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A man lays oil absorbent boom in Plaquemines Parish, Louisiana, to collect oil from the 2010 Deepwater Horizon oil spill. Photograph: Gerald Herbert/AP
A man lays oil absorbent boom in Plaquemines Parish, Louisiana, to collect oil from the 2010 Deepwater Horizon oil spill. Photograph: Gerald Herbert/AP

BP settlement over Deepwater Horizon oil spill approved by federal judge

This article is more than 11 years old
Company estimates it will pay $7.8bn to 100,000 people and business who lost money because of April 2010 well blowout

A federal judge gave final approval to BP's settlement with businesses and individuals who lost money because of the 2010 oil spill in the Gulf of Mexico.

BP PLC has estimated it will pay $7.8bn to resolve economic and medical claims from more than 100,000 businesses and individuals hurt by the nation's worst offshore oil spill. The settlement has no cap; the company could end up paying more or less.

US district judge Carl Barbier, who gave his preliminary approval in May, made it final on Friday in a 125-page ruling released Friday evening. "None of the objections, whether filed on the objections docket or elsewhere, have shown the Settlement to be anything other than fair, reasonable and adequate," he wrote.

BP and attorneys for the plaintiffs said they were pleased.

"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," company spokesman Scott Dean said. "Today's 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."

A statement from plaintiffs' attorneys Steve Herman and Jim Roy praised the settlement program's administrator, Pat Juneau.

"This settlement has and will continue to bring the people and businesses of the gulf the relief they deserve," the attorneys wrote.

The April 2010 blowout of BP's Macondo well triggered an explosion that killed 11 rig workers on the Deepwater Horizon and spilled more than 200m gallons (757m liters) of oil into the gulf, closing much of it for months to commercial and recreational fishing and shrimping.

There is still a lot of litigation left, including a trial to identify the causes of BP's blowout and assign percentages of fault to the companies involved, Barbier wrote. That trial is scheduled next year.

He said it averts worries that litigation could continue for 15 to 20 years, as it did after the Exxon Valdez and Amoco Cadiz oil spills, creating a secondary disaster for those affected.

Barbier has not ruled on a medical settlement for cleanup workers and others who say exposure to oil or dispersants made them sick.

The agreement covers people and businesses in Louisiana, Mississippi, Alabama and some coastal counties in eastern Texas and western Florida, and in adjacent gulf waters and bays.

BP has already begun paying claims before the law required it, and is doing so "in an impressive fashion," Barbier wrote. He said the claims center processed 4,500 claims a week in November and has authorized nearly $1.4bn in payments, and BP also has paid about $405 million on nearly 16,000 claims during a transitional process that ended June 4.

Barbier noted that lawyers' fees won't come out of settlements: BP has agreed to pay them separately.

As part of the settlement, BP will pay $2.3bn to cover seafood-related claims by commercial fishing vessel owners, captains and deckhands. That fund is the settlement's only limit, Barbier wrote. He said that it is about five times the average industry gross revenue from 2007 to 2009 and, according to evidence provided, more than 19 times the revenue the industry lost in 2010.

After Barbier's preliminary approval in May, thousands of people opted out of the settlement to pursue their cases individually. More than 1,700 changed their minds and asked to be added back in by a December 15 deadline, Barbier said.

Still unresolved are environmental damage claims brought by the federal government and Gulf Coast states against BP and its partners on the Deepwater Horizon drilling rig, and claims against Switzerland-based rig owner Transocean Ltd. and Houston-based cement contractor Halliburton.

BP also has paid or agreed to pay settlements of a record $4.5bn in criminal penalties, including $1.3m in fines. US district judge Sarah Vance has scheduled a January 29 hearing to accept or reject that plea agreement with the US Department of Justice, which also includes guilty pleas to criminal charges involving the workers' deaths and to lying about the amount of oil spilled from the blown-out well.

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