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BP Macondo Lawsuit Approved

A federal judge has given final approval to the economic portion of a multibillion dollar class action settlement between BP plc and thousands of individuals and businesses affected by the April 2010 deepwater Macondo well blowout.

Although the agreement does not have a cap, BP has estimated that the agreement, which was reached in March with the Plaintiffs' Steering Committee (PSC), will pay out $7.8 billion to resolve a "substantial majority of legitimate economic loss and medical claims" (see NGI, March 12).

The PSC is acting on behalf of thousands of individuals and businesses in the multi-district litigation (MDL 2179) proceedings pending in New Orleans (In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, U.S. District Court for the Eastern District of Louisiana, No. 10-2179).

U.S. District Judge Carl Barbier on Dec. 21 ruled on the economic claims settlement; he plans to make a separate ruling on the medical benefits settlement in the near future. Close to 13,000 litigants had opted out of the settlement, and hundreds had appeared before Barbier at a fairness hearing in November. However, Barbier, in a 125-page ruling, said the plaintiffs' arguments were not persuasive.

"While these filings suggest that certain parties view the evidence differently from how BP does, none suggests that the settlement, which is designed to resolve such disagreements, is anything but fair, reasonable and adequate," Barbier wrote. "All objections to the settlement are hereby overruled."

Eleven men were killed when the BP-operated well blew out on April 20, 2010, causing Transocean Ltd.'s Deepwater Horizon drilling rig to catch fire and sink. The resulting 87-day-long oil spill devastated the Gulf Coast in the worst oil spill in U.S. history.

BP officials welcomed Barbier's decision.

"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," management said in a statement. The "decision by the court is another important step forward for BP in meeting its commitment to economic and environmental restoration efforts in the Gulf and in eliminating legal risk facing the company."

The PSC said the settlement "has -- and will continue to -- bring the people and businesses of the Gulf the relief they deserve."

Barbier noted in his ruling that claimants opting out of the settlement would not benefit from it. Plaintiffs joining the settlement also reserve the right to assert some claims against Transocean and well cement contractor Halliburton Co., he added. Under the settlement BP had transferred some of its claims against those companies to the plaintiffs and it remains locked in litigation with them.

In November BP agreed to pay the U.S. Department of Justice more than $4.5 billion in penalties and plead guilty to 11 felony counts of misconduct or neglect of ships officers relating to the deaths of the 11 men on the drilling rig (see NGI, Nov. 19).

The government last month also indicted the two highest-ranking BP supervisors aboard the Deepwater Horizon during the disaster, charging them with 23 criminal counts including manslaughter. A trial is scheduled for 2014.

The criminal settlements do not include federal civil claims, including potentially more Clean Water Act violations that range from $1,100 to $4,300 per bbl of oil spilled, which means BP could be fined $20 billion or more if its actions were found to be grossly negligent.

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