BP oil spill settlement: Justice for 100,000 Gulf Coast victims?

The estimated total cost of the settlement will be about $7.8 billion, which makes it one of the largest class-action settlements in US history. The BP oil spill settlement was filed Wednesday.

Devon Ravine/Northwest Florida Daily News/AP
An aerial photo taken Monday April 16, 2012 shows the coast of Pensacola Beach, Fla., during a media helicopter flight organized by the BP Gulf Coast Restoration Organization.

Two days before the two-year commemoration of the start of the Gulf of Mexico oil spill, BP and a committee representing more than 100,000 plaintiffs have agreed on a blueprint to settle billions of dollars in unresolved economic, property, and medical damage claims.

The 354 pages of court documents, filed Wednesday in federal court in New Orleans, explain how the company intends to handle the many types of claims it faces from condominium owners, hotel and resort operators, restaurateurs, and seafood operators.

BP says that there is no cap on how much it will pay these claimants and that claimants in each category “will be paid in full” and “without delay.” In one exception, however, a $2.3 billion cap has been set for seafood claimants, such as commercial fishermen and seafood boat captains.

According to the filing, plaintiffs may submit claims in six categories: economic loss to an individual or business, property damage, physical damage to a vessel, subsistence damage, damages for seafood operators, and payment to those who participated in BP’s Vessels of Opportunity program, which involved using personal boats to assist in efforts to deal with the BP oil spill.

The total cost of the settlement, the company estimates, will reach about $7.8 billion, which makes it one of the largest class-action settlements in US history.

The company and the committee consisting of plaintiff attorneys released a statement Wednesday that called the agreements “a fair, reasonable and adequate resolution of the claims.”

The 100,000-plus plaintiffs were part of a federal trial that still includes other matters, such as claims made by the US government and individual Gulf states against BP and other parties involved in the disaster – particularly Transocean, the rig owner; and Halliburton, the company responsible for cementing the well. In hopes that the settlement can be carried out before the trial gets under way, the filing Wednesday requests that the trial date be pushed back.

The trial has the potential of forcing BP to pay a far greater sum than what was resolved Wednesday. For example, Clean Water Act liabilities could total as much as $17.6 billion.

US District Judge Carl Barbier has not indicated if he will approve the filing’s request to adjourn the trial indefinitely until the settlement is fully resolved. If he does, the trial may be pushed back as late as 2013. Judge Barbier scheduled a status hearing May 3 to discuss next steps with the involved parties.

BP Group chief executive Bob Dudley said the settlement offers “those affected full and fair compensation, without waiting for the outcome of a lengthy trial process.”

Stephen Herman and James Roy, two attorneys for the plaintiffs, released a statement saying that the settlement will help businesses and individuals in a "transparent and expeditious manner under rigorous judicial oversight" and that "it does the greatest amount of good for the greatest number of people."

The filing indicates that the settlement details are the outcome of a negotiating process that started in February 2011 and continued on a daily basis until May of that year. Negotiations picked up again early this year after a mediator became involved.

“Neither side will receive everything it wants – not BP, which believes that plaintiffs’ claims are subject to considerable litigation risk, and not the [plaintiffs], who maintain that they would one day obtain larger awards if their claims were to proceed to trial,” the filing reads.

BP has already paid $6 billion to oil spill victims through a $20 billion trust it established last year. The company also says it will provide $57 million to promote Gulf Coast tourism.

Besides the six categories, the agreement also says that BP will pay, out of the trust, medical claims for cleanup and other workers who say they have illnesses related to exposure to chemicals used to disperse the oil. These workers had previously been excluded from the trust compensation dollars.

The deadline to file claims under the new resolution is April 22, 2014, and the process allows plaintiffs to appeal the amount they are awarded. If plaintiffs accept the settlement, they are prohibited from taking further legal action against BP, although they could still pursue litigation against Transocean and Halliburton.

The explosion of the Deepwater Horizon offshore oil-drilling rig in the Gulf of Mexico on April 20, 2010, resulted in 11 deaths and the release of 4.9 million barrels of oil (205 million gallons), making it one of the worst environmental disasters in US history.

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