Appeal court sides with BP, halts some oil spill payments

BP PLC said it was “extremely pleased” by a federal appeals court in New Orleans that set aside the claims administrator’s interpretation of the business economic loss framework in a settlement agreement reached last year.

The Fifth Circuit Court of Appeals Oct. 2 ordered US District Court Judge Carl Barbier to write a “narrowly tailored injunction” halting some payouts to businesses and individuals while the lower court continues to study questions raised by BP.

The ruling will at least temporarily slow the pace of payments worth hundreds of millions of dollars that BP was making under a class-action settlement related to the Gulf of Mexico oil spill from the deepwater Macondo well blowout in April 2010.

Geoff Morrell, BP senior vice-president of communications, said the ruling affirmed BP’s stance regaining claims from the Macondo blowout and resulting explosion and fire on the Deepwater Horizon semisubmersible.

“Claimants should not be paid for fictitious or wholly nonexistent losses. We are gratified that the systematic payment of such claims by the claims administrator must now come to an end,” Morrell said.

Last year, BP estimated it would have to pay out $7.8 billion but later the company it could not estimate costs because it claimed a court-appointed fund administrator improperly calculated claims.

Meanwhile, Judge Barbier has started the second phase of a three-phase civil trial to efforts to determine how much BP might have to pay in Clean Water Act fines for the oil spill (OGJ Online, Oct. 2, 2013).

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