Court Upholds BP Oil Spill Payments

BP Plc faces billions of dollars in additional payments after failing to convince an appeals court that the company is being forced to pay claims that aren’t directly related to the 2010 Gulf of Mexico oil spill.

A three-judge panel of the U.S. Court of Appeals in New Orleans earlier rejected BP’s view that the claims administrator for the company’s $9.2 billion settlement had misinterpreted the agreement and was paying for economic losses that couldn’t be linked to the spill. BP today lost its bid for reconsideration by the full appeals court.

BP initially estimated that the settlement, reached in 2012, would cost the company about $7.8 billion. The company raised the figure as the claims administrator approved payments BP considered improper.

Eight of 13 judges chose to deny a rehearing. Only three of the five dissenters provided reasons for their votes.

U.S. Circuit Judge Edith Brown Clement said in her dissenting opinion today that accepting the interpretation of claims permits payment “without regard” to whether an injury was caused by the oil spill violates requirements for approving class-action lawsuits.

The settlement approval would “impermissibly extend the judicial power of the United States into administering a private handout program,” she said.

Further Appeal

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.

Lawyers for plaintiffs have said BP had “buyers’ remorse” over the settlement.

Jim Roy and Steve Herman, lead attorneys for the plaintiffs, said today they were “pleased that the court of appeals agreed that BP must honor its contract.”

The appeal is in Re Deepwater Horizon, 13-30095, 13-30315, U.S. Court of Appeals for the Fifth Circuit (New Orleans). The lower court case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).