U.S. appeals court says BP bound by Gulf spill accord

Tue Mar 4, 2014 2:20pm EST

Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon, off Louisiana, in this April 21, 2010 file handout image. REUTERS/U.S. Coast Guard/Files/Handout

Fire boat response crews battle the blazing remnants of the offshore oil rig Deepwater Horizon, off Louisiana, in this April 21, 2010 file handout image.

Credit: Reuters/U.S. Coast Guard/Files/Handout

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(Reuters) - A divided U.S. appeals court has rejected BP Plc's bid to block businesses from recovering money over the 2010 Gulf of Mexico oil spill, even if they could not trace their economic losses to the disaster.

By a 2-1 vote, the 5th U.S. Circuit Court of Appeals in New Orleans late Monday upheld a December 24 ruling by U.S. District Judge Carl Barbier in New Orleans, authorizing the payments on so-called business economic loss claims. It also said an injunction preventing payments should be lifted.

The decision is a setback for BP's effort to limit payments under a multi-billion dollar settlement over the April 20, 2010, explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well.

That disaster killed 11 people and triggered the largest U.S. offshore oil spill.

Geoff Morrell, a BP spokesman, said the company may appeal. BP had previously asked the full 5th Circuit to review a January 10 decision by another three-judge panel that upheld the settlement itself.

BP previously settled U.S. criminal proceedings over the spill, and has completed two phases of a three-part civil trial before Barbier, where it could face more than $17 billion of penalties.

The company has set aside $42.7 billion for cleanup, compensation, legal and other costs related to the spill It has estimated that business economic loss claims in the latest appeal totaled about $1 billion.

"Each $1 billion extra on claims equates to just 2 pence per share for BP," Investec analysts said in a note.

BP shares traded down 0.3 percent at 491.6 pence in late afternoon trading in London.

RESUMPTION OF PAYMENTS EXPECTED

Barbier ruled that BP would have to live with its earlier interpretation of a December 2012 settlement with businesses and individuals harmed by the spill, in which certain businesses claiming losses were presumed to have suffered harm.

BP argued that this would allow businesses to recover for fictitious losses, but the 5th Circuit rejected its appeal.

"The settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill," Circuit Judge Leslie Southwick wrote for the majority.

Terms of the settlement "are not as protective of BP's present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court," the judge added.

The 5th Circuit also said claims administrator Patrick Juneau retained the authority to root out bogus claims, without having to perform the "gatekeeping" function that BP sought.

Circuit Judge Edith Brown Clement dissented, saying the decision wrongly helps claimants whose losses had "absolutely nothing to do with Deepwater Horizon or BP's conduct."

Steve Herman and Jim Roy, who represent the business claimants, said in a joint statement: "Today's ruling makes clear that BP can't rewrite the deal it agreed to."

Juneau, in a statement, said the decision "appears to clear the way" for the resumption of payments on business economic loss claims, and that he will resume making such payments upon a formal direction from the district court.

BP originally projected that the settlement would cost $7.8 billion. As of February 4, it had boosted this estimate to $9.2 billion, and said this sum could grow "significantly higher."

As of Monday, about $3.84 billion had been paid out to 42,272 claimants, according to Juneau's website. (here)

The case is In re: Deepwater Horizon, 5th U.S. Circuit Court of Appeals, Nos. 13-30315 and 13-30329.

(Reporting by Jonathan Stempel in New York; Additional reporting by Sarah Young in London, Mica Rosenberg; Editing by Miral Fahmy, Jane Merriman and Sofina Mirza-Reid)

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Comments (11)
BaiJiuUSA wrote:
HaHa!!! Quit your whining BP! nobody cares about large oil companies!

Mar 04, 2014 6:48am EST  --  Report as abuse
tatman wrote:
here we have oil company bad behavior at its finest — every attempt to mitigate and thwart compensation for the worst man-made disaster in american history by bp is still ongoing. why, america, do you think the owners of the keystone pipeline will be any different should there be a rupture or spill on american soil? this should be a massive wake-up call throughout the nation to see what happens when an oil company contaminates our natural resources…. they cry, fight, sue and obfuscate in order to shift the burden for cleanup and damages onto the back of the taxpayer to protect and shield their profits.

Mar 04, 2014 7:06am EST  --  Report as abuse
Every time I see one of those BP ads on tv, I realize more completely how desperately this company has struggled to avoid paying the legitimate costs of its irresponsible behavior.

Mar 04, 2014 9:05am EST  --  Report as abuse
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