BP Wins Court Victory Over Spill Payments

Appeals court orders narrowing of interpretation of claim


NEW ORLEANS -- A federal appeals court ordered a lower-court judge to halt payments to some Gulf Coast businesses that say they suffered damage after the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. In Wednesday's ruling, the Fifth Circuit Court of Appeals ordered District Court Judge Carl Barbier to craft a "narrowly tailored injunction" that would halt some payouts while the lower court continues to study questions raised by BP PLC, reported The Wall Street Journal.

The ruling at least temporarily slows the pace of hundreds of millions of dollars in payments BP is making under a class-action settlement to address damages from the Deepwater Horizon oil spill, said the report.

A spokesperson for BP told the newspaper that the company was pleased with the ruling in that it would bring to an end payments on claims it considered fictitious.

Lawyers representing thousands of businesses and individuals in the class-action case said they were satisfied the ruling meant the majority who have filed claims would continue to see payments.

In a statement, the oil company said, "BP is extremely pleased with today's ruling by the U.S. Court of Appeals for the Fifth Circuit setting aside the claims administrator's interpretation of the business economic loss framework in the settlement agreement BP reached with the Plaintiffs' Steering Committee last year. Today's ruling affirms what BP has been saying since the beginning: claimants should not be paid for fictitious or wholly nonexistent losses. We are gratified that the systematic payment of such claims by the claims administrator must now come to an end.

"As part of today's decision, the Fifth Circuit has also reversed the District Court's denial of BP's motion for a preliminary injunction staying the payment of business economic loss claims under the agreement. The Fifth Circuit has ordered the District Court to 'expeditiously craft' an injunction that stays payments to people who did not suffer 'actual injury traceable to loss from the Deepwater Horizon accident' until the matter is 'fully heard and decided through the judicial process.'

"The Fifth Circuit has remanded the matter for further proceedings in the District Court.

"BP is assessing the further implications of the Fifth Circuit's decision and will issue an additional statement in due course."

When the settlement was approved last year, BP estimated it would have to pay out $7.8 billion. The company later said it could no longer estimate costs because it claimed a court-appointed fund administrator improperly calculated claims, resulting in payments that were too large and improper disbursements.

BP tried unsuccessfully to get Barbier to change the calculation methods and freeze payments. The company appealed his decisions and sued the claims administrator, lawyer Patrick Juneau.

The appeals court upheld the judge's dismissal of the suit against Juneau, according to the report, but said the judge needs to look more closely at the language of the settlement to resolve how losses should be calculated and investigate whether payments are going to businesses not damaged by the spill.

Earlier this week, Barbier opened the second phase of a three-part civil trial to determine how much BP would pay in Clean Water Act fines.

BP--with U.S. operations based in Chicago, Houston and Blaine, Wash.--is the nation's second-largest producer of oil and gas. It markets more than 15 billion gallons of gasoline every year United States to consumers through more than 11,000 branded retail outlets and supplies more than four billion gallons of fuel annually to fleets, industrial users, auto and truck manufacturers, railroads and utilities. With headquarters in London, BP is the single, global brand formed by the combination of the former British Petroleum, Amoco, Atlantic Richfield (ARCO) and Burmah Castrol.