The evening of April 20, 2010, was just like any other along the Louisiana Gulf Coast. Fishermen were trolling the waters for their livelihood. Birds, fish, mammals and other sea life enjoyed the creature comforts of their natural habitat along the marshlands of the Mississippi Delta and the Gulf of Mexico.
Fifty miles off shore, crewmembers of the Deepwater Horizon were going about the business of satisfying the world’s insatiable appetite for oil. Then the unthinkable happened. At approximately 9:45pm CDT, methane gas from the underwater well shot to the surface, expanded and exploded. Fire engulfed the entire platform killing 11 workers and injuring 17 others. It was a painful reminder of the dangers associated with oil drilling, especially a mile below the ocean surface.
The explosion unleashed a massive oil spill that quickly made its way to the Louisiana shoreline killing wildlife, ruining ecologically sensitive wetlands and destroying the livelihoods of tens of thousands of Gulf Coast residents from Texas to Florida. The economic impact would reach well into the billions of dollars with no end in sight.
By the time the well was capped July15, 2010 an estimated 17 to 39 million gallons of oil spilled into the Gulf making it the largest accidental marine spill in the history of the petroleum industry. By comparison the Exxon Valdez disaster dumped approximately 11 million gallons into the pristine Alaskan waters according to official reports, and it’s safe to say the size of both spills was probably underreported.
The Deepwater Horizon disaster affected 16,000 miles of coastline. Some 18 months later there are still sporadic reports of tar balls washing up on the shores of numerous Gulf Coast communities. In June 2010, BP made a deal with the federal government to set aside $20 billion towards clean up and relief for victims of the oil spill. The $20 billion would be managed through the Gulf Coast Claims Facility (GCCF) under the administration of Kenneth Feinberg.
The announcement of Fienberg came with great fanfare and media coverage because of his track record as administrator in managing previous disasters – Hurricane Katrina and 9/11. Relief appeared to be imminent. BP and the Coast Guard were doing a better job coordinating clean up efforts of the oil-infested Gulf waters. They hired now unemployed fisherman and others to rake up the oil soaked sandy beaches.
Television news crews captured moving images of desperate wildlife officials and volunteers cleaning the oil soaked feathers of birds along the ecologically sensitive Louisiana coast. This was the beginning of the public relations campaign to make BP look like good corporate citizens. Many of you remember ads on television of BP officials and claims representatives promising to get this right. Even Tony Hayward, the former chief executive of BP took to the airwaves proclaiming his sorrow.
From a distance it appeared BP and the Coast Guard were getting the upper hand. But those distant looks were deceiving. For residents of the Gulf Coast, their nightmare was far from over. The claims process was fraught with problems from the beginning – paperwork snafus and lack of clarity in submitting the appropriate documents was just the beginning. And now in the last week (November 2, 2011) BP and the Coast Guard agreed that BP is no longer responsible for oil cleanup unless officials can prove it came directly from the BP well, yet there are reports of tar balls still washing up on shore that experts have traced back to the spill. BP now says they will turn their attention to restoration.
At press time the lucrative Gulf Coast fishing industry shows little signs of even a modest recovery and the ecological mess could take years, if not decades to overcome. The tourism and hospitality industry is awash in red ink with bankrupt businesses and small mom and pop enterprises being wiped off the map.
"A report commissioned by the Louisiana Office of Tourism in 2010 projects a $691 million loss in leisure travel through 2013. The net overall loss of $295 million in travel to Louisiana would be worse if not for a slight increase in business visitor spending."
The Florida panhandle, in particular Escambia County and the Pensacola area, experienced a significant loss of revenues in 2010. Lodging revenues in June of 2010, just two months after the explosion fell 14.7 percent as compared to the previous year and remained depressed all summer, with losses in July and August reaching well over 20 percent each month as compared to the same period the previous year.
Unlike Southern and Central Florida that enjoy year-round tourist activity, the height of tourism season in the panhandle – Memorial Day to Labor Day – represents 55 to 60 percent of all revenues on an annual basis. As of August, the GCCF says they have paid over 949,000 claims at a cost of $5 billion. One can only imagine the claims process slowing down even more the further away we get from the date of the disaster. BP has also cited the rebound in tourism along the Florida Gulf Coast as a reason to reduce or eliminate claims payments.
