NEW ORLEANS -- Murphy Oil Corp. agreed to pay $330 million to settle a class-action lawsuit filed by Hurricane Katrina victims whose homes and businesses were inundated with floodwaters that carried nearly 1.1 million gallons of crude oil from a company storage tank, according to a report in The Wall Street Journal.
The refinery-tank spill in Meraux, La., a working-class suburb of New Orleans, caused some of the worst environmental damage from the hurricane. Owners of about 6,200 homes and businesses in Meraux and adjacent Chalmette were involved [image-nocss] in the lawsuit against the company's Murphy Oil USA Inc. The case was set to go to trial next week.
Terms of the proposed settlement call for Murphy, based in El Dorado, Ark., to compensate affected home and business owners for property damage, the diminished value of properties damaged by the spill and mental anguish and inconvenience resulting from the incident, according to a joint statement from lawyers on both sides. In addition, Murphy said it will offer to purchase at fair market value as many as 600 homes and businesses in an area next to the refinery that was heavily affected by the spill.
As part of the settlement, a company-funded cleanup under way and being supervised by federal and state regulators will continue. The deal must be approved by a U.S. District Court judge in New Orleans. A hearing is scheduled for Tuesday, Oct. 10.
Murphy said it expects insurance to cover all settlement costs except for the purchase and remediation of damaged properties. That will cost an estimated $55 million and be incurred as a capital expenditure, a spokesman said.
The oil came from a storage tank that floated off its foundation during the late-August 2005 storm. Murphy had offered settlements to residents that ranged from $11.50 to $12.60 per square foot of their homes, depending on the damage, plus $2,500 per person in each household, according the WSJ report. Company officials have insisted that most of the crude oil was cleaned up quickly and poses no health threat once it is removed from homes and lots. Murphy still faces a number of individual lawsuits related to the spill.
Murphy Oil USA is a refiner, marketer and transporter of petroleum products in the United States. It has refineries are in Meraux, La., and Superior, Wis. Its subsidiary, Murphy USA Marketing Co., operates retail gasoline stations under the Murphy USA brand across 21 states in the United States. Most are high-volume, low-cost retail gasoline stations, primarily in the parking areas of Wal-Mart Supercenters.
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