Gulf Coast Oil Spill Attorney

Disastrous Oil Rig Explosion Devastates Environment, Economy in Gulf States; BP Responsible for
Worst Oil Spill in United States History

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Gulf Coast residents are suffering yet another horrific “natural disaster” as millions of barrels of oil wend their way from the Louisiana shoreline to the beaches of the Florida Panhandle, nearly 400 miles away.

But this time, unlike Hurricane Katrina, the disaster is not natural. It is man-made by one of the world’s largest oil companies.

The toxic oil permeating the Gulf of Mexico stems from a disastrous BP oil rig explosion April 20 that took 11 lives, injured 17 oil workers, and sent nearly 100 more scrambling for life boats to escape the flames. Now, water-borne slicks, patches, globs, tar balls, and plumes leave in their wake ruined wetlands, oil-coated birds, and polluted fishing sites . . . not to mention thousands of businesses and individuals who have incurred property damage or lost their livelihood. 

The vast scope of this oil spill and the catastrophic environmental and economic damage it is causing far surpass the consequences of the infamous Exxon Valdez tanker spill in 1989. There is no question: This is the worst oil spill in United States history.

While the Deepwater Horizon well has been capped, and a “static kill” of mud and cement appears to have halted the flow, this is by no means the end of the story.

Permanent sealing of the well that has wreaked such havoc on the Gulf Coast awaits completion of relief wells the end of August. But the end of the oil flow is only the beginning of months, even years, of assessments and compensation disputes related to the economic and environmental devastation caused by the BP oil spill.

Here are some highlights of events and issues during August:

• BP continues to drill two relief wells that will intersect with the Deepwater Horizon well, pump concrete into it, and permanently shut down the oil flow. Drilling is hampered by weather delays and regular safety testing, but is hoped to be completed by the end of August or early September.
• The National Incident Commander, Coast Guard Admiral Thad Allen, expressed fears that the “bottom kill” – injecting mud and cement into the bedrock – could damage the Deepwater Horizon well’s cap. He warned that additional equipment would have to be installed to ease pressure inside the well, which would further delay the “final fix.”
• Some previously-closed fishing areas have been reopened along the Gulf Coast. At a White House press conference, the Under Secretary of Commerce for Oceans and Atmosphere, Dr. Jane Lubchenco, assured Americans that seafood is being tested meticulously for evidence of oil taint before it is marketed to restaurants and consumers. Yet surveys show that many seafood lovers remain suspicious.
• Resumed hearings on the BP oil spill disaster produced new testimony about early warnings and what happened in the days immediately following the explosion. An executive from Halliburton, the company in charge of sealing the well, testified that he notified BP several days before the explosion that he was concerned about the cementing process. He says his warnings were ignored. A BP executive also testified that he learned too late – after the explosion – about changes made to the blowout preventer that kept it from working properly.
•  There is some evidence that the Obama Administration’s decision to stop all deepwater drilling in the Gulf after the BP oil spill has not resulted in the economic devastation that many feared. Early reports say that dire predictions of economic damage of as much as $10.2 billion have not materialized – at least, not yet. Nonetheless, economic fallout from the BP oil spill disaster itself mounts as the fishing industry, related businesses, and tourism continue to suffer.
• In Florida, there were cautious signs of good news. President Obama and his family visited the Panhandle, where beaches are slowly recovering from the double whammy of oil pollution and tourist cancellations. Florida realtors will be receiving shares of $16 million from a fund “oil claims czar” Kenneth Feinberg set up for agents and brokers with oil spill losses. And an analysis released August 25 by the National Oceanic and Atmospheric Administration indicates that while four miles of Florida’s coast are still experiencing moderate to heavy oil impact, there is no path offshore for the oil to enter the Florida Straits. The report concludes that the East Coast, Southern Florida and the Keys “are unlikely to experience any effects from the remaining oil on the surface of the Gulf.”

News and events from early July and August reflect the tremendous environmental and financial chaos that has resulted from the BP oil disaster. Many of these problems with cleanup, damage assessment, and compensation still linger on.

