NEW ORLEANS--A federal judge said Wednesday that BP must stand
by the agreement it made with the companies it compensated for
losses blamed on the 2010 Gulf oil spill.
The oil giant had argued that a flawed funding formula enabled
nearly 800 businesses to overestimate their spill-related claims.
About 150 claimants should return a total of $185 million, and
overpayments to the rest haven't been calculated, attorney Kevin
Downey argued.
U.S. District Judge Carl Barbier wasn't persuaded, thwarting
BP's latest attempt to control potential liabilities now
approaching $50 billion.
The judge agreed weeks ago to change the compensation formula
for any future payments, but ruled Wednesday that a deal is a deal
when it comes to the money BP has already paid out. Under that
agreement, claimants agreed not to sue, and BP agreed that no
future court action could change their payments.
"BP disagrees with today's decision and will appeal it,"
spokesman Geoff Morrell said. "We asked the Court, as a matter of
equity and fairness, to order the return of excessive
payments."
Judge Barbier said he would rule later on the issue of
compensation for cleanup workers whose chronic medical problems
weren't diagnosed until after the deal's cutoff date of April 16,
2012. The settlement entitled cleanup workers with chronic
conditions including rashes and breathing problems to receive up to
$60,700 if the problems first surfaced within days of their cleanup
work.
The 2010 spill was the nation's worst oil disaster, beginning
with an explosion that tore open the oil company's Macondo well on
the floor of the Gulf of Mexico, destroying the Deepwater Horizon
drilling rig and killing 11 workers.
As the spill defied containment efforts for nearly three months,
fouling seafood grounds, coastal marshes and beaches, BP sought to
restore its image and limit its liability by promising to
compensate the victims.
Trying to force businesses to return that compensation could
cost the London-based company some goodwill, but BP's financial
pressures are different now.
"In 2010 and 2011, BP was willing to cut any deal necessary with
anyone to reduce its legal risk," said Pavel Molchanov, an energy
analyst for Raymond James. "Now the company is taking a more
assertive approach."
BP's closing share price was $50.20 the day of the explosion,
and fell to $22.80 in June 2010, before the well was capped.
Shareholders returned after BP set aside $42 billion to cover its
liabilities, reassured the financial damage was contained.
That is no longer so clear: The judge's ruling this month that
BP showed gross negligence and willful misconduct added a new level
of uncertainty around BP's spill-related expenses, reducing its
market value by $9 billion in a single day.
"That was not expected," Mr. Molchanov said. "It added a big
question mark."
BP's total potential liabilities now include up to $18 billion
in fines and penalties that could be imposed for violating federal
pollution laws, and more than $27 billion BP says it has already
paid to restore the coast and settle damage claims.
The claims office said it has paid $4.1 billion to more than
50,700 people and businesses as of Wednesday, and it isn't done
yet--the settlement fund isn't capped.
BP's stock fell 21 cents on Wednesday, closing at $45.51 a
share. The oil giant reported profit of $24 billion last year, but
analysts have said it could be forced to sell assets to cover the
fines.
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