BP, plaintiffs reach Gulf oil spill settlement worth $7.8 billion

By Harry R. Weber and Michael Kunzelman, from Associated Press wire
2 March 2012 NEW ORLEANS – BP agreed late Friday to settle lawsuits brought by more than 100,000 fishermen who lost work, cleanup workers who got sick and others who claimed harm from the oil giant’s 2010 Gulf of Mexico disaster, the worst offshore oil spill in the nation’s history. The momentous settlement will have no cap to compensate the plaintiffs, though BP PLC estimated it would have to pay out about $7.8 billion, making it one of the largest class-action settlements ever. After the Exxon Valdez disaster in 1989, the company ultimately settled with the U.S. government for $1 billion, which would be about $1.8 billion today. BP still has to resolve claims by the U.S. government, Gulf states and its partners in the doomed Deepwater Horizon project, in which pressure from a well a mile below the ocean’s surface blew up a massive drilling rig, killing 11 men and spewing oil into the sea for nearly three months. Those claims from the government could add billions more to its tab, and BP has already paid out billions in cleanup costs and to compensate victims. The U.S. Justice Department, in a statement, said Friday’s settlement is not the end of the road, by far. “The United States will continue to work closely with all five Gulf states to ensure that any resolution of the federal law enforcement and damage claims, including natural resources damages, arising out of this unprecedented environmental disaster is just, fair and restores the Gulf for the benefit of the people of the Gulf states,” the agency said. BP said it expects the money to come from the $20 billion compensation fund that it previously set up. According to the Deepwater Horizon Oil Spill Trust, current total trust assets are approximately $9.5 billion. BP’s payout estimate includes what the company internally predicts legal fees for the numerous plaintiffs lawyers in the case will be, though the issue has not yet been discussed between both sides, according to a person with direct knowledge of the settlement terms who spoke on condition of anonymity because those details are confidential. […] The spill exposed oil industry failings, and forced BP chief executive Tony Hayward to step down after the company’s repeated gaffes, including his infamous statement at the height of the crisis: “I’d like my life back.” He was jettisoned off to work for a BP affiliate in Russia and has since left that company. BP’s environmentally-friendly image was tarnished, and independent gas station owners who fly the BP flag lost business from customers who were upset over the spill. The disaster also created a new lexicon in American vocabulary as crews used innovative attempts to plug the spewing well, such as the top kill and the junk shot in which they tried to plug the well with pieces of rubber. As people all over the world watched a live spill camera on the Internet and television, the Obama administration dealt with a political headache, in part because the government grossly underestimated how much crude was spilling into the Gulf. The main targets of litigation resulting from the explosion and spill were BP, Transocean, cement contractor Halliburton Co. and Cameron International, maker of the well’s failed blowout preventer. BP, the majority owner of the well that blew out, was leasing the rig from Transocean. The Justice Department sued some of the companies involved in the ill-fated drilling project, seeking to recover billions of dollars for economic and environmental damage. The department opened a separate criminal investigation, but that probe hasn’t resulted in any charges. The companies also sued each other, although some of those cases were settled last year. In one of the pending lawsuits, BP has sued Transocean for at least $40 billion in damages. Trial preparations produced a staggering 72 million pages of documents and included depositions of more than 300 witnesses. The trial also is designed to determine whether Transocean can limit what it pays those making claims under maritime law. […]

BP, plaintiffs reach Gulf oil spill settlement worth $7.8 billion (Updated)