to doing, and paying for, what the natural resource Trustees want it to do. 

Release of Information Collected in the NRDA Process.  The Trustees and BP have collected a huge amount of data in connection with the NRDA restoration planning process, but so far have kept most of it from the public on the theory that it needs to be protected for litigation.  If and when BP agrees to a settlement including full funding of the Trustees’ restoration plan, as described above, the litigation threat will disappear and BP and the Trustees should make all of the restoration plan-related data public. 

An Escrow Account for Current and Future Work.  The price tag for compliance with the restoration plan will be big.  To avoid payment delays and wrangling over invoices, BP should be required to escrow a substantial amount of cash now.

Put BP on Probation.  No criminal charges have been filed against BP, but the feds very publicly have threatened to do so.  If there is a settlement of criminal violations, BP should be put on probation to deter future bad conduct – as it was after the BP refinery explosion in Texas and pipeline spill in Alaska

A Penalty Clause for Future Spills. As additional deterrence against future misconduct, the agreement should have a stiff penalty clause that would be invoked if there is another serious oil spill from any BP well anywhere in U.S. waters. 

I’ll follow up after the settlement, if it happens, to report on whether these ideas found their way into the agreement.

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Susan Hayden DanielsFeb 17 2012 12:31 PM

This is one of the most constructive articles I have read. This would be forward progress. I believe the Order that 6% mandatory attorney's fees paid to the MDL Steering Committee is wrong. This will cause many small firms to drop their cases. There is an enormous amount of documentation needed to meet BP's requirements for settlement with the GCCF. It costs a small firm at least $1 Million dollars to carry these cases for 5 years, excluding the discovery costs. BP's strategy is deny, delay, low-ball when they have to make a settlement offer. I was hoping the small plaintiff's, particularly the fishermen who are starving and losing their houses, would see earlier settlements because of the Feb. 27th trial date. It looks like BP is only going to settle with the government. One thing to add to settlement is for BP to cover all health claims, with no time limit. Thousands of people exposed to the oil and Corexit will be painfully sick and then die due to the acts of BP. Thanks for your good work.

calcFeb 20 2012 08:32 AM

Besides maybe fines From Feds 27 Billion or more What would be incentive to pay individuals, and other groups soon.

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