With BP oil spill billions at stake, why did Gulf fishermen suddenly settle?
News that 100,000 fishermen and oil spill workers settled with BP for $7.8 billion rather than going to trial suggests a lesson from the Valdez spill: Drawn-out litigation can become its own tragedy.
ATLANTA — Gulf of Mexico fishermen battered by the aftermath of the 2010 BP oil spill suddenly settled a major class-action lawsuit against BP on Friday, agreeing to what's likely to be a $7.8 billion payout in return for dropping the litigation.
The settlement, representing some 100,000 fishermen, oil spill workers and others isn't likely to please all the potential litigants still trying to get compensated for the economic effects of the spill, the worst in US history, which bled 2.3 million gallons of crude oil into the Gulf's most sensitive estuaries and fishing grounds, and onto its white sand beaches.
Others worried that the deal would simply shift the payout onus from BP onto a small cadre of lawyers, who themselves stand to make millions. And in reaching the settlement, BP managed to clear perhaps the single biggest hurdle to putting the 2010 spill behind it and moving on with oil exploration in the Gulf. It's still embroiled in civil litigation with the US government over spill damages and with Deepwater Horizon contractors over liability.
To be sure, the settlement, one of the largest class-action settlements in history, is substantially larger than the $1 billion settlement from the Exxon Valdez oil spill in 1989. But while the potential payout in the BP lawsuit could have been larger had the case gone to trial, it's likely that at least some of the claimants and their advisers considered the experience of Alaska fishermen in the wake of the Valdez oil spill, where many believe the 20-year-litigation became an equal, or larger, tragedy than the spill itself. That case was finally settled in 2009.
It's a contention backed up by scientific evidence. According to studies of fishermen in Cordova, Ala., near the Valdez spill, “Data revealed that as important commercial and subsistence resources failed to recover and litigation remained unresolved, many local residents ... experienced chronic psychological stress, social disruption and collective trauma.”
The study, co-authored by psychologist Stephen Picou of the University of South Alabama, drew parallels between the two disasters, noting similarities between communities tied both economically and psychologically to the natural resources affected by the spills. It noted that stress levels in some Alaska communities remained at the same level in 2009 as they had 20 years earlier, in the days after the Valdez spill. Picou said that more recent data “suggest that similar consequences may be forthcoming for Gulf of Mexico communities affected by the BP oil spill.”
But differences have also emerged between the two historic oil spills. For one thing, while thick oil affected shorelines and fish stocks for decades in Alaska, conditions in the much warmer Gulf promoted deterioration of the oil and may have limited its long-term effects on fish and shrimp stocks. While many tourist towns basically wrote off 2010 as a lost season, tourists largely returned to the Gulf's beaches in 2011, lessening concerns about long-term economic impacts of the spill. And fishermen who saw their catch nearly halved in 2010 say many fish stocks appear to have rebounded.
Given those realities, and the trumpeting of the Gulf's health by regional tourist boards, some observers worried that claimants were giving ammunition to BP's contentions – which could have been raised in a trial – that its liability was smaller than predicted.
"Our state and local leaders have been so quick to declare that the beaches, seafood and Gulf Coast are doing fine that we may have screwed up the chances of the remaining outstanding BP oil spill claims to be paid,” Pensacola blogger Rick Outzen, publisher of the Independent News, wrote last year.
The disaster began in April 2010 when a wellhead known as Macondo blew out deep below the Deepwater Horizon exploratory drilling rig, leading to an explosion and fire that killed 11 workers. As the rig sank, oil began to spill freely into the Gulf. It took 87 days for BP, working with government scientists, to plug the well – a drama that introduced phrase like “junk shot” into the vernacular and unraveled like a slow-motion nightmare for coastal communities who helped fight off the oil with booms, surface fires, and beach rakes.
BP has already paid out billions from a $20 billion trust fund it set aside shortly after the spill, at the behest of the Obama administration. BP set up an independent claims fund that has itself become a source of frustration for many Gulf residents who have struggled to prove the extent of damages from the spill on their livelihoods. While the settlement allows individuals to continue to sue BP, experts do not believe those claims will be substantial.