BP Oil Spill Settlement Won’t Cover Moratorium Claims

The recently-announced BP oil spill lawsuit settlement will not cover economic loss claims that arose out of the months-long off shore drilling moratorium that was imposed after the spill. It seems that BP oil spill moratorium claims are one of the few areas where BP has refused to budge when it comes to paying for the damage caused by its devastating Gulf of Mexico oil spill.

On April 20, 2010, an explosion aboard an oil rig, located about 60 miles off the coast of Louisiana in the Gulf of Mexico, set off a raging inferno that killed 11 workers at the site. The blaze persisted until the rig suffered a partial collapse, rupturing several massive wells, which fed the rig. The disaster prompted the Obama administration to impose a moratorium on offshore drilling that lasted from the end of May 2010 until mid-October 2010, something that only added to the economic devastation the BP oil spill brought to the Gulf Coast.

According to NOLA, BP bowed on health claims, finally striking a settlement deal with plaintiffs to pay hundreds of thousands of people over illness complaints associated with exposure to the spill and related cleanup chemicals. BP even agreed to pay casino workers for their reduced earnings, owners of beachfront property for diminished enjoyment, and fishers for subsistence used, said NOLA. Previously, these types of claims, even health complaints, had been previously rejected by the so-called “pay czar,” Kenneth Feinberg.

Although it agreed concession in these areas, the settlement—expected to run at least $7.8 billion—will not cover moratorium claims, said NOLA. The news is crushing for the many thousands of oilfield workers and other businesses whose work on rig supply vessels, shipyards, and drilling operations equipment supply was curtailed by the Obama administration’s moratorium. These workers’ losses are perceived as not directly linked to the disasters; therefore, although considered victims of the spill, they will not be compensated because their losses are more directly related to the government’s response to the disaster.

Moratorium losses have long been linked to controversy. For instance last November, Feinberg pushed BP to pay 6,000 moratorium claims BP specifically told him not to pay. At the time, said NOLA, BP spokesman Curtis Thomas defended the action, saying that the federal oil spill law “was not designed to remedy claims arising from the government’s decision to impose a temporary moratorium.” Denied moratorium claims involve a number of interests such as caterers, diving companies, fabricators, suppliers, and people who work in the shallow-water Gulf, but whose livelihoods have suffered significant losses because business dropped in response to the BP disaster.

When Obama persuaded BP to set up a $20 billion trust fund, the monies were intended to pay people and businesses impacted by or injured by the explosion, noted NOLA. Another $100 million was to be set aside by BP to compensate rig workers hurt by the moratorium; Feinberg was administer the trust fund and BP sent the $100 million to the Baton Rouge Area Foundation for distribution to moratorium claimants, said NOLA.

The fund was closed to business loss claims and the foundation paid only $11 million to moratorium claimants, transferring the bulk of the rest of the money to area charities. Sadly, according to one plaintiff attorney, that $70 million might have covered the outstanding moratorium claims, wrote NOLA.

The disaster sent crude oil gushing into the Gulf of Mexico for months, ultimately emptying at 200 million gallons of oil into the sea, not only devastating the home to countless indigenous species of shellfish and other aquatic life, but also decimating the source of business and employment for tens of thousands of people living along the coast from Texas to Florida.

As we’ve long explained, thousands of people living or working along or in the Gulf of Mexico continue to suffer daily, either because they’ve been forced out of work or are forced to live with disabling side effects related to the work to clean the oil spill from the water and beaches during and after the spill.

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