With great flourish late Friday night, BP and key plaintiffs' acttorneys in the consolidated federal Macondo damages trial announced a settlement that could cover more than 100,000 claimants. But as other attorneys familiar with the case, as well as outside legal scholars following the litigation, began to examine the settlement Saturday, a few key findings came to the fore.
Most importantly, the settlement is only between the company and the Plaintiffs Steering Committee. It does not include the federal government, or any of the state or local governments. For those reasons alone the settlement does not preclude a trial, these sources said.
Another key point is that the settlement does not commit any new funds from BP. Indeed, the company estimated the settlement would cost about $7.8 billion, "expected to be paid from the $20-billion trust," also known as the Gulf Coast Claims Facility (GCCF). The $7.8 billion includes $2.3 billion to help resolve economic loss claims related to the Gulf seafood industry.
The proposed settlement would mean the end of the GCCF established under an agreement with the White House and administered by Ken Feinberg. "He has overseen the GCCF since it began operating in August 2010, and we thank him and his team for their dedication and professionalism," said BP CEO Bob Dudley in announcing the settlement. "During his tenure, BP has paid approximately $6.1 billion to resolve more than 220,000 claims from individuals and businesses."
BP acknowledged that the proposed settlement does not include claims or possible criminal charges against it by the US Justice Department or other federal agencies, including under the Clean Water Act and for Natural Resource Damages under the Oil Pollution Act. It also doesn't include charges by states or local governments.
The proposed settlement also excludes certain other claims against BP, such as securities and shareholder claims pending in a separate consolidated federal case being heard in Houston.
Also outside the settlement are claims based solely on the deepwater drilling moratorium or the related permitting process, as well as the myriad cross-claims among defendants. However, the settlement does says that "to the extent permitted by law, BP will assign to the PSC certain of its claims, rights and recoveries against Transocean and Halliburton for damages not recoverable from BP."
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. Once there are definitive and fully-documented agreements, BP and the PSC would then seek the court's preliminary approval of the settlement.
One attorney, not part of the PSC, was critical of the settlement. "It's not even GCCF 2, it's just GCCF 1.1 without Feinberg. BP gets credit for spending the same money, maybe even less, twice."
Legal experts were quick to laud the company for dialing down its exposure, but noted that without a settlement on the federal and state charges, the settlement was a boat with only a few holes in it. "We are definitely still having a trial," said one scholar following the case.
Indeed, Judge Carl J. Barbier noted in his order Friday that the trial is only adjourned, not dismissed, and that he would revise his trial plan after consulting with all the parties. "Because such a settlement would likely result in a realignment of the parties in this litigation and require substantial changes to the current Phase I trial plan, and to allow the parties to reassess their respective positions, the court, on its own motion, orders that Phase I of the trial scheduled to commence on Monday, March 5, 2012 at 8:00 a.m. is adjourned. The court will schedule a status conference with liaison counsel to discuss issues raised by the settlement and to set a new trial date."