• In a White House briefing August 4, the Obama Administration cited a report claiming that the estimated 207 million gallons of oil leaked into the Gulf was either gone or lingering in diluted form. Scientists quickly challenged this assertion as based on modeling rather than on-the-ground observation. Gulf residents countered the report with evidence of oiled beaches and wildlife, and of the collapse of fishing and tourism in the region.
• As engineers began the final chapter of containment, the drilling of a relief well, National Incident Commander Thad Allen told the American public that there is  little chance the well will leak again. But he cautioned that this is still an environmental disaster, and that an entire shoreline still needs to be cleaned.
• Louisiana is preparing for the August 16 opening of the fall shrimp season along its coast, although some waters will remain closed and seafood will undergo rigorous safety testing. Other Gulf coast residents and businesses, while heartened that the well has been capped, warn that oil is still out there. Many of them fear that both the government and BP will abandon efforts to restore their devastated economy.
• On August 10 the Justice Department announced negotiations with BP to use revenues from the oil company’s continued Gulf drilling as collateral to guarantee the $20 billion cleanup/compensation fund agreed to in June.  However, this kind of deal would conflict with efforts by environmental groups and some members of Congress to bar BP from further Gulf drilling.
• Victims of the oil spill – especially small businesses – report that the claims process still lags considerably behind, and, as one Pensacola Bay entrepreneur says, results in broken promises and insufficient payouts. To date, a total of 145,219 claims have been filed, and more than $324 million has been paid out. BP has revamped its business claims process three times, each time claiming that checks would be expedited to businesses with urgent cash flow needs.
• In the meantime, efforts to recover economic losses have been dealt another blow as hundreds of federal lawsuits – at least 70 in Florida – are delayed by a panel of judges deliberating where the cases will be heard, and by whom. Those who will suffer from the delay include commercial fishing businesses, realtors, hotel owners, restaurant owners and employees, and condo owners who have lost income from normally-lucrative summer rentals.   

Facts about this oil rig disaster have moved almost as swiftly as the oil. Here is just some of the history of attempts to deal with the Deepwater Horizon spill since the rig exploded April 20.

The consequences of an oil spill of this magnitude can be difficult to measure and are not always predictable. In the last week of July, after three months of trial and error, testing of a newly-installed, tighter-sealing cap was yielding positive results. Only minor leaks were detected in the well, and BP was given the okay to plan to plug the well permanently with what is called a “static kill” - pumping mud and cement from the top into the oil reservoir at the bottom of the well.

Drilling of relief wells is scheduled to be completed in August, and National Incident Commander Thad Allen says their success likely will increase because of the static kill. In the meantime, skimming of surface oil continues, and ships continue to collect and burn off oil from below the surface of the spill site. Current estimates are that from 94 million to 184 million gallons of oil have poured into the Gulf of Mexico since the Deepwater Horizon oil spill disaster . . . a far cry from BP CEO Tony Hayward’s initial dismissal of the Deepwater Horizon leak as “insignificant.”

Now that hurricane season has arrived, new worries have arisen about the effect of a big storm and whether the promising new cap will hold. Officials, scientists, and BP contractors are optimistic about the cap’s ability to withstand a surface storm. Yet Tropical Storm Bonnie, the first of the season to target the Gulf area, prompted an evacuation order for ships in the oil spill area.      

Interior Secretary Ken Salazar has called once more for a six-month moratorium on deepwater drilling.  On July 12 he issued new rules for the moratorium, after the original order was rejected by federal courts. The revised moratorium would allow some drilling to continue if rig owners can prove the ability to shut down an out-of-control well immediately, that blowout preventers have passed stringent tests, and that the company has the resources to withstand cleanup costs if there should be an oil spill.

Allegations have surfaced, however, that the moratorium’s implied endorsements from scientists and engineers were exaggerated. Republicans on the House Natural Resources Committee have called for an investigation into recommendations issued in the May 27 report that prompted Salazar’s renewed effort. At the same time, Senators from both parties are urging resumption of shallow-water drilling permits, which are be covered by the moratorium but have been delayed by review of safety and environmental protection standards.

