Appeals Court Rules BP Must Pay Gulf Oil Spill Claimants

CREDIT: AP Photo/Gerald Herbert

PJ Hahn, Coastal Zone Manager for Plaquemines Parish, examines oil along the shoreline of Bay Jimmy, which was heavily impacted by the Deepwater Horizon oil spill, in Plaquemines Parish, La., Friday, Sept. 27, 2013.

A U.S. appeals court has rejected BP’s attempt to stop Gulf businesses from collecting what the oil company called “fictitious losses” from the 2010 Gulf oil spill, saying that BP is required to reimburse companies and individuals even if they don’t submit proof that their losses came from the spill.

The 5th U.S. Circuit Court of Appeals in New Orleans decided 2-1 to uphold a December ruling on BP’s claim, and also said that an injunction on BP payments to some businesses enacted in October should be lifted.

“The settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill,” Circuit Judge Leslie Southwick wrote. Because of this, BP will have to stick with the settlement it agreed to in 2012, despite the fact that its terms “are not as protective of BP’s present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court,” the judge wrote. In 2012, BP said the settlement was “good for the people, businesses and communities of the Gulf and is in the best interests of BP’s stakeholders.”

Last year, BP claimed that it had to pay hundreds of millions of dollars to businesses that exaggerated or invented losses from the Gulf oil spill, losses the company called “irreparable injustices.” The oil giant, which is among the most profitable companies in the world, tried in court to force local companies to prove that their losses originated from the spill, but in December, a judge said BP can’t change the interpretation of its settlement just because it is paying more for losses than it expected. That judge’s ruling was upheld this week. A BP spokesman said the company is considering appealing the decision again.

BP had originally estimated that it would be paying about $7.8 billion to businesses and Gulf residents, but in February, it upped its estimate to $9.2 billion, saying that amount could end up being “significantly higher.” So far, BP has paid out about $3.84 billion to 42,272 claimants.

Though it previously agreed to the settlement, BP has gone on the offensive in recent months. Last year, the oil giant began printing full-page ads in the Wall Street Journal, New York Times and Washington Post, some of which have run as recently as March 4. The ads provide scenarios of claims that BP think could be fraudulent and asks the reader whether they would approve the claim.

“BP remains committed to paying all legitimate claims of real people who suffered real financial losses from the spill,” one of the ads reads. “But we will take whatever legal steps necessary to ensure that fraud is not rewarded and claims money goes to claimants who actually deserve it.”

Last year, BP also set up a hotline for citizens to report cases of fraudulent claims, a tool that rewards callers if the claim they report leads to an indictment, recovery of money or denial of a claim.

As BP considers whether or not to appeal again, the effects of the 2010 disaster still linger in the Gulf. As of March 3, tar balls are still being collected from Florida beaches nearly four years after the spill. And recent research has found that chemicals in crude oil can be harmful to hearts of developing fish, meaning that any organism that swam near the Deepwater Horizon rig was exposed to cardiac risks.