Bloomberg News

BP Seeks to Halt Some Gulf Oil-Spill Settlement Payments

April 01, 2013

BP Plc (BP/)’s lawsuit challenging some payments under the $8.5 billion Gulf of Mexico oil-spill settlement should be thrown out because the company is seeking to change fixed terms in the agreement, spill victims said.

BP’s suit targeting interpretations of the settlement by court-appointed administrator Patrick Juneau is flawed and should be dismissed, lawyers for oil spill victims who agreed to resolve their claims said in a filing today in federal court in New Orleans.

“BP has not set forth facts that give rise to a viable claim” over Juneau’s interpretation of provisions about economic-loss claims, the attorneys said in court papers.

The filing comes as BP is set to start its sixth week of trial tomorrow over claims that the London-based oil company was grossly negligent in its handling of the Macondo well and was responsible for the fatal explosion and spill that fouled the gulf in 2010.

Ellen Moskowitz, an outside BP spokeswoman, had no immediate comment on the filing by the spill victims. Moskowitz is a partner with the New York-based Brunswick Group.

U.S. District Judge Carl Barbier in New Orleans, who is presiding over the nonjury trial of liability for the worst offshore spill in U.S. history, previously declined to force Juneau to alter his interpretation of the settlement terms to match BP’s expectations.

‘Fictitious Losses’

BP contends in court papers that Juneau’s interpretation of the settlement accord includes claims the oil company “never contemplated” paying. The firm’s lawyers also argue the administrator is exposing BP to millions of dollars in “fictitious losses” as a result of Juneau’s reading of the pact.

BP said two-thirds of all business economic-loss payments larger than $75,000 have been based on “flawed data.” The company also contends that more than 1,200 payments have been made to claimants in the agriculture, construction and professional services industries that are too remote from the area impacted by the spill to qualify for compensation.

In today’s filing, lawyers for spill victims said Juneau has no power to revise his interpretation of the settlement to conform with BP’s view given Barbier’s approval of the accord last year.

The administrator had no authority “to adopt BP’s proposed framework for calculating variable profit, regardless of whether it would be a reasonable approach, because it would be inconsistent with the court’s interpretation of the language of the settlement agreement,” the lawyers said.

Uncapped Accord

The uncapped accord resolved most private plaintiffs’ claims for economic loss and property damage related to the explosion of the Deepwater Horizon rig in April 2010 and the ensuing spill.

The accord excludes claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill.

It also doesn’t cover federal government claims and those of Gulf Coast states Louisiana and Alabama, or lawsuits against co-defendants.

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).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

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


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