Home' Trinidad and Tobago Guardian : May 22nd 2014 Contents MAY 2014 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
BP Plc faces billions of dollars
in additional payments after
failing again to convince an
appeals court that the com-
pany is being forced to pay
claims that aren t directly
related to the 2010 Gulf of Mexico oil spill.
The decision leaves BP with two options:
pay claims the company has called "fictitious,"
or appeal further to the US Supreme Court.
Paying these claims will cost additional billions
of dollars, BP has said in court filings. Pay-
ments for disputed business economic losses
have been on hold while BP appealed.
A three-judge panel of the US Court of
Appeals in New Orleans earlier rejected BP s
view that the claims administrator for the
company s $9.2 billion settlement had mis-
interpreted the agreement and was paying for
economic losses that weren t caused by the
spill. BP yesterday lost its bid for reconsid-
eration by the full appeals court.
BP contends a flawed interpretation by
Patrick Juneau, the claims administrator, has
raised the accord s price tag "substantially
higher" than that projected cost, according
to the company s April 29 earnings statement.
BP has taken a cumulative pretax charge
of $42.7 billion to cover all out-of-pocket
and some anticipated spill-related costs,
including government penalties, according
to the statement. BP has said it couldn t pre-
dict how much money Juneau s interpretation
of the agreement will add to the ultimate
cost of the settlement.
Oil from the BP spill floats in the Gulf of
Mexico near Orange Beach, Alabama, US, on June 18,
A divided panel of the appeals court ruled in March
that BP had to live with the terms of the deal as inter-
preted by Juneau.
Eight of 13 judges yesterday chose to deny a rehear-
The settlement agreement "is not fundamentally
flawed," said US Circuit Judge Leslie Southwick. BP
agreed that claimants wouldn t have to prove losses
were caused by the spill if their losses matched math-
ematical formulas, the judge said.
US Circuit Judge Edith Brown Clement, one of the
five dissenters, said in her opinion that accepting this
interpretation of claims would permit payment "without
regard" to whether an injury was caused by the oil
spill and violates requirements for approving class-
The settlement approval would "impermissibly extend
the judicial power of the United States into administering
a private handout program," she said.
BP is considering whether to further appeal, Geoff
Morrell, a spokesman for London-based BP, said in
an e-mailed statement.
"BP is disappointed that the full Fifth Circuit will
not be considering the divided panel decisions related
to the compensation of claims for losses that have no
apparent connection to the spill," Morrell said, referring
to the appeals court in New Orleans.
Lawyers for plaintiffs have said BP had "buyers
remorse" over the settlement.
Jim Roy and Steve Herman, lead attorneys for the
plaintiffs, said yesterday they were "pleased that the
court of appeals agreed that BP must honor its con-
The blowout of BP s deep-water Macondo well off
the coast of Louisiana in April 2010 killed 11 people
and sent more than four million barrels of oil spewing
into the Gulf of Mexico. The accident sparked thousands
of lawsuits against BP, Transocean Ltd, owner of the
Deepwater Horizon drilling rig that burned and sank,
and Halliburton Company, which provided cement
services for the well.
BP reached a settlement with most private-party
plaintiffs in 2012, initially estimating the cost at about
US$7.8 billion. The company raised the figure as the
claims administrator approved payments BP considered
BP last year asked US District Judge Carl Barbier to
rein in Juneau, contending that he was misinterpreting
the terms of the settlement and paying claimants who
couldn t connect business losses to the spill. Ques-
tionable payments included US$21 million to a rice
mill 40 miles from the coast whose revenue rose the
year of the spill, BP has said.
Lawyers for the plaintiffs responded that, under the
agreement, businesses didn t have to prove a direct
impact or link to the spill. Claims payments were based
on a formula, primarily depending on distance from
the spill, using sample periods before and after the
event. Businesses in the areas covered by the settlement
were assumed to have suffered because of the spill s
regional economic effects, according to court filings.
Barbier rejected BP s interpretation. BP was aware
that the terms of the settlement agreement could pro-
duce "false positives," Barbier said in an April 2013
ruling, citing a letter from a company lawyer to Juneau.
The appeals court upheld Barbier s decision in March.
BP faces billions in spill payments
as court upholds deal
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