BP Bid to Halt Spill Payouts Should Be Denied, Court Told

BP Plc shouldn’t be allowed to temporarily halt payments from a court-supervised settlement program set up after the 2010 Gulf of Mexico oil spill, plaintiffs’ lawyers said.

BP this week asked U.S. District Judge Carl Barbier in New Orleans to suspend payments while Louis Freeh, the former director of the Federal Bureau of Investigation, probes possible misconduct in the program. Two senior attorneys for the claims program were dismissed for possible conflicts of interest, BP said in its July 15 filing.

“BP has not identified a single claim that it contends was ‘tainted’ or otherwise affected by the alleged conflict of interest,” Stephen Herman and James Roy, the plaintiffs’ lead attorneys, said in a filing today. “BP has not suffered, nor does it face the threat of, ‘irreparable harm,’ nor indeed any harm.”

BP’s request is “unnecessary” and “in part based on premature speculation,” claims program administrator Patrick Juneau said in a court filing today. His office “already has placed on ‘hold’ those claims with any remote connection to the parties under investigation,” according to the filing.

“There is no proof to support BP’s contention that each and every claim must be presumed to have some imputed ‘taint,’” Juneau said.

Barbier set a hearing on BP’s motion to halt payments for tomorrow.

Lawyer Suspended

Barbier ordered the investigation by Freeh on July 2 after a staff attorney at the program was suspended for allegedly taking fees from law firms while processing their clients’ claims.

The program is paying an average of more than $73 million a week and “it would be impractical if not impossible to recover all tainted payments” made during the investigation, London-based BP said in its filing this week.

An injunction freezing payments “is the only way to ensure that BP is not further irreparably harmed” by paying awards that may be “tainted by improprieties,” company lawyers said.

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

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