Bloomberg News

Mexican States, Alabama Cities Can’t Bring Some BP Claims

December 13, 2011

(Updates with lawyer’s response in the sixth, seventh paragraphs.)

Dec. 10 (Bloomberg) -- Mexican states and Alabama cities that a federal judge deemed too far removed from the 2010 Gulf of Mexico oil spill to have been physically harmed by it had some of their claims against BP Plc dismissed.

U.S. District Judge Carl Barbier in New Orleans also threw out state law claims by six Louisiana parishes seeking penalties over wildlife killed or injured by the spill. He said the parishes, or counties, can still sue BP and other spill companies under U.S. law to recover wildlife losses, spill damages and removal costs.

“The Mexican states have failed to demonstrate that recovery is authorized by a treaty or executive agreement” between the U.S. and Mexico, Barbier said in yesterday’s ruling. The coastal states of Tamaulipas, Quintana Roo and Veracruz must prove that a “proprietary interest” was physically harmed by the drifting oil in order to sue BP for negligence, he said.

Barbier threw out claims by four inland Alabama cities that sued BP and other companies involved in the spill for physical damages and economic losses.

“The court also takes notice of the fact that the Alabama cities are not located directly on the coast, but are some distance inland,” Barbier said.

Remaining Claims

Rhon Jones, the lawyer for the Alabama cities, said Barbier’s ruling instructs the cities to present their claims directly to BP. If the oil company won’t pay, the judge said the cities may come back to the court for further consideration.

“These four Alabama cities are on direct travel routes to the coast,” he said. “We believe these cities have suffered an economic impact because of the spill.”

The decision allows the Mexican states to pursue some claims because they “all did suffer proprietary interest damages,” Enrique Serna, their attorney, said in a phone interview. “Regarding negligence and gross negligence, we are content that those claims are alive.”

The Mexican states sought to pursue claims under the U.S. Oil Pollution Act, using the Cartagena Convention, a treaty covering the rights of foreign governments to recover damages. The Cartagena Convention “does not authorize the recovery under OPA,” Barbier said in yesterday’s ruling.

“We are disappointed” with this part of the ruling, Serna said. “We are going to analyze the decision carefully and will weigh our options.”

Claims Narrowed

BP still faces claims for physical spill-damage, oil- removal costs, lost tax revenue and increased social services costs by other local governments that sued after the worst offshore oil spill in U.S. history, Barbier ruled. In some cases, the government entities may be entitled to seek punitive damages from BP and the other companies involved in the spill.

Yesterday’s decision followed previous rulings by Barbier that narrowed the focus of the oil-spill litigation, eliminating hundreds of claims among those consolidated in his court for pretrial processing. Thousands of coastal property owners, tourism businesses and government entities sued BP, its well partners and contractors for damages from the spill.

Defendants in the suits include Transocean Ltd., the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded; Halliburton Co., which provided cementing services; Cameron International Corp., which provided blowout-prevention equipment; and BP’s minority partners in the well, Anadarko Petroleum Corp. and Mitsui & Co.’s Moex Offshore LLC unit.

A trial is set for February to determine the liability of each company for causing the spill.

The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

--Editors: Michael Hytha, Mary Romano, Sylvia Wier

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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