A federal appeals court ruling late Monday may spare BP PLC (BP, BP.LN) from making hundreds of millions of dollars in compensation payments stemming from its 2010 oil spill in the Gulf of Mexico.
A federal appeals court ruling
late Monday may spare BP PLC (BP, BP.LN) from making hundreds of millions of
dollars in compensation payments stemming from its 2010 oil spill in the Gulf
of Mexico.
The 5th Circuit Court of Appeals said a lower court judge in New Orleans must
address whether companies seeking payouts from a 2012 settlement actually
suffered damage that directly stemmed from the oil spill. That judge, Carl
Barbier, said he only needed to ensure that the court-appointed administrator
overseeing the settlement was using proper accounting methods, not whether the
companies' losses were caused by the spill.
The appeals court disagreed.
"The district court erred by not considering the arguments on
causation," the appeals court said late Monday in a 2-1 decision.
"The issue of causation is again remanded for expeditious
consideration."
The appeals court order also calls for payments to be at least temporarily
halted to any business that can't trace its injury directly back to the spill.
Those payments could be made at a later date, the ruling said.
A BP spokesman said Monday's ruling supports what the company has been saying
over the last year, both inside and outside the courtroom: that the
court-appointed administrator was misinterpreting the language of the oil spill
settlement.
"If properly implemented by the District Court, the Fifth Circuit's order
will help return the settlement to its original, intended and lawful
function--the compensation of claimants who sustained actual losses that are
traceable to the Deepwater Horizon accident," BP spokesman Geoff Morrell
said.
Earlier this year BP raised questions over how the spill fund's administrator,
Louisiana lawyer Patrick Juneau, was calculating losses for tens of thousands
of Gulf Coast businesses who have filed for payouts.
Lawyers for the companies seeking remuneration have argued BP understood the
settlement could lead to some payments where the spill might not have been the
cause of the loss, but that BP miscalculated the cost. The company now wants to
change settlement terms previously agreed to, they said.
BP now estimates the settlement will cost the company about $9.2 billion.
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