Court rejects BP appeal over gulf oil spill payouts

Correction: ●An earlier version of this story incorrectly said that the court ordered BP to pay damages to businesses unaffected by the 2010 Gulf of Mexico oil spill. BP argued that a court-appointed claims administrator had misconstrued the terms of a settlement and ordered it to make such payments. The appeals court rejected BP’s assertion.

A U.S. court has rejected the oil giant's appeal over compensation payouts for the 2010 Gulf of Mexico spill. (Reuters)

In a setback for London-based BP, a New Orleans appellate court turned down the oil giant’s effort to block payments to businesses whose damage claims could not be clearly traced to the massive oil spill in the Gulf of Mexico in 2010.

The U.S. Court of Appeals for the 5th Circuit on Monday night rejected BP’s argument that a court-appointed claims administrator had misconstrued the terms of a settlement. BP had argued the administrator had ordered it to pay damages to undeserving businesses claiming losses that had no connection to the oil spill.

Instead, the court said in a 2 to 1 ruling, the claims administrator was simply following guidelines BP had agreed to in a settlement reached with a wide variety of plaintiffs in 2012.

“The Settlement Agreement contained many compromises. One of them was to provide in only a limited way for connecting the claim to the cause,” the court said. “The claims administrator, parties, and district court can resolve real examples of implaus­ible claims as they resolve other questions that arise in the handling of specific claims.”

BP had contested that business claims for damages had to assert links to the oil spill and that the claims administrator had failed to insist on that. But the court said, “We do not agree that we should order the claims administrator to perform that gatekeeping function.”

Two leading lawyers on the plaintiffs’ steering committee, Steve Herman and Jim Roy, said, “Today’s ruling makes clear that BP can’t rewrite the deal it agreed to.”

Geoff Morrell, BP spokesman and senior vice president, said the company “disagrees” with the decision.

“BP had asked the court to prevent payments to business economic loss [BEL] claimants whose alleged injuries are not traceable to the Deepwater Horizon accident and oil spill,” Morrell said. “BP believes that such BEL claimants are not proper class members under the terms of the settlement and is considering its appellate options.”

BP is trying to limit the cost of the settlement reached in late 2012. At the time, BP estimated that the deal would cost the company $7.8 billion, although it now says the price tag could reach $9.2 billion. The company has waged an aggressive campaign through lobbying, diplomacy and full-page newspaper ads highlighting what it sees as injustices in the claims process. The company has declined to say how much it has spent on the campaign.

“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.

Steven Mufson covers the White House. Since joining The Post, he has covered economics, China, foreign policy and energy.
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