Tags: bp | oil spill

BP Wins Tentative OK for $7.8 Billion Oil Spill Accord

Wednesday, 02 May 2012 07:53 PM

 

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BP Plc and lawyers suing the company over the 2010 Gulf of Mexico oil spill won preliminary approval of their proposed settlement from the federal judge in New Orleans overseeing the litigation.

BP in March agreed to pay an estimated $7.8 billion to resolve most private plaintiffs’ claims for economic loss, property damage and spill and cleanup-related injuries. The settlement establishes two separate classes, one for economic loss and the other for any physical injuries related to the spill or the cleanup.

The proposed settlement is “fair, reasonable, adequate, entered in good faith, free of collusion, and within the range of possible judicial approval,” U.S. District Judge Carl Barbier said in granting preliminary approval of the agreement today.

Barbier set a fairness hearing where he will consider final settlement approval for Nov. 8. He didn’t act on a BP request to postpone any trial on liability for the incident until after the fairness hearing.

The proposed settlement, reached March 2, days before a scheduled trial on liability for the 2010 spill, doesn’t cover federal government claims and those of Gulf Coast states Louisiana and Alabama. It also excludes 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 deep-water drilling prompted by the spill.

Opt Out

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 moratorium, can continue to pursue their claims.

Plaintiffs “who opt out or who possess reserved claims will be able to pursue those claims effectively outside” the settlement under the terms of the agreement, Barbier said in today’s order.

Barbier said today he considered objections to his initial approval of the accord and found they weren’t persuasive at this stage of his review of the settlement. “The court finds these objections do not warrant denial of preliminary approval,” the judge said.

Preliminary approval “is just a starting point, not an ending point,” Barbier said at an April 25 hearing on the agreement. Prospective claimants will receive notices of the settlement terms following his order.

BP and the Plaintiffs Steering Committee, a group of lawyers appointed by Barbier to handle the lawsuits, asked the judge to hold a Nov. 8 fairness hearing before granting final approval of the accord and to postpone any trial on liability until after the hearing.

Blowout and Explosion

BP has agreed to pay claimants before final approval of the settlement, Steve Herman, co-lead counsel in the PSC, said at the April 25 hearing.

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 accident prompted hundreds of lawsuits against London-based BP; Transocean Ltd., the Vernier, Switzerland-based owner and operator of the rig; and Halliburton Co., which provided cementing services.

The plaintiffs’ and government claims against BP’s contractors on the doomed Macondo well remain, and no new trial date has been set. A trial would cover federal and state government pollution claims, as well as cross-claims between BP and its partner companies in the Macondo site and rig.

Under the settlement, BP has assigned to the plaintiffs the company’s right to seek cleanup costs and the value of the lost oil from Transocean and Halliburton.

$20 Billion Trust

Halliburton spokeswoman Beverly Stafford didn’t immediately reply to e-mail or voice messages seeking comment on today’s order. Scott Dean, BP spokesman, declined to comment. Transocean spokesman Guy Cantwell said in an e-mail the company had no immediate comment on the judge’s ruling.

Wyn Hornbuckle, a Justice Department spokesman, said the government had no comment on the judge’s ruling.

The proposed settlement between BP and the Plaintiffs Steering Committee will be paid out of a $20 billion trust set up to compensate spill victims. The trust has about $14 billion remaining.

BP has estimated the cost at $7.8 billion. All sides agree the amount may increase depending on the number of claims paid. The amount also may be lower than the estimate. If the trust is exhausted, the company will pay additional funds directly, lawyers for the plaintiffs said last month.

“There is no cap on the settlement,” plaintiffs’ attorney Joe Rice told Barbier at the April 25 hearing.

Multiple parties filed objections to the settlement or requests that Barbier delay preliminary approval.

Halliburton Objections

Halliburton objected “to the limited amount of time available to analyze the settlement agreements and files these preliminary objections,” Donald E. Godwin, a lawyer for the Houston-based company, said in court papers filed April 24. The proposed settlement was filed with the court April 18.

Halliburton also objected to the agreement because it assigns BP’s claims against the company to the plaintiffs lawyers and attempts to make Halliburton “liable in part for settlement payments,” Godwin said. The settlement also restricts Halliburton’s ability to settle claims, he said.

The American Shrimp Processors Association asked Barbier April 23 to delay preliminary approval of the settlement, calling it biased against some members of the shrimp industry. The accord treats shrimp harvesters and boat captains better than owners of docks and plants that receive the catch and prepare it for market, the organization said in court papers.

‘No Obvious Deficiencies’

“At this stage, the Settlement Agreement appears fair, has no obvious deficiencies, does not improperly grant preferential treatment to the Class Representatives or to segments of the Class, and does not grant excessive compensation to attorneys,” Barbier said in today’s order.

“The comprehensive system of claims frameworks featured in the Settlement Agreement is the product of many months of intensive negotiation, provides for class recovery unlimited by any aggregate cap, does not constitute a limited fund to be divided among competing claimants (with the sole exception of the $2.3 billion Seafood Compensation Program, whose allocation was placed with a court-appointed neutral), and does not place class members in conflict or competition with each other,” he 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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