BP Can’t Remove Gulf Spill Claims Administrator

November 11, 2014

BP Plc lost a bid to remove Patrick Juneau, the claims administrator overseeing payouts for the 2010 Gulf of Mexico spill, according to a New Orleans federal court ruling today.

Juneau is in charge of the London-based energy company’s $9.2 billion settlement of damage claims stemming from the worst offshore oil spill in U.S. history. BP claimed the lawyer had a conflict of interest because he briefly represented Louisiana in the early days of the spill.

U.S. District Judge Carl Barbier, who is in charge of thousands of spill-damage lawsuits consolidated in New Orleans, rejected BP’s request today, saying the company should’ve complained sooner about any potential bias.

“It is beyond cavil that BP had actual knowledge of Mr. Juneau’s previous consulting work on behalf of the state of Louisiana” and discussed that work when it vetted Juneau for the job, Barbier said.

BP has been fighting Juneau and federal judges in New Orleans for more than a year over numerous policy interpretations the company claims are inflating the cost of its settlement beyond expectations.

Loss Formulas

Barbier and the U.S. Court of Appeals in New Orleans upheld Juneau’s decision to pay hundreds of millions of dollars in claims to businesses that weren’t required to prove their losses were directly tied to the spill. BP says it never intended to pay those types of claims, but Barbier ruled that deal terms required compensation for all firms that met certain mathematical loss formulas that varied by industry and distance from the spill.

The company has asked the U.S. Supreme Court to review Juneau’s interpretations and the rulings upholding them, along with other court decisions BP now claims render its settlement invalid.

BP also faces trial in January, when Barbier will determine how much it must pay in penalties for violations of the U.S. Clean Water Act. In a worst-case scenario for the company, BP’s fines could exceed $18 billion, which would come on top of the more than $28 billion it has already paid in cleanup costs and damages.

The cost of the claims already settled is “likely to be significantly higher” than the most recent estimate of $9.7 billion, the company said in an Oct. 28 earnings statement.

Geoff Morrell, a spokesman for BP, said the company strongly disagrees with Barbier’s ruling and is considering an appeal.

“BP will also continue its efforts to restore needed and promised integrity and transparency to the Gulf claims program,” Morrell said in an e-mail. “Simply put, it is unacceptable for the claims program to continue operating as it has been – inefficiently, secretively, and marred by corruption, fraud, and conflicts of interest.”

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

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