On the brink of what was primed to be the longest and most complex civil litigation in history, BP has struck a settlement deal with thousands of civil claimants in a bid to put the Gulf of Mexico disaster behind it and tackle its outstanding liabilities to the US government and other companies involved at the Macondo well.
The sum is thought to be at the upper end of what BP had been prepared to pay in order to settle, and will be paid out of the $20 billion trust the company founded in 2010 to mollify criticism from US politicians that at one point threatened the company with a severe funding crisis in the wake of the disaster.
The Plaintiffs’ Steering Committee (PSC) that reached the deal with BP acts on behalf of individual and business plaintiffs, and included everything from fishermen and restaurateurs to travel agents and condominium owners. Between them the PSC claimants had appointed hundreds of law firms, filing millions of depositions, at the New Orleans District Court for trial due to begin tomorrow.
BP says that the proposed settlement is subject to reaching definitive and fully-documented agreements within 45 days, and if those agreements are not reached, either party has the right to terminate the proposed settlement.
“From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region, and we’ve worked hard to deliver on that commitment for nearly two years,” said Bob Dudley, BP Group CEO. “The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast.”
BP – with operated the Macondo well with a 65% interest – estimates that the cost of the proposed settlement, expected to be paid from the $20 billion trust, would be approximately $7.8 billion. This includes a BP commitment of $2.3 billion to help resolve economic loss claims related to the Gulf seafood industry.
While BP has sought to reliably estimate the cost of this proposed settlement, it is possible that the actual cost could be higher or lower than this estimate depending on the outcomes of the court-supervised claims processes, the company says.
The settlement follows $22 billion that BP has already paid out in cleaning up the spill and making interim payments to claimants and public bodies, and does not include its potential criminal liability to penalty yet to be meted out under separate litigation with the US government under the Clean Water Act and Oil Pollution Act. If the US proves BP were grossly negligent, the fines levied could top $20 billion.
In addition, BP – which operated the Deepwater Horizon rig, Transocean – which owned it – and Halliburton – which provided cementing services at the Macondo well – have not settled the issue of liability between them. BP’s partners at the well are also in litigation against each other.
BP said the proposed settlement with the PSC was not an admission of liability and that the supermajor would seek to assign to the plaintiffs some of its claims against Transocean and Halliburton.
Eleven people died and 4.9 million barrels of oil spewed from the Macondo oil well in what was the largest oil spill in US history.