The outcome of the Deepwater Horizon oil spill disaster remains uncertain, but here are some things we know for sure:

• As the Gulf Coast environment becomes increasingly polluted, BP’s cleanup costs will run billions and billions of dollars. By July, the Obama Administration already had billed BP $223 million in cleanup costs. But the cost to fragile ecosystems cannot be measured in dollars: Marshlands, wildlife sanctuaries, coral reefs and mangroves are priceless.
• The economic impact of this oil rig explosion seriously jeopardizes working families, waterfront businesses, commercial and residential property owners, and even state and local governments that stand to lose sales tax and property tax revenue. Current estimates are that more than seven million businesses have been harmed because of the spill itself and loss of revenue as tourists flee the region. In addition, a deepwater drilling moratorium – whether temporary or long-term – puts thousands of oil industry employees out of work.
• BP was not prepared for an accident of this kind, despite the company’s written statements to a government oversight agency that it could handle a worst-case scenario. At a Congressional hearing weeks after the BP disaster, so-called “emergency plans” of all of the country’s major oil companies were exposed as outdated and insufficient to handle even a smaller-scale spill.
• Industry experts are saying that just a few weeks before the disastrous oil rig explosion, BP opted for risky shortcuts, including minimizing barriers to high-pressure gas leaks, failing to test the quality of the cementing, and skipping installation of critical capping devices. In a confidential survey conducted before the explosion, Transocean, the company that leased the rig to BP, found that many workers were worried about the rig’s safety. Workers cited lack of equipment maintenance and poor safety practices – but did not report concerns because they were afraid of being fired.
• At the same time that BP was glossing over safety warnings and cutting costs, Minerals Management Service (MMS) – part of the US Department of Interior – was turning a blind eye to safety problems and kowtowing to Big Oil’s demands.  

The more we know about BP, the less surprising this disaster becomes. BP has been fined more than $100 million in the past for safety violations that caused deaths, injuries, and environmental damage.

• Prior to the April 20 Deepwater Horizon oil rig explosion, there were problems with various aspects of the drilling operation, and BP was cited for numerous safety violations.
• The oil rig’s blowout preventer, designed to protect from exactly this kind of catastrophe, failed to work. It did not have a remote control or acoustically-activated trigger for emergencies. New evidence suggests that a component of the blowout preventer called the blind shear ram did not perform – a potential problem that the oil industry and the government’s oversight agency had known about for years.  
• Another BP Gulf of Mexico oil platform, Thunder Horse, narrowly averted catastrophe in 2005 when a valve installed backwards caused flooding during a hurricane. Cracks were also discovered in underwater pipelines because of a poor welding job.
• At a BP refinery in Texas, 15 people were killed and 170 were injured in a 2005 explosion. A report by the United State Chemical Safety Board concluded that the explosion of a 170-foot tower full of liquid hydrocarbons was “caused by organizational and safety deficiencies at all levels of BP.”
• In 2006, a BP pipeline caused the largest spill ever on Alaska’s North Slope: 267,000 gallons of oil leaked because of miles of corroded pipes that had not been maintained. Yet, despite the $20 million in fines and restitution assessed, there was another BP spill on the North Slope in November 2009, this one traced to improper equipment.
• In late May 2010, a month after the Deepwater Horizon disaster, 200,000 gallons of oil spilled from a BP storage tank because of a power failure – the third-largest spill in the Trans-Alaska Pipeline System.
• A June 2010 report revealed that BP’s own employees fear impending disaster at the company’s Prudhoe Bay oil field. Employees say that cost cutting and safety violations there could create a devastating oil spill equal to or worse than the Deepwater Horizon incident.

BP agreed to set up a $20 billion compensation fund administered independently by an Obama appointee – an idea that may prove better in theory than in practice.

From the beginning, BP has admitted responsibility for the Deepwater Horizon oil spill disaster and promised to honor legitimate claims. But since May, the company has paid $144 million for less than 30,000 claims – not even a third of the 90,000 filed. The average payment has been small; from $2,500 to $5,000, mostly going to self-employed workers such as fishermen, charter boat captains and beachfront property owners who can prove losses directly from the spill impact.

