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Fifth Circuit Rules BP Can Appeal Some Settlement Claims

Still reeling from the fallout surrounding the April 2010 Deepwater Horizon oil spill in the Gulf of Mexico, BP late Friday received a mixed bag of news from an appellate court. The energy giant learned it would be able to appeal some claims related to the disaster, while others will remain out of reach.

The Fifth U.S. Circuit Court of Appeals in New Orleans on Friday ordered a district court judge to alter a procedure that previously blocked appeals of claims, but noted that BP appeals based on the company's belief that certain damages inflicted on claimants were not caused by the Deepwater Horizon incident would not be allowed.

BP argues that the Final Rules should be modified to reflect the holding in Deepwater Horizon III that the Settlement Agreement contains a causal nexus requirement -- that a class member’s injury be plausibly traceable to the oil spill -- and that “implausible claims” that do not satisfy that requirement should be addressed as they arise.

"Rather than argue against the policy itself, BP seems to argue that the Claims Administrator has refused to enforce the Settlement Agreement’s causal-nexus requirement due to a misapplication of the Alternative Causation Policy," the Fifth U.S. Circuit Court of Appeals in New Orleans found. "However, this argument does not show how the district court’s decision to preclude from its review cases based on the Alternative Causation Policy is an abuse of discretion."

The Fifth Circuit also asked the district court judge to review its rule blocking BP appeals of cases that involve the Matching Policy, where a business' losses are compared to a matching of its revenues and expenses.

"In light of the recent developments...we are unable to decide whether the district court’s decision to categorically preclude review of cases involving the Matching Policy constituted an abuse of discretion," the Fifth Circuit found. "On remand, the district court should reconsider its decision to categorically preclude these cases from its review. In doing so, the district court should consider what effect, if any, the Final Rules have on cases involving Policy 495. In the event the court is of the view that these cases should be categorically precluded from review, the court should provide a rationale for such a finding."

The court also ruled that the district court acted appropriately when it barred BP appeals dealing with payouts to non-profit organizations.

"In sum, finding that we have jurisdiction over this appeal, we hold that the parties have a right under the Settlement Agreement to appeal claim determinations from the district court to this court," the Fifth Circuit said in its ruling. "We also hold that the Final Rules violate this right with its lack of docketing provisions providing for a proper appeal to this court, and remand on that basis. On remand, we instruct the district court to reconsider its decision to categorically preclude cases involving the Matching Policy from its review in light of recent developments. We find no error in the decision to categorically preclude cases involving the Alternative Causation Issue from judicial review. We also find no error in the decision to categorically preclude cases involving the Non-Profit Policy."

BP spokesman Geoff Morrell told NGI that the company is “pleased that the Fifth Circuit upheld our right to appeal individual claims determinations.”

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