Watch Live

Tweet TWEET

BP Asks Appeals Court to Order Limit on Spill Payments

BP Plc (BP/) asked an appeals court for an injunction to stop some payments under a $9.2 billion settlement tied to the 2010 Gulf of Mexico oil spill, saying the judge overseeing the case ignored the court’s mandate to review claims.

BP is challenging U.S. District Judge Carl Barbier’s decision upholding the interpretation of the agreement by its claims administrator. BP claimed the administrator, Patrick Juneau, approved millions of dollars in “fictitious” payments to businesses for economic losses that weren’t related to the worst offshore spill in U.S. history.

The appeals court in New Orleans last month sent the dispute back to Barbier to review his interpretation of some of the accord’s terms. The panel also ordered Barbier to stop some payments under the settlement until he can sort out who has legitimate claims.

“The district court has refused to enjoin payments to claimants that suffered no harm traceable to the oil spill,” BP said in a filing today seeking an emergency order blocking such payments. “These impending windfall payments are the result of the district court’s failure” to comply with the appellate court’s order, the company said.

‘Irretrievably Scattered’

BP, based in London, asked the New Orleans panel to prevent “hundreds of millions of dollars from being irretrievably scattered to thousands of claimants” who shouldn’t be part of the settlement.

“BP continues to ignore not only the settlement agreement they co-authored and committed to, but also court orders prohibiting them from flip-flopping on the issue of causation,” Steve Herman and Jim Roy, the lead lawyers for the plaintiffs’ steering committee, said in an e-mailed statement. “They agreed time and time again that objective, transparent formulas would determine causation; they cannot change their mind simply because the settlement is costing them more than they hoped.”

The blowout of BP’s deep-water Macondo well off the coast of Louisiana in April 2010 killed 11 people and sent millions of barrels of oil spewing into the Gulf of Mexico. The accident sparked hundreds of lawsuits against BP, as well as Transocean Ltd. (RIG), owner of the Deepwater Horizon drilling rig that burned and sank, and Halliburton Co. (HAL), which provided cement services for the well.

BP reached a settlement with most private plaintiffs in March 2012, just before a trial on liability for the incident was to begin. BP initially valued the economic-loss settlement at $7.8 billion. It now puts the cost at $9.2 billion, according to an Oct. 29 company regulatory filing.

Barbier gave final approval to the settlement in December.

Excluded Claims

The accord resolved economic-loss claims for multiple classes of businesses and property owners in Louisiana, Alabama and Mississippi and parts of Texas and Florida.

It excluded claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill.

The appeal is BP Exploration & Production Inc. v. Deepwater Horizon Court-Supervised Settlement Program and Patrick Juneau in his official capacity, 13-30315, U.S. Court of Appeals for the Fifth Circuit (New Orleans). The lower court case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.