NEW ORLEANS - BP and a team of plaintiffs' attorneys on Wednesday presented a federal judge with the formal terms of a proposed class-action settlement designed to resolve billions of dollars in economic damage claims spawned by the 2010 oil spill in the Gulf of Mexico.
The London-based oil giant and lawyers representing more than 100,000 individuals and businesses are asking U.S. District Judge Carl Barbier in New Orleans to give preliminary approval to the settlement agreement. The judge hasn't indicated when he will rule.
BP PLC estimates it will pay about $7.8 billion to resolve these private party claims, which would make it one of the largest class-action settlements ever. But the settlement doesn't have a cap on the amount of money BP would pay.
Wednesday's court filing says the agreement "creates a comprehensive compensation system" and is "more than fair, reasonable and adequate."
"As in any settlement, neither side will receive everything it wants — not BP, which believes that plaintiffs' claims are subject to considerable litigation risk, and not the (Plaintiffs' Steering Committee), who maintain that they would one day obtain larger awards if their claims were to proceed to trial," the filing says.
The agreement announced March 2 doesn't resolve separate claims brought by the federal government and Gulf states against BP and its partners on the Deepwater Horizon drilling rig over environmental damage from the nation's worst offshore oil spill.
The settlement also doesn't resolve claims against Switzerland-based rig owner Transocean Ltd. and Houston-based cement contractor Halliburton. Barbier has scheduled a May 3 status conference to discuss plans for a possible trial for claims not covered by the settlement.
Barbier also is expected to hold a "fairness hearing" on the settlement before deciding whether to give final approval to it.
The agreement calls for paying medical claims from cleanup workers and others who say they suffered illnesses from exposure to the oil or chemicals used to disperse it. Many people have filed claims asserting spill-related illnesses, but none were paid through a BP-created $20 billion compensation fund administered by the Gulf Coast Claims Facility.
The agreement spells out several compensation levels, with cleanup workers eligible for the most: up to $60,700 plus money to cover hospital and medical bills they might have racked up because of work-related health problems.
There's money for workers and residents who can prove they suffered more mild symptoms from breathing in oil or dispersants. Many people have complained of ear, nose, throat, skin and neurological problems because of the spill. Under the agreement, residents in this category can get between $900 and $5,450 with some eligible for medical bills they have paid. Workers can get between $1,300 and $7,750 plus medical expenses.
In addition, BP has agreed to spend $105 million over five years to set up a Gulf Coast health outreach program and pay for medical examinations of people who suffered from the spill for 21 years.
The oil company also agreed to pay $2.3 billion for seafood-related claims by commercial fishing vessel owners, captains and deckhands.
"Notably, the amount that BP has agreed to pay to fund the Seafood Compensation Program exceeds the annual revenue of these industries many times over," a court filing says.
The settlement also would compensate other categories of losses, including lost wages, businesses losses, property damage and damage to vessels that worked on the cleanup.
Wednesday's court filing says plaintiffs' lawyers who negotiated the deal and have worked on the litigation are seeking fees, costs and expenses capped at $600 million. They're asking for an interim award of $75 million plus additional quarterly payments equivalent to 6 per cent of class claims.
Barbier would set any award for the attorneys. BP isn't contesting the request.
BP also has agreed to pay $57 million to promote the Gulf Coast tourism and seafood industries and spend up to $5 million on a publicity campaign to inform Gulf Coast residents how to participate in the settlement.
The "notice campaign may come to be regarded as one of the most comprehensive and elaborate notice programs in litigation history, with 95 per cent of the adults in the Gulf Coast exposed to class notice materials on average 8.8 times, and 83 per cent of U.S. adults exposed on average 3.8 times," a court filing says.
The April 20, 2010, blowout of BP's Macondo well triggered an explosion that killed 11 rig workers and unleashed a gusher that spewed more than 200 million gallons of oil into the Gulf.
In the aftermath, BP created a $20 billion fund to compensate commercial fishermen, property owners, hotels and other tourism-driven businesses that claimed they suffered economic damages.
The Gulf Coast Claims Facility processed more than 221,000 claims and paid out more than $6 billion from the fund before a court-supervised administrator took over the claims process on March 8. The administrator, Patrick Juneau, announced last week that 5,238 claimants have been paid more than $134 million during the transition period as of April 6.
Claimants who received settlement offers from the GCCF can receive 60 per cent of that offer while they consider whether to participate in the court settlement. If they opt out of the court settlement, they must sign a release to get the remaining 40 per cent. If they opt in, the court-supervised process will decide if they are entitled to more than what the GCCF offered.
The settlement excludes certain types of businesses, including financial institutions, casinos and racetracks, as well as losses allegedly caused by the federal government's temporary moratorium on deepwater drilling.
In a court filing Friday, Florida Attorney General Pamela Jo Bondi urged Barbier to hold off on giving preliminary approval to the deal before "other interested stakeholders" can review and comment on its terms.
Bondi said the settlement seems to apply only to claims from Florida residents and businesses on the Panhandle or along the west coast of the state, possibly shutting out thousands of other claimants in other parts of the state. She also expressed concern that Barbier's preliminary approval would eliminate the interim claims process.
"This could significantly harm those individuals and businesses that have sought and received interim payments but decided not to submit final claims, perhaps due to their concerns over the spill's unknown long-term effects," she wrote.
The plaintiff's attorneys, however, say BP will continue to process and pay interim claims as required by law.
Glen Brooks, the Cortez, Fla.-based owner of a fleet of fishing boats, said his business survived the closing of fishing grounds and other early effects of the spill. He turned down a settlement offer from the GCCF out of uncertainty about the spill's long-term effects.
"It's just a big guess right now because we don't know what's going to happen to the fishery," said Brooks, president of the Gulf Fishermen's Association.