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Court Again Rules in Favor of BP in Macondo Settlement

BP plc may be spared from paying hundreds of millions in compensation payments related to the 2010 Macondo well blowout in the Gulf of Mexico following an appeals court ruling late Monday.

The producer in November asked for an injunction to stop payments from the December 2012 settlement to claimants whose injuries weren't traceable to the oil spill. BP's lawyers contend that U.S. District Judge Carl Barbier of the Eastern District of Louisiana, who is overseeing the multidistrict litigation in New Orleans, ignored a mandate to review the claims after the U.S. Court of Appeals for the Fifth Circuit ordered a review (see Daily GPI, Oct. 4).

Barbier in July had rejected a proposal by BP to temporarily halt claims payments until an investigation into the payouts was conducted (see Daily GPI, Sept. 10; July 22). However, the appeals court two months ago ordered Barbier to "expeditiously craft" a "narrowly worded injunction" to halt payments to claimants that did not suffer "actual injury traceable to the loss from the Deepwater Horizon accident" until the matter was decided through the judicial process (BP Exploration & Production Inc. v. Deepwater Horizon Court-Supervised Settlement Program et al, No. 13-30315).

In the latest ruling, the appeals court, again in a 2-1 decision, said Barbier "erred by not considering the arguments on causation...The issue of causation is again remanded for expeditious consideration." The order also halts temporarily payments to any business that cannot trace its injury directly to the spill. Those payments could be made at a later date, the ruling indicated.

The panel repeated its October order, but acknowledged that it may have confused the issue because there was a divided opinion. "This court's expressing its views through two different opinions that may have created interpretive difficulties on the remand," it said.

A BP spokesman said the ruling supports what the company has said -- the court-appointed administrator Patrick Juneau was misinterpreting the language of the $7.8 billion oil spill settlement reached in 2012 (see Daily GPI, Dec. 28, 2012). BP in October estimated that settlement now is approaching costs of around $9.2 billion.

"If properly implemented by the district court, the Fifth Circuit's order will help return the settlement to its original, intended and lawful function -- the compensation of claimants who sustained actual losses that are traceable to the Deepwater Horizon incident," said the spokesman.

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