Federal appeals court: BP cannot block payments on Gulf spill loss claims

By Jonathan Stempel

(Reuters) - A divided U.S. appeals court on Monday rejected BP Plc's bid to block businesses from recovering money over the 2010 Gulf of Mexico oil spill, even if they could not trace their economic losses to the disaster.

By a 2-1 vote, the 5th U.S. Circuit Court of Appeals in New Orleans upheld a December 24 ruling by U.S. District Judge Carl Barbier in New Orleans, authorizing the payments on so-called business economic loss claims. It also said an injunction preventing payments should be lifted.

Monday's decision is a setback for BP's effort to limit payments over the April 20, 2010, explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well.

The disaster killed 11 people and triggered the largest U.S. offshore oil spill.

Barbier had ruled that BP would have to live with its earlier interpretation of a multi-billion dollar settlement agreement over the spill, in which certain businesses claiming losses were presumed to have suffered harm.

BP argued that this would allow businesses to recover for fictitious losses, but the 5th Circuit rejected its appeal.

"The settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill," Circuit Judge Leslie Southwick wrote for the majority.

Terms of the settlement "are not as protective of BP's present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court," the judge added.

The 5th Circuit also said claims administrator Patrick Juneau retained the authority to root out bogus claims, without having to perform the "gatekeeping" function that BP sought.

Circuit Judge Edith Brown Clement dissented, saying the decision wrongly helps claimants whose losses had "absolutely nothing to do with Deepwater Horizon or BP's conduct."

BP spokesman Geoff Morrell said the London-based oil company disagreed with Monday's decision, believing that the claimants were not "proper class members" under the settlement. He said BP will consider a further appeal.

Steve Herman and Jim Roy, who represent the business claimants, said in a joint statement: "Today's ruling makes clear that BP can't rewrite the deal it agreed to."

A spokesman for Juneau did not immediately respond to a request for comment.

BP originally projected that its settlement with businesses and individuals harmed by the spill would cost $7.8 billion. As of February 4, it had boosted this estimate to $9.2 billion, and said this sum could grow "significantly higher."

As of Monday, about $3.84 billion had been paid out to 42,272 claimants, according to Juneau's website. (https://www.deepwaterhorizoneconomicsettlement.com/docs/statistics.pdf)

The case is In re: Deepwater Horizon, 5th U.S. Circuit Court of Appeals, Nos. 13-30315 and 13-30329.

(Reporting by Jonathan Stempel in New York; Additional reporting by Mica Rosenberg; Editing by Andre Grenon and Ken Wills and Miral Fahmy)

[Image: Oil spill workers collect tainted debris and dark oil patches along the beach as oil washes ashore on June 10, 2010 at Perdido Pass, AL. by Cheryl Casey via Shutterstock.com]