BP, Plaintiff Lawyers Submit Proposed Spill Accord Terms
By Jef Feeley, Margaret Cronin Fisk and Dawn McCarty - Apr 18, 2012 11:06 AM ET
Attorneys for both sides filed the accord today with U.S. District Judge Carl Barbier in New Orleans for preliminary approval. Barbier has scheduled a closed-door status conference on the lawsuits May 3. The plaintiffs and BP asked Barbier to hold a Nov. 8 fairness hearing before final approval of the settlement and requested that he postpone any trial over liability until after the hearing.
“As in any settlement, neither side will receive everything it wants,” the lawyers said in today’s filing. The agreement “represents a resolution that is more than fair, reasonable and adequate.”
BP in March agreed to pay an estimated $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, reached March 2, days before a scheduled trial on liability for the 2010 spill, doesn’t cover federal government claims and those of the Gulf Coast states Louisiana and Mississippi.
Also excluded are claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deepwater drilling prompted by the spill. The blowout and explosion on the Deepwater Horizon drilling rig killed 11 workers and caused the worst offshore oil spill in U.S. history.
“The people and businesses of the Gulf Coast stand to reap great benefits from these settlements,” plaintiffs’ attorneys James P. Roy and Stephen Herman said today in a joint statement. “We have held BP fully accountable for the Deepwater Horizon tragedy less than two years after the spill.”
Attorneys for the plaintiffs will receive as much as $600 million in fees and expenses, according to today’s filing. The money “will be paid separately from any amounts paid to the settlement class, and it does not reduce their payments or benefits” under the agreement.
The plaintiffs’ and government claims against BP’s contractors on the doomed Macondo well also remain, and no new trial date has been set.
A trial would cover not only federal and state government pollution claims, but also cross-claims between BP and its partner companies in the Macondo site and rig. Barbier would decide whether BP can demand that those companies pick up some of the estimated $26 billion in costs spawned by the disaster.
The accident prompted hundreds of lawsuits against London- based BP; Transocean Ltd. (RIG), the Vernier, Switzerland-based owner and operator of the rig; and Houston-based Halliburton Co. (HAL), which provided cementing services.
The U.S. government also sued BP, Transocean and BP’s partners in the well, Mitsui & Co. (8031)’s MOEX Offshore 2007 and The Woodlands, Texas-based Anadarko Petroleum Corp. (APC), alleging violations of federal pollution laws. Louisiana and Alabama sued as well.
The disaster sent more than 4 million barrels of oil spewing into the Gulf of Mexico, according to the U.S., leaving BP liable for fines as high as $17.6 billion.
The federal Clean Water Act lets the federal government seek fines of as much as $1,100 for each barrel of oil spilled as a result of simple negligence, often described as a failure to exercise ordinary care. The maximum increases to $4,300 a barrel for gross negligence, or a conscious act or omission.
BP has settled with MOEX; Anadarko; M-I Swaco, a unit of Houston-based oil services company Schlumberger Ltd. (SLB) that employed two of the 11 workers killed in the explosion; and Cameron International Corp. (CAM), which provided blowout-prevention equipment. MOEX has also settled with the U.S., agreeing to pay $90 million to resolve Clean Water Act claims.
The proposed settlement between BP and the Plaintiffs Steering Committee, a group of lawyers appointed by Barbier to handle the lawsuits, will be paid out of a $20 billion trust set up to compensate spill victims. The trust fund has about $14 billion remaining. Victims’ lawyers said there isn’t a cap on damages BP must pay.
BP has estimated the cost at $7.8 billion. All sides agree the amount may increase depending on the number of claims paid. If the trust is exhausted, the company will pay additional funds directly, lawyers for the plaintiffs said last month.
“This settlement demonstrates BP’s continued progress in resolving significant issues related to the Deepwater Horizon incident,” Bob Dudley, BP’s chief executive officer, said in a statement. The settlement offers “those affected full and fair compensation, without waiting for the outcome of a lengthy trial process.”
Under terms of the settlement, two groups of plaintiffs will be eligible to receive payment for their claims. The first will be those whose businesses or properties were damaged by the spill, and the second will include those who suffered injuries from spill exposure.
BP’s Gulf Coast Claims Facility, which was set up to resolve spill claims more quickly than through litigation, was shut down last month and has been administered by a transitional administrator, Louisiana lawyer Patrick A. Juneau. Juneau said last week that the transition process had issued more than 5,000 payments from March 8 through April 6.
The deal will allow victims who aren’t satisfied with it to opt out and pursue lawsuits against BP. Plaintiffs not covered in the overall settlement, such as those claiming harm from the drilling moratorium that followed the spill, can continue to pursue their claims, according to today’s filing.
The proposed settlement cuts out certain classes of plaintiffs from recovery, including some Florida residents, Pam Bondi, the state’s attorney general, said in an April 13 filing.
“It appears that the settlement will apply only to claims from Florida businesses and residents located in the Panhandle or along the west coast of Florida,” she said. BP and the Gulf Coast Claims Facility have previously “paid claims from almost every county in Florida.”
BP said last month the proposed settlement won’t increase the $37.2 billion charge it previously recorded in its financial statements for costs associated with the spill. That figure includes $20 billion BP set aside for the claims trust fund, from which the proposed settlement payout will be derived.
The proposed settlement includes $2.3 billion earmarked for economic losses related to the seafood industry in the Gulf of Mexico, the company said.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
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