The proposed settlement between BP and thousands of residents and businesses hurt by the 2010 oil spill in the Gulf of Mexico is enticing for all sides. People who need it would get cash from BP without enduring the wait and uncertainty of going to trial. And the British oil giant could continue its effort to rebuild its business and brand name with consumers and U.S. regulators. But the federal judge overseeing the case needs to ensure that expediency does not trump fairness and that any deal provides for long-term recovery.
The deal announced late Friday between BP and a steering panel of plaintiff's attorneys could resolve the majority of private claims still outstanding from the Deepwater Horizon disaster. The company would pay victims for lost wages and other economic damages, and establish a process for paying health-related claims. BP would provide $2.3 billion to the gulf seafood industry and set aside $105 million to expand and improve community-based health care in gulf communities. The company would monitor the health of those agreeing to the settlement for up to 21 years and provide a framework for them to claim damages down the road. The settlement does not affect the federal government's active criminal investigation, any spill-related environmental fines or cleanup costs, or any claims by state or local governments.
The proposed settlement is a serious starting point. The sluggish economic recovery has compounded the pain for many families who are struggling to hold on. For them, a settlement could help save businesses, homes and their local communities. By taking the financial hit now, BP could limit its liability, provide investors with more certainty and refocus on its business strategy. But the federal government should still pursue its criminal investigation and seek the stiffest environmental fines possible.
BP and the plaintiff's attorneys are expected to file details of the settlement in the next 40 days. U.S. District Judge Carl Barbier, who is handling the consolidated cases, will then hold "fairness" hearings to assess whether the settlement is adequate. Barbier should ensure that shifting the claims process to a new, court-supervised administrator is easy for claimants to understand and navigate. The medical benefits need to be nailed down, and the judge should explore whether $105 million for ongoing health care initiatives is enough.
BP's anticipated price tag for the settlement is $7.8 billion — or what the company took in as profit in the last quarter of 2011. Barbier should reasonably balance the payout with the risks both residents and businesses are facing as the long-term impact to the gulf and its communities comes into sharper focus. Victims will be forced to play something of a guessing game in any circumstance, but the court can at least frame a system for claimants to make an informed decision.