BP wins reprieve over Gulf spill payouts: U.S. appeals court

Thu Oct 3, 2013 5:37am EDT
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By Jonathan Stempel

(Reuters) - BP Plc won a legal reprieve in its effort to force the administrator of a settlement related to the 2010 Gulf of Mexico oil spill to tighten standards in assessing claims, potentially sparing the oil company billions of dollars of extra costs.

A divided 5th U.S. Circuit Court of Appeals in New Orleans on Wednesday directed U.S. District Judge Carl Barbier, who in March had approved administrator Patrick Juneau's evaluation methods, to take a fresh look at which claims are legitimate.

The 5th Circuit also directed Barbier to halt payments on those claims that don't meet stricter standards.

BP had agreed in 2012 to make payments to cover economic losses arising from the spill.

But it complained that Juneau's payout formula has been too generous, and compensates people and businesses that were not harmed.

That argument drew sympathy from Circuit Judge Edith Brown Clement, part of a 2-1 panel majority that sent the case back to Barbier, who also sits in New Orleans.

"There is no need to secure peace with those with whom one is not at war," Clement wrote.

"The district court had no authority to approve the settlement of a class that included members that had not sustained losses at all, or had sustained losses unrelated to the oil spill, as BP alleges," she added. "If the administrator is interpreting the settlement to include such claimants, the settlement is unlawful."   Continued...

Oil floats on the surface of the Gulf of Mexico around a work boat at the site of the Deepwater Horizon oil spill in the Gulf of Mexico June 2, 2010. REUTERS/Sean Gardner