Succumbing to pressure from the Obama Administration, BP agreed in June to set aside $20 billion for business claims and reimbursement to local governments for the cost of cleanup and administration. In addition, $100 million was set aside for oil rig employees out of work because of the federal moratorium on drilling.

The new “Oil Spill Compensation Czar,” attorney Kenneth Feinberg, has his work cut out for him. Faced not only with a 60,000 claim backlog, but an additional estimated 2,000 applications filed each day, Feinberg is working with a team of some 950 claims adjusters in 35 offices. All of them, including Feinberg, are being paid by BP.

At a press conference in Pensacola, FL on July 12, Feinberg said that his team would be operational in two or three weeks – probably in early August. In Congressional testimony the following week, Feinberg voiced concerns about the difficulty of determining eligibility for emergency payments and long-term settlements. At issue, for example, are claims for what might be called “indirect” losses by real estate agents and brokers with commissions at stake on residential and commercial properties in the Gulf region.  

Once a question mark in terms of damage potential, Florida now finds tar balls and oil-slicked wildlife on its Panhandle beaches. Worse, the perception of oil spill damage is emptying out beachfront condos, hotels, and restaurants.

Ten percent of Florida’s beaches have been affected by the Deepwater Horizon spill so far – about 90 miles of the state’s coastline, or nearly 20% of the total Gulf Coast shoreline impacted. Oil Impact Notices have been issued for 15 beaches in Escambia, Okaloosa, and Walton Counties – beaches that state and county governments are attempting to protect with hundreds of thousands of feet of hard and supplemental boom.

On July 22, the National Oceanic and Atmospheric Administration (NOAA) reopened for fishing about a third of the Gulf area previously closed because of the BP oil spill disaster. A majority of the 26,388 square miles reopened is along the west coast of Florida, providing at least some relief to commercial fishermen and charter boats that have been out of commission for as long as two months.

The state’s tourism industry has been dealt a potentially lethal blow, however, as unfounded rumors prove just as difficult to contain as the oil. Hotels and condominium owners report increasing vacancies and cancelations, even along the 90% of beaches that are not affected by the spill. Restaurant owners and other tourism-dependent businesses are beginning to sustain revenue losses during what is normally a profitable summer season.

The US Travel Association, a huge travel trade association, commissioned a study from Oxford Economics showing that Florida might bear the brunt of the oil spill’s long-term economic losses. In reviewing both historical data and forecasts from NOAA, the report suggests that Florida’s tourism economy could suffer more than 75% of the region’s financial losses over the next three years.  The group has asked BP to fund a $500 million marketing program to disseminate information and restore tourism to the Gulf area.

Alarmed by the threat to its $60 billion tourism industry and one million employees, the State of Florida itself is spending an unheard of $10 million on advertising to get tourists back. Governor Charlie Crist even tried billing BP for $50 million for tourism. No surprise here: BP rejected the claim.

In the next few months, more and more details will unfold about the BP oil spill disaster and the impact of its environmental and economic devastation. In the meantime, click on these web pages to learn more.    

• What Happened
• Environmental Damage
• Economic Impact
• Government Roles
• FAQs

The law firm of Searcy Denney Scarola Barnhart & Shipley is available to consult with Gulf state businesses and residents whose lives are affected by the BP oil spill.

If you, a business colleague, or a family member has sustained real or personal property damage and/or loss of income or earning capacity as a result of this oil spill disaster, Searcy Denney can help you sort out your rights to seek justice.

We have experience handling mass tort cases, where a group of people with losses caused by the same defendant can seek justice by having their claims pursued through the court system. In these cases, however, each claim is distinct, and we represent every client individually.

Please fill out the contact form on this page, or call us at 1-800-780-8607. A member of our staff will call you back to schedule a confidential consultation with one of our attorneys, free of charge.

RESOURCES

The White House: Deepwater BP Oil Spill
Updated Administration-Wide Response
Oil Spill Checklist
Oil Spill Claims: A Legal Overview