BP private claims appeal and ongoing litigation: What does it mean?

By Mordechai Treiger and Will Lindsey, Environmental Defense Fund

Three years after the Macondo oil well was capped off the coast of Louisiana, BP is still making headlines as it works to resolve legal claims stemming from the incident. As legal interns who have spent the past ten weeks working every day on issues related to the oil spill, even we sometimes find BP’s various legal obligations somewhat confusing. So we put together this brief outline to help ourselves keep things straight. We hope you find it helpful, too.

Private economic claims against BP that have been settled

These claims made headlines recently when BP petitioned U.S. District Judge Carl Barbier, who is overseeing the complex multi-district litigation stemming from the spill, to temporarily halt payments out of a court-supervised settlement fund. Barbier denied BP’s request, thereby allowing settlement administrator Patrick Juneau to continue paying out claims to individuals claiming economic losses as a result of the disaster. Juneau is actually the second settlement administrator of private economic claims – Ken Feinberg oversaw an initial $6.3 billion deal with a subclass of private plaintiffs. Even after BP reached agreements with two classes of claimants, there remain unsettled individual claims that are now in trial against BP.

Government claims against BP under the Clean Water Act and private claims that have not yet been settled

BP is currently in court to determine the extent of its liability to the government under the Clean Water Act, to the five Gulf Coast states for economic losses and to plaintiffs who declined to participate in either the Feinberg or Juneau settlements. While the first phase of the trial focused on events preceding the Deepwater Horizon blow out, Phase II – covering the amount of barrels spilled and the subsequent efforts to stop the flow of oil – will be critical in determining the extent of BP’s liability to damaged parties. Ultimately, Judge Barbier must rule on whether BP was “grossly negligent” or merely “negligent,” a seemingly-semantic distinction that could spell the difference between a $4.5 billion and $17.6 billion payout. Phase II has been moved back from September 16 to September 30 to give both parties more time to prepare. Barbier can only rule on civil penalties under the Clean Water Act and individual claims that have yet to settle once Phase II is complete.

Natural Resource Trustee claims under the Oil Pollution Act

Under the Natural Resource Damage Assessment provisions of the Oil Pollution Act, BP has a responsibility to restore the Gulf to its natural baseline and to make up for lost ecosystem services. In the immediate aftermath of the spill, BP worked with natural resource trustees to provide $1 billion in funding for Early Restoration projects in recognition of the fact that moving quickly was vital to Gulf restoration. But this amount was merely preliminary, and many billions more are needed to fully rehabilitate the damaged shoreline. BP’s commitment to ecological restoration of the Gulf is completely independent of its liability to coastal businesses and residents and to the government under the Clean Water Act.