Business News

Published: Thursday December 26, 2013 MYT 7:44:00 AM
Updated: Thursday December 26, 2013 MYT 12:26:31 PM

US court rejects BP bid to require proof of Gulf oil spill losses

BP's view "is not only clearly inconsistent with its previous position, it directly contradicts what it has told this court," Barbier wrote. "The court further finds that BP's change of position was not inadvertent." File pic shows sign board of a BP petrol station in Moscow June 1, 2012. - Reuters

BP's view "is not only clearly inconsistent with its previous position, it directly contradicts what it has told this court," Barbier wrote. "The court further finds that BP's change of position was not inadvertent." File pic shows sign board of a BP petrol station in Moscow June 1, 2012. - Reuters

NEW ORLEANS:  BP Plc has failed to persuade a US federal judge to require businesses seeking to recover money over the 2010 Gulf of Mexico oil spill to provide proof that their economic losses were caused by the disaster.
 

US District Judge Carl Barbier in New Orleans said the British oil company would have to live with its earlier interpretation of a settlement agreement over the spill, in which certain businesses could be presumed to have suffered harm if their losses reflected certain patterns.

Barbier said BP could not now take a new position on causation of damages, and reverse an interpretation that it had once termed "more than fair," even if this resulted in the substantially higher payouts that the oil company feared.

BP's view "is not only clearly inconsistent with its previous position, it directly contradicts what it has told this court," Barbier wrote. "The court further finds that BP's change of position was not inadvertent."

Geoff Morrell, a BP spokesman, said, "Awarding money to claimants with losses that were not caused by the spill is contrary to the language of the settlement and violates established principles of class action law. BP intends to seek appropriate appellate remedies to correct this error."

BP had originally projected that its settlement with businesses and individuals harmed by the spill, would cost US$7.8bil.

As of late October it had boosted this estimate to US$9.2bil, and said this sum could grow "significantly higher."

The company has complained that payments were being inflated by "fictitious" claims, and because court-appointed settlement administrator Patrick Juneau has paid out too much and compensated businesses and individuals who were not harmed.

Earlier this month, the 5th US Circuit Court of Appeals in New York ordered Barbier to take a second look at Juneau's methodology.

In his 38-page decision, the judge concluded that changes were needed.

He directed Juneau to "implement an appropriate protocol or policy for handling business economic loss claims in which the claimant's financial records do not match revenue with corresponding variable expenses."

As of Monday, about US$3.81bil has been paid out to 40,371 spill claimants, according to Juneau's claims website. (http://www.deepwaterhorizoneconomicsettlement.com/docs/statistics.pdf)

The April 20, 2010, explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well killed 11 people and triggered the largest US offshore oil spill.

Barbier also oversees litigation to allocate blame and financial responsibility for the disaster. - Reuters

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