Court Rejects BP Appeal Over Gulf Spill Payouts; Says Company Must Honor Settlement Agreement

An illuminated sign stands on the forecourt of a BP gas station, operated by BP Plc, in Upminster, U.K., on Thursday, Feb. 28
An illuminated sign stands on the forecourt of a BP gas station, operated by BP Plc, in Upminster, U.K., on Thursday, Feb. 28, 2013. BP Plc's push to maximize profits and cut costs at the Macondo well was a 'root cause' of the explosion that led to the 2010 Gulf of Mexico oil spill, a safety expert who studied the disaster said. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

By Jonathan Stempel
March 4 (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 Dec. 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 Jan. 10
decision by another three-judge panel that upheld the settlement
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
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.

Barbier ruled that BP would have to live with its earlier
interpretation of a Dec. 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 Feb. 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. ()
The case is In re: Deepwater Horizon, 5th U.S. Circuit Court
of Appeals, Nos. 13-30315 and 13-30329.



Gulf Oil Spill-- Looking Back