BP Proposes Gulf Spill Accord Terms, Trial Delay

BP Plc reached settlements to resolve billions of dollars of claims from the 2010 Gulf of Mexico oil spill, and asked a U.S. judge for a long delay in any trial over remaining disputes stemming from the disaster.

The London-based oil company expects under Wednesday’s agreements to pay $7.8 billion to resolve economic, property and medical claims by more than 100,000 individuals and businesses.

That payout would make the accord one of the largest class-action settlements in U.S. history. There is no cap, and the ultimate payout may be higher or lower than BP projects.

“Neither side will receive everything it wants,” but the settlements are “more than fair, reasonable and adequate” and could avert a decade of litigation, BP and plaintiffs’ lawyers said in papers filed in New Orleans federal court.

This Friday is the two-year anniversary of the explosion of the Deepwater Horizon drilling rig, which killed 11 workers and triggered the largest U.S. offshore oil spill from BP’s ruptured Macondo well. About 4.1 million barrels of oil were spilled and not cleaned up, the U.S. government has estimated.

“BP made a commitment to help economic and environmental restoration efforts in the Gulf Coast,” Chief Executive Bob Dudley said in a statement. “This settlement provides the framework for us to continue delivering on that promise, offering those affected full and fair compensation, without waiting for the outcome of a lengthy trial process.”

In a separate statement, Stephen Herman and James Roy, lawyers on the so-called Plaintiffs’ Steering Committee (PSC), said the settlement holds BP “fully accountable”.

Lawyers for the plaintiffs are seeking up to $600 million to cover fees and costs, including a $75 million interim award. These are separate from amounts paid to victims.

BP still faces tens of billions of dollars of potential claims from the U.S. government; Gulf states; and drilling partners Transocean Ltd, which owned the rig, and Halliburton Co, which provided cementing services.

The oil company’s potential liability for violating the federal Clean Water Act alone could reach as high as $17.6 billion upon a finding of gross negligence. BP has already taken a $37.2 billion charge for the spill.

BP shares closed down 6.5 pence at 448.1 pence in London, Reuters data shows.


About 109,000 condominium owners, hotel and resort operators, restaurateurs, shrimpers and others may be eligible to recover on economic and property claims, court papers show.

The medical settlement addresses claims by people made ill from exposure to oil or chemical dispersants. It covers clean-up workers and residents of beachfront or wetland areas, and allows people who develop symptoms later to sue BP at that time. About 16,000 plaintiffs have submitted claims, court papers show.

Victims who are unhappy with the settlements may opt out and pursue their claims separately.

Those ineligible to recover include financial institutions, casinos, people claiming hardship from an Obama administration moratorium on deepwater drilling, and some private plaintiffs in Florida and Texas.

Wednesday’s settlements follow depositions of 311 witnesses, and the production of about 90 million pages of documents and some 20 terabytes of data.

U.S. District Judge Carl Barbier is scheduled to consider preliminary approval of the accords around Nov. 8, with final clearance to come later.

If BP wins a trial delay, the schedule suggests that any trial on federal and state government pollution claims, claims against BP’s drilling partners, and claims among BP and those partners would not start until well into 2013, if not later.

“States represent millions of citizens, and they deserve their day in court,” Alabama Attorney General Luther Strange, who coordinates state interests with his Louisiana colleague James “Buddy” Caldwell, said in a telephone interview.

“I think quite frankly that BP is not going to focus on a comprehensive settlement until it is up against a trial deadline,” Strange added.

Strange said he is unaware of any ongoing talks between those two states and either BP or its drilling partners.

Barbier plans to meet privately with the parties on May 3.


Prior to the settlement, the lawyer Kenneth Feinberg had paid out $6.1 billion to spill victims who submitted claims under BP’s $20 billion Gulf Coast Claims Facility.

BP expects the $7.8 billion payment to come from that trust. Claimants with final offers from Feinberg can receive 60 percent of their money now, and if eligible under the new program may receive the remaining 40 percent or seek higher awards.

Payouts are continuing, and being overseen by Patrick Juneau, a Lafayette, Louisiana lawyer appointed by the court.

“The PSC seems to believe the court-appointed administrator will be more generous than Feinberg,” said Tony Buzbee, a lawyer in Houston who said he represents 15,000 people and businesses with claims. “I believe the $7.8 billion figure will grow.”

Wednesday’s settlements award $2.3 billion to commercial fishermen, seafood boat captains and others for damage related to shrimp, oysters, blue crab and other species.

Another $57 million will be used to “promote the Gulf Coast”, including tourism and the seafood industry.

Last week, Florida Attorney General Pam Bondi asked Barbier to delay preliminary approval to let potential plaintiffs, including various Florida claimants and others who might be left out, assess the “fairness and rationale” behind the accords.

Buzbee expects the settlements to win approval, and said their structures may limit opposition.

“That payments continue even while the settlement is being reviewed takes away one of the primary arguments an objector might have,” he said. “That the (legal) fees will not come out of victims’ pockets will take a lot of the fire out of the bellies of people who might have objected.”

Jennifer Meale, a spokeswoman for Bondi, said her office is reviewing the settlements. Wyn Hornbuckle, a U.S. Department of Justice spokesman, declined to comment. Halliburton and Transocean spokespeople did not respond to requests for comment.

The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.