BP Plc. and the lead lawyers representing victims of the 2010 Gulf of Mexico oil spill won approval of the economic and environmental loss portion of a proposed $7.8 billion partial settlement of claims.
The agreement resolves most private plaintiffs' claims for economic loss and property damage related to the explosion of the Deepwater Horizon oil rig and subsequent spill. It doesn't cover suits brought by the U.S. government and the states of Alabama and Louisiana over the largest offshore oil spill in U.S. history.
U.S. District Judge Carl Barbier in New Orleans, who is overseeing litigation over the spill, granted final approval to the settlement yesterday after he considered objections to the accord. Barbier gave preliminary approval in May.
The settlement "provides compensation to class members that appears sufficient" to cover their losses from the spill, Barbier said in his 125-page ruling approving the agreement.
The blowout and explosion aboard the Deepwater Horizon drilling rig in April 2010 killed 11 workers and sent millions of barrels of crude leaking into the gulf.
BP officials hailed Barbier's approval of the settlement as a step forward in the company's efforts to move beyond the spill.
"We believe the settlement, which avoids years of lengthy litigation, is good for the people, businesses and communities of the Gulf and is in the best interests of BP's stakeholders," Scott Dean, a company spokesman, said in an e-mailed statement.
Barbier was also considering the portion of the settlement designed to cover claimants' physical injuries related to the spill or the cleanup. The accord sets aside money to provide medical monitoring of claimants' health in the future, according to court filings.
The proposed partial settlement of private claims was reached March 2, days before a trial on liability for the spill was set to begin. While BP estimates the accord to be worth at least $7.8 billion, it doesn't have a cap on potential settlement claims.
"We are extremely pleased with the court's ruling," Steve Herman and Jim Roy, the co-lead counsel for the plaintiffs, said in a statement. "This settlement has -- and will continue to -- bring the people and businesses of the Gulf the relief they deserve."
The accord 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.
It also doesn't cover federal government claims and those of Gulf Coast states Louisiana and Alabama, or lawsuits against co-defendants.
BP has been in negotiations with the U.S. Justice Department to settle the federal claims, the company said in an Oct. 30 regulatory filing. BP has provisioned about $38.1 billion for spill costs and has paid more than $8 billion in compensation to individuals, businesses and government entities so far.
The oil company faces a potential $17 billion fine by the U.S. under Clean Water Act provisions, should it be found grossly negligent for the spill. The issue of gross negligence is set to be determined at a nonjury trial over liability for the explosion of the Deepwater Horizon drilling and the subsequent oil spill now set for Feb. 25 before Barbier in New Orleans.
BP also agreed to pay $4 billion to the U.S. Justice Department to resolve criminal charges connected to the spill and $525 million to settle the U.S. Securities and Exchange Commission's claim that the company misled investors about the rate of oil flowing into the gulf.
Two BP officials face criminal charges tied to the fatal explosion on the Deepwater Horizon rig. Federal prosecutors contend the managers on the rig ignored indications the well wasn't secure before the blast that killed 11 on the vessel.
Another BP executive was charged with obstruction and making false statements related to the size of the 2012 spill off the coast of Louisiana.
In approving the partial settlement yesterday, Barbier dismissed objections from more than 13,000 spill victims who claimed the deal underpays some claimants and unfairly excludes others.
Many of the objections to the settlement were filed by people or businesses excluded from the agreement or from fishermen who contend they aren't getting enough under the accord to compensate for lost catches.
Barbier said the economic loss zones were the result of months of work by experts hired by plaintiffs' lawyers to decide which areas had legitimate loss claims.
"The economic loss zones reasonably reflect the likelihood that a given class member suffered economic damage as a result of the spill," the judge wrote.
Lawyers for some Gulf Coast fishermen argued the $2.3 billion set aside for their claims was inadequate given the potential damage to stocks of vermilion snapper and other fish.
Barbier said experts haven't found any conclusive proof of a collapse of snapper fisheries and the accord provides money "to cover potential future injury." "Settlements are compromises," the judge said. "The fact that some class members wish BP had paid more compensation is no reason to reject the settlement." 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).