5 Mar 2014 More

Court Rules Against BP in Settlement Terms

posted by Unknown @ 09:40 0 Comments

The BP logo still carries some weight
BP (British Petroleum), has been notified by a federal appeals court that it must stick to the settlement amount of $9.2 billion for damages caused in the Gulf of Mexico oil spill back in 2010. The company had appealed on grounds that a claims administrator had read the deal wrong.  The judge has ruled that the settlement amount will stand.

Now the company must again resume payments to businesses that were adversely affected in the spill.  Payments had been temporarily suspended back in December while the judge considered the appeal.
“In light of our reading of the settlement agreement,” wrote Circuit Judge Leslie Southwick of the US Court of Appeals in New Orleans, “we conclude the settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill.”

The blowout of the deepwater Macondo well in the Gulf of Mexico off the coast of Louisiana killed 11 rig workers and spilled millions of barrels of crude oil straight into the waters of the gulf.  The oil spill occurred in April 2010.

Cost of the settlement

The initial value of losses due to the spill, according to BP, came in at $7.8 billion.  A regulatory finding last year increased that amount to $9.2 billion.  BP disagrees with that amount.

“BP had asked the court to prevent payments to business economic-loss claimants whose alleged injuries are not traceable to the Deepwater Horizon accident and oil spill,” says Geoff Morrell a spokesman for the company. “BP believes that such claimants are not proper class members under the terms of the settlement and is considering its appellate options.”

In fact, the company believes costs will run even higher than the $9.2 billion amount when you factor in claims not yet received or processed.  There are currently more than 85,000 claims yet to be reviewed, this according to a Feb. 28 report.

Claims not included

The settlement does not even include other claims like those from 750 state and local governments, 700 casinos, 250 financial institutions, and another 900 companies that saw losses due to the ban that followed the spill.  The Obama Administration imposed a ban on drilling in the gulf following the spill.

There is still time for more claims as the deadline for filing does not expire until six months after all appeals have been exhausted.  BP estimates claims from local and state governments alone could total as much as $34 billion.  If gross negligence is found, some claims could as much as triple.

Added fines

On top of all the claims, BP could be facing as much as $17 billion in fines under the US Clean Water Act.  The amount of the fines is directly related to the amount of oil spilled due to negligence.  That number will be decided by US District Judge Carl Barbier.  The date for that trial has yet to be determined.

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