This from a company that enjoyed a net income of $3.7 billion in 2010, $16.5 billion in 2009 and over $21 billion in 2008. Numerous law firms have stepped in to represent victims of the spill including the Miami-based firm Farrell and Patel. They represent over 1,000 individuals and business, including 800 hotels.
Other clients include; fishermen, gas stations/convenience stores, rental properties, development land and RV parks. These are not large class action suits, but rather 1,000 individual claims. The hotel properties range in size from small 10-unit independent mom and pop motels to 300-unit franchised luxury properties. According to Andy Ingraham, president of the National Association of Hotel Owners, Operators and Developers several of these properties are African-American owned.
The firm has implemented a two-pronged approach. The first is short-term relief that should be paid to the claimants as part of the fund to assist with more immediate needs, which in some cases is a matter of survival. The second phase involves long term damages against BP and some, or all, of the 159 individuals and corporations responsible for the spill. But even the short-term relief for the victims is taking months longer than necessary according to many of the claimants.
Ricky Patel, a partner in the firm Farrell and Patel says, “the GCCF was established to process claims and assess damages as they deem appropriate,” not necessarily to do what’s in the best interest of the businesses or individuals the spill has harmed.
It took Exxon/Mobil two decades to make good on their claims and many could effectively argue their solution was completely inadequate given the damage caused in Alaska, so BP has a template to follow. For BP, there is a financial windfall to slowing down the claims process. The dollar value will be worth less several years from now making it cheaper to wait, if they settle at all.
In October 2011, Operation People for Peace made Houston its forth stop in a protest targeted at BP. Participants included, human rights activist Dick Gregory, National Congress of Black Women, chair E. Faye Williams and the group’s leader Art Rocker. Rocker says, “many individuals were severely damaged and have not been compensated for their losses despite our best efforts to date. Most of these people are minority or poor people who BP has chosen to ignore while settling with other people who are well connected politically.”
Patel says, “the claims process has proven to be arbitrary at best.” There are instances of properties actively denied claims while 20 other properties around them are getting paid. Another problem for the victims, the total amount of a particular claim is rarely, if ever awarded despite fully supported financial documentation.
For those who lack legal representation, the GCCF has created another tactic to make the victims go away – take a claim, double the requested amount and force the claimant to sign documentation stating it’s the final offer and no further damage claims may be filed. The immediacy and the amount of payment might sound good to the victim in the short-term, but many quickly realize the settlement was inadequate and believe they have no further legal recourse, which Patel says is false.
Hank Harris, president and CEO of the National Black Tourism Association (NBTB) and the Gulf Coast African American Visitors Bureau says BP, while at fault for the oil spill isn’t entirely to blame for settlement funds not reaching African-Americans. Harris points the finger at official oversight and administration of government agencies and those responsible for tourism promotion in Northwest Florida that received payments from the GCCF, but exclude funding African-Americans when it comes to sharing in the windfall.
Harris says, “over the past 18 months, Northwest Florida tourism officials have enjoyed a windfall of funding derived from the Deepwater Horizon Oil Spill…with direct funding for tourism exceeding $20 million. Of that amount less than $200,000 has been directed towards expenditures involving African-American cultural heritage.”
According to Farrell and Patel, of those claims they’ve submitted on behalf of their clients, less than half have been addressed by the GCCF, and they rarely give a response within the 90-day window that the GCCF themselves established to process the claims. What is very clear says Patel, “is Mr. Feinberg and the GCCF have lost sight of the fact that these are not mere numbers and names on a paper. These are real businesses and real people who have suffered tremendous losses that are a direct result of the negligence of BP.”
Some hotel owners are unaware that the losses, damages and difficulties they suffered in the later part of 2010 may be largely attributable to the oil spill and not a decline in the economy, which of course BP will exploit where possible to deny a claim. Compounding the problem is the lack of banking support as most lenders refuse to work with distressed property owners. Patel says, “Far too many hoteliers are being forced into bankruptcy as they await decisions from the GCCF. Through no fault of their own, they are facing the loss of everything, which is an overwhelming prospect. Within AAHOA (Asian American Hotel Owners Association) there have been five suicides by owners who have lost their properties as a result of the oil spill.”
One of Patel’s clients who wishes to remain anonymous owned several hotel properties, lost them all and now works three jobs and his wife, who never previously worked is now working two jobs. Sadly for the victims of the BP spill, the battle for equitable relief could last for years with some never receiving adequate compensation.