Lee and Charlotte Counties accept Deepwater settlements, at a loss

July 17, 2015
By Boca Beacon

bp chart 2bp chart 1Lee and Charlotte counties have each formally accepted settlements for their claims against BP, related to the Deepwater Horizon oil spill, at a fraction of the amounts for which they filed claims.
In recent weeks, several nearby governments including Collier and Sarasota Counties also accepted sums for economic losses incurred in the wake of that 2010 disaster.
Both Lee and Charlotte were offered “take it or leave it” sums and both counties rushed to respond to the offers by deadline, holding special board meetings. The alternative, according to staff and outside council representing each county, would have been litigation that might become protracted or expensive. In the face of that possibility, combined with the difficulty of estimating the duration or cost of that potential litigation, Lee and Charlotte commissioners voted unanimously to accept their respective offers.
According to Lee County staff, the United States District Court for the Eastern District of Louisiana announced on July 2 that its panel of
“neutrals” had arrived at settlement offers. BP would agree to pay approximately $30 billion in claims to several states, corporations, and individuals, for economic losses and damages to natural resources in the wake of the disaster. $1 billion of that was set aside for payouts to governments.
Both Lee and Charlotte County accepted offers for substantially less remuneration than the amount for which they had submitted claims.
Lee County originally filed a claim for approximately $70 million, according a representative, and accepted a settlement offer of $5.24 million, less attorney fees and costs. Charlotte County filed a claim for $35 million and accepted an offer of approximately $7.4 million, less attorney fees and costs.
Attorney fees for both governments were set in advance at 20 percent of any settlement awarded, which could result in a payout of approximately $1 million to attorneys for Lee County and $1.5 million to attorneys for Charlotte County. A representative of Lee County cautioned that no exact amount was available, since fees have not yet been specified. But Kevin Dean, a member of the outside counsel retained for Charlotte County related to the settlement, confirmed before the board that those fees would be just under $1.5 million.
Governments submitted claims independently, based on their own metrics, related to estimated economic losses during 2010.
Charlotte County, according to Dean, estimated its losses using comparative values for revenues such as sales and bed taxes, franchise and communications fees, and enterprise funds for a portion of the first year for which claimants could file, 2010. They also included property tax revenues during a portion of that first year, which accounted for $3.1 million of the estimated total year’s losses: $8.6 million.
They used a multiplier, including a 2 percent growth estimate, to project out over four more years, arriving at the total estimated loss, $35 million.
Lee County did not specify how it arrived at its $70 million total.
Dean said that the panel of neutral parties assembled by the court to administer the settlement payouts used a different metric; theirs only multiplied the base year’s losses by two, effectively paying out for two years instead of five, and did not include property tax revenue losses.
Additionally, instead of estimating the year’s losses based on three months of comparative revenue values, the court’s panel used eight months’ worth of values.
That method was then applied to all claimant governments but Florida City (whose losses were not multiplied at all for additional years), according to Dean.
Settlements offered, at least for Lee and Charlotte county, were non-negotiable, final offers.
Payouts are not assured, however. As Dean noted during the special meeting of the CCBCC, individual offers are contingent upon “substantially all” of the 530 governments accepting their respective offers. Neither Dean nor the CCBCC could decipher the meaning of “substantially all,” but they decided it did not affect their decision.
Commissioners for Lee and Charlotte did not specify what the funds would be used for, only to accept the amounts offered and to place the money in each county’s general fund. The offers were not subject to any restrictions on how the money could be spent, and neither board suggested any strategy for expenditure during their discussions about whether or not to accept the settlements.