BP said it had reached a US$7.8 billion deal to settle thousands of claims from fishermen and others affected by the 2010 Gulf of Mexico oil spill, ahead of a blockbuster US trial.
The settlement announced on Friday does not affect what is anticipated to be tens of billions of dollars in fines and claims from the US government and the coastal states and local governments impacted by the spill. Nor does it resolve suits filed by shareholders or those seeking compensation because of a drilling moratorium imposed in the wake of the worst environmental disaster in US history.
However, it does resolve a big piece of a very complicated legal battle.
“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 chief executive officer Bob Dudley said in a statement.
The last-minute deal means the highly anticipated trial will be delayed once again after a week-long postponement was ordered last Sunday to allow the settlement talks to continue.
Judge Carl Barbier issued an order late on Friday adjourning the case indefinitely “because such a settlement would likely result in a realignment of the parties in this litigation ... and in order to allow the parties to reassess their respective positions.”
The case will likely still go to court even if a deal is reached with the federal government.
That is because the British energy giant is hoping to shift some of the cost to its subcontractors, a complex legal question that will likely end up taking years and multiple appeals to resolve.
Barbier — an expert in maritime law charged with consolidating hundreds of spill-related lawsuits into one single case — has left the door open to some shared liability in key pre-trial rulings.
Several government probes have already castigated BP, rig operator Transocean and Halliburton — which was responsible for the well’s faulty cement job — for cutting corners and missing crucial warning signs.
The April 20, 2010, explosion on the BP-leased Deepwater Horizon drilling rig killed 11 workers, and in the following days blackened beaches in five US states and devastated the Gulf Coast’s tourism and fishing industries.
It took 87 days to cap BP’s runaway well 1,500m below the surface that spewed about 4.9 million barrels of oil into the Gulf of Mexico.
Barbier is tasked with determining whether the deadly mistakes constitute gross negligence, how much of the blame rests with each party and whether punitive damages should be imposed.
Just one set of federal fines could reach US$18 billion if gross negligence is found.
BP is also on the hook for all economic damages caused by the spill, including the cost of environmental rehabilitation, and could also be hit with costly criminal charges and punitive damages ranging from one to five times the cost of economic damages.
“There’s only one path for BP to take: Blame it on as many other people as possible and make sure it’s not cast as gross negligence,” Blaine LeCesne, a law professor at Loyola University in New Orleans who has been following the case closely, said in a recent interview.
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