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US appeals court rejects BP efforts to halt oil spill payments

04 March 2014

On March 4, the 5th US Circuit Court of Appeals in New Orleans upheld a December 24 ruling by District Judge Carl Barbier in New Orleans authorising the payments on so-called business economic loss claims after the 2010 Gulf of Mexico oil spill, even if they cannot trace their economic losses to the disaster. It also said an injunction preventing payments should be lifted. 

BP had argued that some firms filed fictitious spill claims.

"The settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill," the court said in its verdict.

In 2012, BP agreed to make payments to those who suffered economic losses as a result of the disaster aboard the Deepwater Horizon drilling rig. The explosion killed 11 workers and spilled an estimated four million barrels of oil into the gulf, making it the worst offshore oil spill in US history.

As a result of the ruling, BP will potentially have to pay out billions more to businesses than it had previously thought. The firm initially estimated the spill settlement would cost $7.8bn (£4.7bn), but later revised that figure upwards to $9.2bn once the full scope of the claimants became apparent.

The company said that an adverse ruling could push that figure even higher.

As of 11 February, the settlement fund had paid out more than $3.8bn to businesses who claimed to have been adversely impacted by the oil spill. Another $1bn has been approved but not yet paid.

Two of three judges on the Court of Appeals panel voted against the request.
BP added it believes the settlement “cannot be upheld under the law” unless this “problem” is fully corrected.

As of 31 December 2012, the company had spent more than $14 billion (£8bn) on the clean-up, response and compensation.

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