BP has argued for months in federal court and high-profile newspaper ads that the oil-spill settlement it signed in 2012 should be scrapped if what it believed to be fraudulent payments continued. But the company lost that option late Friday when the Fifth U.S. Circuit Court of Appeals upheld the existing framework for reviewing claims and disbursing funds.
The ruling narrows BP’s options for avoiding what it says are millions of dollars in payments to individuals and business not harmed by the 2010 oil spill in the Gulf of Mexico.
A BP spokesman said the decision still leaves open the question of whether court-appointed administrator Patrick Juneau is interpreting the settlement accurately—an issue BP has raised with another set of Fifth Circuit judges that is pending.
The company contends Mr. Juneau is ignoring language in the settlement requiring proof that a claimant actually was damaged by the Deepwater Horizon spill, which it says has allowed widespread fraud. Mr. Juneau has said he is interpreting the settlement correctly.
“The company will continue to press its position on the agreement’s threshold requirement that claimants’ losses must be traceable to the spill,” spokesman Geoff Morrell said in a statement.
BP once estimated spill claims paid from the settlement’s funds would cost the company $7.8 billion, a figure that was raised to $9.4 billion. Now those payouts could reach $14 billion, according to Tom Claps, a legal analyst with Susquehanna Capital.
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