$330 Million Settlement for St. Bernard Parish Homeowners in Murphy Oil Katrina Spill

When Hurricane Katrina's storm surge hit St. Bernard Parish on August 29, 2005, it pushed a 250,000-barrel storage tank off its base at Murphy Oil USA's Meraux refinery. The tank ruptured, releasing approximately 25,000 barrels of crude oil that spread across roughly one square mile of residential neighborhoods. The spill coated homes, yards, and streets, cutting off any meaningful use of the affected properties for months after the storm.

Neighborhood residents filed twenty-seven consolidated class action lawsuits in the U.S. District Court for the Eastern District of Louisiana. U.S. District Judge Eldon Fallon certified the class and appointed a Plaintiffs Steering Committee to coordinate the litigation on behalf of all affected homeowners. Hugh Lambert of Lambert and Nelson in New Orleans was named to that committee, one of a small group of attorneys charged with building the case and negotiating on behalf of roughly 6,000 class members.

The PSC's work centered on establishing Murphy Oil's liability for the tank failure and on documenting the scale of property damage and displacement suffered by each tier of homeowners, from those whose homes stood closest to the tank to those on the outer edge of the contamination zone. Murphy had already paid out approximately $83 million to settle earlier individual claims before the consolidated class was formally structured.

On January 30, 2007, Judge Fallon approved the class settlement, calling it 'fair, reasonable and adequate.' The total value reached $330,126,000. The agreement was structured in four components: a $120 million compensation program for property owners based on proximity to the tank, a $55 million buyout program for those closest to the refinery, credit for the $83 million already distributed, and a $71 million remediation fund for cleanup. Murphy Oil also agreed to pay more than $36 million in attorneys fees and costs separately, on top of the class fund.

Compensation tiers ranged from $15,000 for homes at the outer boundary of the class area to buyout offers of $40 per square foot of living space plus additional damages for those nearest the tank. A small number of individuals who lived outside the class boundaries or who opted out retained separate claims. The settlement remains one of the largest environmental class actions arising from Hurricane Katrina.