Sue or Settle? Compensation Guidelines for BP Oil Spill Victims

On Monday, Washington lawyer Kenneth Feinberg will take over the task of distributing $20 billion of BP compensation money to the victims of the BP Oil Spill. Unfortunately, the guidelines determining which businesses will receive those payments are getting more and more specific.

According to the guidelines presented by Mr. Feinberg, who was specifically appointed this task by President Obama, businesses will receive their compensation depending on their geographic distance from the spill and their dependence on the natural resources of the Gulf, according to a Huffington Post article.

In other words, many of the struggling companies in Florida, for example, will not receive compensation even though they deserve it. Because much of the Florida coastline went unharmed, they will have more difficulty proving they deserve long-term or emergency compensation.

Another important detail in the guidelines, still being decided upon, involves the victims’ ability to sue BP and other responsible parties once long-term compensations have been paid.  If Business X is paid long-term compensation, as opposed to emergency compensation, Business X no longer has the right to sue BP or other responsible companies. In the long run, this could save BP millions. Plus, lawsuits are often long and drawn out, an unappealing fact to business owners. Accepting the initial compensation will be the most appealing option for many, and an easier one for BP.

Today, Feinberg begins his task of distributing the compensation, but is still on the fence as far as companies’ rights to sue BP and other parties. Feinberg seems focused on distributing as much compensation as possible to all of those who deserve it and is still deciding whether or not to force businesses to give up their rights to sue BP afterwards.

Many Gulf businesses will be stuck with a frustrating but easy choice: accept an immediate settlement, or spend years in court with BP.

A Guessing Game?

There is no question that struggling Gulf businesses should be compensated by BP for their losses, but determining which companies should be compensated could be the most difficult part of the process. 

While many of the business in the Gulf states are now struggling, how do you tell which ones are struggling because of the recession and which ones are struggling due to the BP Oil Spill? It is nice to think all companies who deserve it will be compensated, but we should also consider that many companies will be compensated even though they don’t deserve it.

Can we really determine whether a flower shop is failing because of the recession or because there aren’t any weddings on the beach? Can we determine whether a paint store is struggling due to the recession or to a lack of new home buyers in the Gulf area?

This situation will become quite messy, in many different situations and instances. We can only hope that businesses struggling with the recession do not apply to receive compensation money designated for companies truly damaged by BP and its Gulf Oil Spill.

The coming weeks will be interesting as Kenneth Feinberg presents the rules and determines who deserves compensation.