By Kathy Finn
NEW ORLEANS, April 5 A U.S. judge's ruling
Friday against BP Plc means the company can proceed with
its appeal of the way a court-appointed administrator apportions
payments for claims related to the 2010 Gulf of Mexico oil
spill, some of which BP called "absurd."
Federal District Judge Carl Barbier said he found no reason
to reverse his decision last month to uphold the payout process.
This was despite BP's protest at payouts including $21 million
for a Louisiana rice mill 40 miles (64 km) from the coast which
earned more revenue in 2010 than in any of the previous three
The hearing in New Orleans federal court revisited a part of
BP's liability laundry list that seemed settled last year when
it agreed to terms on economic, property and medical
compensation for individuals and businesses who filed a class
As of Friday, more than 160,000 claims have been submitted
under the Deepwater Horizon Economic and Property Damages
Settlement, according to the settlement website, and a total of
$1.87 billion of payments had been made on 27,488 claims.
The source of dispute is about the calculation of business
economic losses, for which $743 million has been paid out on
4,461 claims, according to the website.
BP initially estimated the overall settlement bill at $7.8
billion, but the total is uncapped, and dependent on decisions
made by Patrick Juneau, a Louisiana lawyer who administers the
payments under complex rules set out by the agreement.
"BP believes today's proceedings and the related filings
were necessary steps on the way to appellate review," the
company said in a statement on Friday, confirming it had filed a
notice of appeal with the Fifth Circuit Court of Appeals - the
next step in the federal judicial hierarchy.
BP said it would consider how to proceed based on Barbier's
latest ruling, but reiterated that Juneau's interpretation of
the settlement produced "unjustified windfall payments" for
"non-existant, artifically calculated" losses.
Barbier told BP that it should take the issue up with the
appeals court and then ask him to stay his original decision to
uphold the payouts process on March 5.
Barbier is also presiding over a trial to determine blame
and overall damages for the disaster at the Macondo well, and
that trial enters its seventh week on Monday.
The accident killed 11 people and triggered the worst
offshore oil spill in U.S. history. BP has estimated it will
spend at least $42 billion to cover clean-up, fines and other
liabilities, and has sold off assets to cover its costs.
In an affidavit this week, Juneau explained the workings of
the claims administration, which started operating last June
following the April 2012 settlement. Over the summer, his team
of experts and accounting firms ran blind tests of real claims
and tweaked the process after suggestions from BP, Juneau said.
Juneau added that he himself had raised the possibility of
people being compensated even if their losses were not spill
related, and BP's lawyers responded to him that those people
were entitled to full recovery.
After a fairness hearing in November, Barbier granted final
approval of the process the following month. Juneau noted there
was already an internal appeals process set out in the agreement
for any party which disagreed with the program's calculations,
involving an independent panel of court-appointed neutrals.
On top of the plaintiffs' claims, there are also civil
claims under the Clean Water Act covered by the New Orleans
trial that could add as much as $17.5 billion to the total bill.
Billions more could be piled on in economic damage claims from
Gulf Coast states, while a third set of claims, for natural
resource damage, have not yet been filed.
The overall civil trial heard by Barbier is In re: Oil Spill
by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on
April 20, 2010, U.S. District Court, Eastern District of
Louisiana, No. 10-md-02179.