BP Wants Business to Repay ‘Windfall’ Oil Spill Claim Overayments

By Jonathan Stempel | June 30, 2014

BP Plc has asked a U.S. judge to direct what it called a “vast number” of businesses to repay hundreds of millions of dollars it says were wrongly awarded as compensation on claims stemming from the 2010 Gulf of Mexico oil spill.

In a Friday court filing, BP asked U.S. District Judge Carl Barbier in New Orleans to require businesses to make restitution plus interest of excess payments, which it called “windfalls.” It also requested an injunction to stop the businesses from spending these excess sums.

BP said letting the overpayments stand would create discrepancies that reward some businesses whose awards were made sooner. It also said “there is no public interest in permitting dissipation of assets to which claimants had no right.”

Friday’s request escalates BP’s legal battle over how to interpret its 2012 settlement to resolve claims by businesses who said they suffered economic losses because of the spill.

BP has long said the businesses’ lawyers and claims administrator Patrick Juneau have misinterpreted the settlement, allowing recoveries without proof that the spill caused losses.

The London-based oil company has said the uncapped settlement could cost $9.2 billion, higher than its original $7.8 billion estimate, and that this amount could grow.

On June 9, the U.S. Supreme Court said BP must continue to pay claims as it pursues legal challenges to the payouts.

Friday’s filing came six months Barbier directed Juneau to change his policy in reviewing claims applications, and ensure that claimants be able to “match” revenues with costs for the purpose of calculating financial losses.

BP said Juneau’s new policy, which won court approval on May 5, will lead to “dramatically different calculations of lost profits,” and justifies recouping earlier, inflated awards.

To illustrate the potential changes, BP said a seller of animal skins would have under the new policy been paid $14 million less than it was awarded, while a construction company located hundreds of miles from the Gulf would have been paid $8.4 million less.

Juneau’s earlier interpretation “resulted in claimants receiving awards well in excess of what they are entitled to under the settlement agreement – in some cases by millions of dollars – or awards that weren’t warranted at all,” BP spokesman Geoff Morrell said. “Letting these erroneous awards stand uncorrected would violate basic principles of fairness and equity.”

Steve Herman and Jim Roy, the lead lawyers for business claimants, said in a statement: “This is just another attempt by BP to back out of the commitment it made to the Gulf.”

A spokesman for Juneau did not immediately respond to a request for comment.

The April 20, 2010 explosion of the Deepwater Horizon drilling rig and rupture of BP’s Macondo oil well led to 11 deaths and the largest U.S. offshore oil spill. BP has said it has taken $42.7 billion of pretax charges for the spill.

The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)

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Latest Comments

  • June 30, 2014 at 4:25 pm
    mickey aldridge says:
    Sounds like BP is positioning itself for a defense later when they are taken to court by those claimants who had to go through the matching process and thus will receive much ... read more
  • June 30, 2014 at 2:23 pm
    Mr. Integrity says:
    BP has every right to seek restitution for monies that were paid with no direct ties to damage -- remotely or otherwise -- from the gulf spill. Just like Feinberg is creating... read more
  • June 30, 2014 at 1:42 pm
    Puzzled in PA says:
    It's not like they are losing money now, though, given the price of crude oil. Over the past 2 years they have reported a total of $30.5 billion in underlying replacement cos... read more
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