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Thursday, June 13, 2024 | Back issues
Courthouse News Service Courthouse News Service

BP Oil Spill Victims, but not USA,|Agree to $7.8 Billion Settlement

NEW ORLEANS (CN) - Attorneys for 116,000 Gulf Coast plaintiffs hurt by the Deepwater Horizon oil spill have agreed to a $7.8 billion settlement from BP, but the federal government is not a part of the deal, and is expected to go to trial - though the trial has been postponed again. The proposed settlement would satisfy claims for economic damage and pay for occasional medical monitoring of some plaintiffs for the next 21 years.

BP set up a $20 billion fund, from which the $7.8 billion will be paid, at President Obama's suggestion, in August 2010. The money has been and will be used to pay claims from hundreds of thousands of Gulf Coast fishermen, seafood processors and hotel- and other property-owners who were hurt by the April 20, 2010 spill.

The explosion of BP's Deepwater Horizon oil rig killed 11, dumped 5 million barrels of oil into the Gulf of Mexico and caused the worst environmental disaster in U.S. history.

The first trial in the massive litigation was postponed for a week, during which speculation raged that plaintiff attorneys and BP might settle with the $14 billion that remains in the fund.

On Friday night, BP said in a statementthat just $7.8 billion will be paid out.

U.S. District Judge Carl Barbier, who is overseeing the massive consolidated oil spill litigation, said in an order Friday night that the trial will be postponed again. He gave no date for its opening.

"The Court will schedule a status conference with liaison counsel to discuss issues raised by the settlement and to set a new trial date," Barbier's 1-page order states.

The order says the trial was postponed again because "such a settlement would likely result in a realignment of the parties in this litigation and require substantial changes to the current Phase I trial plan, and in order to allow the parties to reassess their respective positions."

The announced settlement will satisfy only the economic claims brought by Gulf Coast residents and businesses.

Other claims brought by the federal government and the states are still pending.

But BP's statement that announced the settlement indicated the rest of the $14 billion fund might be used, in part, to satisfy state and federal government interests in the litigation.

BP said the $20 billion was originally set aside to fund such interests.

BP's oil spill compensation fund has been held by the Gulf Coast Claims Facility and has been overseen by attorney Kenneth Feinberg.

Fourteen billion dollars remain in the fund. BP will pay a bit more than half of that to settle with plaintiff steering committee attorneys, who were appointed by the court to handle the litigation.

Anthony Buzbee, a Houston plaintiff attorney not on the plaintiff steering committee, who has 12,000 oil spill clients, said he was surprised the settlement was for just half of what remains in the fund.

"I don't know enough to criticize it at this point, but based on what I know I can't see the benefit, other than benefiting the lawyers on the committee," Buzbee told Courthouse News on Saturday.

BP's press release said that the settlement amount is just an estimate.

"While BP has sought to reliably estimate the cost of this proposed settlement, it is possible that the actual cost could be higher or lower than this estimate depending on the outcomes of the court-supervised claims processes," BP said in its statement. "In accordance with its normal procedures, BP will re-evaluate the assumptions underlying this estimate on a quarterly basis as more information, including the outcomes of the court-supervised claims processes, becomes available."

BP said in its statement that the fund was never meant to pay just economic damage claims, but all claims arising from the spill. It indicated that the rest of the fund will be used to satisfy state and federal claims.

"Other costs to be paid from the trust include state and local government claims, state and local response costs, natural resource damages and related claims, and final judgments and settlements. It is not possible at this time to determine whether the $20 billion trust will be sufficient to satisfy all of these claims as well as those under the proposed settlement. Should the trust not be sufficient, payments under the proposed settlement would be made by BP directly," BP said in its statement.

The BP statement added: "The proposed settlement does not include claims against BP made by the United States Department of Justice or other federal agencies (including under the Clean Water Act and for Natural Resource Damages under the Oil Pollution Act) or by the states and local governments."

The base fine for Clean Water Act penalties is $1,100 per barrel of oil spilled. If gross negligence is found by the judge, the fine could be as high as $4,300 per barrel.

The BP oil spill dumped 4.9 million barrels into the Gulf of Mexico.

Those potential damages, then, could come to $21 billion, if the federal government seeks the maximum penalty.

The proposed settlement involves two separate agreements: one to resolve claims for economic loss, and another to resolve medical claims.

BP said in its statement that the "proposed agreement to resolve medical claims involves payments based on a matrix for certain currently manifested physical conditions, as well as a 21-year medical consultation program for qualifying class members."

The Department of Justice said in a statement: "With regard to the United States' outstanding claims, and as Attorney General Holder recently testified before Congress, the United States is prepared to hold the responsible parties accountable for the damage suffered in the Gulf region. The United States will continue to work closely with all five Gulf states to ensure that any resolution of the federal law enforcement and damage claims, including natural resource damages, arising out of this unprecedented environmental disaster is just, fair and restores the Gulf for the benefit of the people of the Gulf states.

"Although we remain open to a fair and just settlement, we are fully prepared to try the case.

"While we are pleased that BP may be stepping up to address harms to individual plaintiffs, this by no means fully addresses its responsibility for the harms it has caused - as nothing in the PSC/BP settlement compensates the public for the significant damages to its natural resources and environment and BP has yet to pay a penalty for its violations of law."

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