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 has estimated 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.
BP and the plaintiffs' attorneys have said their 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 oil company also agreed to pay $2.3 billion for seafood-related claims by commercial fishing vessel owners, captains and deckhands.
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 percent 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 percent. 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.
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.