BP strikes out in attempts to stop oil spill settlement payments

BP has failed in its attempts to stop some of the payments from the settlement agreement over the Deepwater Horizon oil spill.

On March 3, a three-judge panel of the Fifth Circuit Court of Appeals in New Orleans ruled that the company was bound to follow its agreement and pay some gulf businesses for economic damage without their having to prove it was caused by the spill. 

BP PLC wanted to block businesses who can’t trace their losses to the 2010 Deepwater Horizon oil spill from receiving money under the settlement agreement.

The company argued the agreement was unfairly misinterpreted and that it was being forced to pay for damages unrelated to the oil spill.

The appellate panel voted 2-1 to uphold the ruling of Judge Carl Barbier on Dec. 24. He found that the settlement agreement did not require businesses to establish a causal nexus between their alleged injuries and the oil spill.

In an opinion written by U.S. Judge Leslie H. Southwick, the justices found that the company was bound by the agreement it had signed. The agreement allows some businesses in certain areas along the Gulf coast to claim economic losses under an accounting formula without having to provide specific evidence the losses were caused by the oil spill.

“These requirements 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,” wrote Judge Southwick. , who was joined in the result by Judge James L. Dennis.

Judge James L. Dennis, who joined Judge Southwick's opinion, said an objective formula was a compromise in a case with such a huge number of claimants and offered a solution to the problem of precisely accounting for the natural ups and downs of business.

However in her dissenting opinion, Judge Edith Brown Clement argued that the interpretation of the agreement has eliminated the causation requirements, and the court’s decision will result in “absurd results.”

The oil company was hit by another decision recently. BP asked Judge Barbier to stop payments from the $2.3 billion Seafood Compensation Fund, claiming Texas plaintiffs’ attorney Mikal Watts committed fraud when he claimed to represent 40,000 deckhands in the coastal seafood industry.

Barbie asked BP lawyers to prove whether the Watts clients’ claims are a key factor in determining the settlement value and denied the request to stop payments.