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Judge: Leaning toward approving huge BP settlement in Gulf oil spill

A judge on Wednesday said he was leaning toward approving the settlement proposed by BP and a coalition of plaintiffs' lawyers to compensate individuals and businesses for the 2010 Gulf oil spill.

The plaintiffs' lawyers represent more than 100,000 individuals and businesses, but the proposal also has its critics -- among them shrimp processors, recreational fishermen and Halliburton, BP's cement contractor on the Macondo well.

"I'm leaning in favor of doing it, but I'm not going to do that from the bench here today," U.S. District Judge Carl Barbier said during a hearing in New Orleans, the Times-Picayune reported.

Barbier said that he intended to write a full order within a few days and that a final decision would not happen for several more weeks.

While most of the proposal's compensation was not capped, BP has estimated its exposure at $7.8 billion. The oil giant and lawyers' coalition agreed on the terms last month in a bid to avoid a trial that could take years.

The 2,000-page proposal would replace the Gulf Coast Claims Facility, which has managed claims so far, and is broken down into two categories:

  • Economic and property damages. Individuals or businesses in Alabama, Louisiana, Mississippi, four Texas counties on the gulf and Florida's Panhandle and west coast may apply as long as they didn't take an earlier payment. Exceptions are: recreational fishermen, financial institutions, casinos, racetracks, oil companies and insurers.
  • Medical benefits. These may be sought by cleanup workers and people who live within a half mile of Gulf Coast beaches or a mile from Gulf wetland areas. "Certain respiratory, gastrointestinal, eye, skin and neurophysiological" conditions, such as "dizziness, headaches, fainting" would be compensated, according to a summary of the proposal.

How much compensation an individual or business receives would be determined by complicated formulas based on various factors.

Some other highlights:

  • The claims deadline would be April 22, 2014, or six months after the settlement's effective date, whichever is later.
  • Lawyers' fees were estimated at around $600 million and would not come from any funds set aside for victims.
  • An appeal process will be in place.
  • A $2.3 billion fund to compensate seafood fishermen is the only part of the proposal that is capped. Shrimp processors want to be included in the fund.

BP has already taken a $37 billion accounting loss for the spill but, even with a settlement, it still faces tens of billions of dollars of potential claims from the U.S. government and several gulf states.

Clean Water Act fines alone could reach as high as $17.6 billion if gross negligence is determined.

In addition, BP and Macondo partners Transocean, which owned the drilling rig, and Halliburton, which cemented the well, have sued each other.

Halliburton also objects to the proposed settlement, saying it makes Halliburton "liable in part for settlement payments."

Wednesday's decision comes a day after a former BP engineer, Kurt Mix, was arrested and charged with obstruction of justice. He's accused of having deleted hundreds of text messages about the size of the spill.

Last Friday was the two-year anniversary of the worst U.S. oil spill, which was triggered when the Deepwater Horizon rig exploded on April 20, 2010, killing 11 workers and unleashing crude that wasn't fully contained until July 2010.

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