Lawsuits Against BP

June 28th, 2010

BP is facing a wide range of lawsuits because of the Deepwater Horizon oil spill. Workers continue to work at stopping the oil flow into the Gulf of Mexico, and damage to property and businesses continues to accumulate.

No one can accurately estimate the potential cost of the spill because no one knows how long the oil will continue to flow, or how much oil will finally be dumped into the ocean. Every day, the well continues pouring 5,000 barrels (more than 200,000 gallons) of crude oil into the Gulf of Mexico. Investment bank Union Bank of Switzerland (USB) calculated a cost of $12 billion. ING Commercial banking analysts thinks it may be $22 billion.

Blobs of oil have already made landfall, fouling marshes and beaches, and covering wildlife in crude. Trusting BP’s statement that it will cover all “legitimate claims” would be a mistake. This is the same company that works to cut costs at every turn while raking in record profits.

The most upsetting claims against BP are those of the family members of the deceased workers killed in the explosion. Eleven men lost their lives in the disaster. These men had wives and children. Seventeen more were seriously injured in the explosion, leaving them with deep emotional and physical scars.

Other suits include claims for loss of earnings, loss of enjoyment or property. Shrimp and fishing industries have been hit hard by the spill. By extension, restaurants that serve seafood and retailers who sell fishing nets and other equipment are impacted. To put the impact in perspective, a 6,800 square mile area of federal fishing grounds has been closed. The state of Louisiana alone provides 25% of US Seafood according to the Louisiana Department of Wildlife and Fisheries.

As the slick interferes with shipping lanes, goods will become more expensive to acquire, causing losses to all area businesses and residents. The tourism industry is also facing huge losses because of the spill.

Suits allege that BP knew about a broken seal in its well and failed to take steps to correct it. Some allege that BP and Transocean (owner of the rig) knew about power source failures in the blowout preventer that was designed to seal the well in case of just such an emergency as this.

Transocean is trying to cap claims for the spill at $27 million based on an 1851 maritime law. Until the issue is decided, all claims against Transocean have been suspended. The Oil Pollution Act of 1990 (initiated in response to the Exxon Valdez disaster) requires the company responsible for a spill, as determined by the US Coast Guard, to pay up to $1 billion for cleanup and up to $75 million in compensation to victims for lost income.

If the federal investigation shows negligence, deliberate misconduct or federal violations, damages could be greater. An investigation is also underway to determine if criminal charges should be filed based on federal environment laws.

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