U.S. court rejects BP bid to require proof of gulf oil spill losses


BP failed to persuade a federal judge to require proof that losses resulted from the 2010 Gulf of Mexico oil spill. (CARL COURT/AFP/Getty Images)
December 25, 2013

BP has failed to convince a federal judge that businesses seeking to recover monetary damages from the 2010 Gulf of Mexico oil spill should provide proof that their losses were caused by the disaster.

U.S. District Judge Carl Barbier in New Orleans said the British oil company would have to live with its earlier interpretation of a settlement agreement over the spill, in which certain businesses could be presumed to have suffered harm if their losses reflected certain patterns.

Barbier said BP could not take a new position on the cause of damages and reverse an interpretation that it had once termed “more than fair,” even if the interpretation resulted in the substantially higher payouts that the oil company feared.

BP’s view “is not only clearly inconsistent with its previous position, it directly contradicts what it has told this court,” Barbier wrote. “The court further finds that BP’s change of position was not inadvertent.”

Geoff Morrell, a BP spokesman, said: “Awarding money to claimants with losses that were not caused by the spill is contrary to the language of the settlement and violates established principles of class action law. BP intends to seek appropriate appellate remedies to correct this error.”

BP had originally projected that its settlement with businesses and individuals harmed by the spill would cost $7.8 billion. As of late October, the company had boosted the estimate to $9.2 billion, and it said the sum could grow “significantly higher.”

The company has complained that payments were being inflated because of “fictitious” claims and because the court-appointed settlement administrator, Patrick Juneau, had paid out too much and compensated individuals and businesses that were not harmed.

This month, the U.S. Court of Appeals for the 5th Circuit, in New Orleans, ordered Barbier to take a second look at Juneau’s methodology.

In his 38-page decision, the judge concluded that changes were needed.

He directed Juneau to “implement an appropriate protocol or policy for handling business economic loss claims in which the claimant’s financial records do not match revenue with corresponding variable expenses.”

As of Monday, about $3.81 billion had been paid out to 40,371 spill claimants, according to Juneau’s claims Web site.

The April 20, 2010, explosion of the Deepwater Horizon drilling rig and rupture of BP’s Macondo oil well killed 11 people and triggered the largest U.S. offshore oil spill.

Barbier also oversees litigation to allocate blame and financial responsibility for the disaster.

— Reuters

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