BP Appeals Oil Spill Court Approval of Official’s Payouts

BP Plc is appealing a trial court ruling upholding decisions by the administrator of its $8.5 billion settlement over the 2010 oil spill that the company says will force it pay billions of dollars more than expected.

U.S. District Judge Carl Barbier affirmed the interpretations by claims administrator Patrick Juneau in a March 5 order. BP complained he was misinterpreting the settlement agreement and overpaying.

BP filed a notice of appeal yesterday of Barbier’s order with the U.S. Court of Appeals in New Orleans. The appeal is “timely” under federal rules because it was lodged within 30 days of Barbier’s order, BP said in the one-page filing.

BP last month separately asked Barbier to issue an injunction stopping Juneau from paying certain claims, contending that some payments were going for “fictitious” losses. A hearing on this request, and a lawsuit filed by BP against the administrator over the issue, is scheduled to go before Barbier tomorrow.

A nonjury trial over fault for the blow-out of the deep-water Macondo well of the coast of Louisiana began before Barbier Feb. 25. The explosion sent more than 4 million barrels of oil spewing into the Gulf of Mexico and killed 11 people. The accident sparked hundreds of lawsuits against London-based BP, rig-owner Transocean Ltd. and Halliburton Co., which provided cement services.

Apportioning Responsibility

Barbier will determine responsibility for the disaster and whether any of the companies acted with willful or wanton misconduct or reckless indifference -- the legal requirement for establishing gross negligence.

Last year’s settlement between BP and lawyers representing spill-damage victims resolved most economic and medical-injury claims by private parties.

That accord didn’t include damage claims by financial institutions, casinos and companies claiming harm from the Obama administration’s deep-water drilling moratorium, which was imposed after the spill. It also didn’t include claims by the U.S. government and the states of Louisiana and Alabama.

As a result of policy decisions on certain business economic-loss claims by court-appointed administrator Juneau, “BP is already exposed to hundreds of millions of dollars in fictitious ‘losses’ that were never contemplated by the agreement,” BP said in its motion for an injunction last month.

“Although the ultimate exposure is at this time inestimable, it grows daily and could cost BP billions,” according to the motion.

The 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).

Before it's here, it's on the Bloomberg Terminal.