Appeals court opens door to some BP settlement appeals
NEW ORLEANS (AP) — A federal appeals court has opened the door for BP to appeal some claims related to a settlement reached after the 2010 Gulf of Mexico oil spill.
The 5th U.S. Circuit Court of Appeals in New Orleans ordered a lower court judge to change a procedure that effectively blocked appeals. And the appeals court told the judge to reconsider a rule barring BP from appeals regarding the calculation of a business’s losses.
The court upheld the lower court’s ruling that barred appeals dealing with payments to nonprofit groups. And it said the court could continue to prevent appeals arising from BP’s contention that something other than the oil spill caused some businesses’ losses — an issue the oil giant has been fighting unsuccessfully for years.
The opinion, released late Friday, is the latest dealing with a 2012 settlement of oil spill economic-loss litigation. The settlement agreement was hailed by all involved when it was signed, but soon became the subject of contention over the way it was interpreted by the district court in New Orleans and the court-appointed claims administrator.
BP eventually won a change in the way losses are calculated after arguing that administrator Patrick Juneau wasn’t correctly matching businesses’ revenues and expenses. The appeals court, noting that the methodology has changed and has been the subject of numerous developments that “muddy the waters,” told the district court that in cases overseen by U.S. District Judge Carl Barbier, it should take another look at the issue, and provide reasons if the prohibition on appealing claims continues.
In 2012, BP estimated it would pay roughly $7.8 billion to resolve claims under the settlement. A fourth-quarter earnings statement put the estimate at closer to $10 billion, and noted various factors that could change the number again.
BP and lawyers pursuing claims both found something to like in Friday’s ruling.
“We are pleased that the 5th Circuit upheld our right to appeal individual claims determinations,” company spokesman Geoff Morrell said in an emailed statement. The company did not estimate how the decision might affect the cost of claims.
“With regard to ‘alternative causation,’ we’re pleased the 5th Circuit saw through BP’s latest attempt to re-fight an issue that it has lost on every level,” plaintiffs’ attorneys Steve Herman and Jim Roy said in an email. “We’re further pleased the court shut the door on BP’s effort to deny the claims of non-profit organizations.”
In another development in the spill-related litigation, a lawyer for clients with claims against BP asked Barbier on Monday to delay a pending decision on how much the corporation will pay in Clean Water Act penalties, saying a hefty federal penalty could hurt those with court cases pending against the oil giant — including people involved in the major settlement and those who opted out.
Texas lawyer Brent Coon said in the filing that the judgment should be delayed until the individual claim process has been completed.
Barbier completed the third phase of court proceedings on Clean Water Act Penalties in February. A decision is pending and penalties could exceed $13 billion, depending on the per-barrel penalty amount Barbier applies after having already ruled that BP was grossly negligent in the Deepwater Horizon disaster and that 3.19 million barrels of oil was spilled.
The Department of Justice pushed for maximum penalties. BP argued for a lighter penalty, saying its response to the spill and the cleanup effort were robust, and that it has already run up more than $42 billion in costs.
“The bottom line now is that any Court judgment against BP on the Department of Justice case will undoubtedly be in the billions of dollars. Any such amounts would only act as a DETERRENT to any efforts by BP to negotiate and resolve any of the tens of thousands of claims still outstanding from businesses and individuals who have borne the brunt force of this trauma,” Coons filing said.
Should the court decide to go ahead with a Clean Water Act judgment, Coon writes, “plaintiffs reluctantly join BP’s motion to set these damages and fines at the minimum amounts available.”
Morell declined comment.