Court rejects BP appeal: BP must pay for oil spill damages, says court

A federal appeals court on Monday refused to reconsider its previous ruling that businesses don't have to prove they were directly harmed by BP's 2010 Gulf of Mexico oil spill to collect settlement payments.

The decision by the 5th US Circuit Court of Appeals in New Orleans could be a step toward resuming a claims process that was suspended after a district court ruling in December. However, BP spokesman Geoff Morrell said in an emailed statement Monday night that the British oil company is considering its legal options.

The 2012 settlement doesn't have a cap, but BP initially estimated that it would pay roughly $7.8 billion to resolve the claims. Later, as it started to challenge the business payouts, the company said it no longer could give a reliable estimate for how much the deal will cost.

BP says it has paid out more than $12 billion in claims to people, businesses and government entities. A trial scheduled for January in New Orleans is part of the litigation that will determine how much the oil giant owes in federal Clean Water Act penalties.

BP had asked the full 5th Circuit Court of Appeals in New Orleans to rehear the case after a three-judge panel's March ruling. The court voted 8-5 against a rehearing.

The action preserves US District Judge Carl Barbier's ruling that BP had agreed in a 2012 settlement to pay claims without requiring proof that losses were directly caused by the spill resulting from the explosion of the Deepwater Horizon oil rig, which killed 11 workers.

Judge Leslie Southwick wrote in Monday's order that a 2012 policy statement, issued by the court-appointed claims administrator and developed with "input and assent from BP," spelled out the criteria for business claims.

"Instead of direct evidence of a causal connection between the Deepwater Horizon disaster and the claimant's business losses, the Exhibit described four geographic zones, several types of businesses, formulae for presenting economic losses, and various presumptions regarding causation that apply to specific combinations of those criteria."

Southwick said all parties agreed to the criteria prior to final court approval of the 2012 settlement.

Judge Edith Brown Clement dissented. "Our courts' decisions would allow payments to 'victims' such as a wireless phone company store that burned down and a RV (recreational vehicle) park owner that was foreclosed on before the spill," she wrote. "Left intact, our holdings funnel BP's cash into the pockets of undeserving non-victims." She said the ruling made the court "party to this fraud" and said judges in the majority were trying to "shift the blame for these absurdities to BP's lawyers."

Monday's ruling consolidated multiple appeals in the case and appears to settle what BP said were conflicts between two earlier panel decisions related to the settlement. It is the latest development in a complicated legal back-and-forth over to whom BP owes money following the largest oil spil in US history. A three-judge panel ruled in December that Barbier had to consider BP's arguments. But Barbier ruled against the company.

"BP is disappointed that the full Fifth Circuit will not be considering the divided panel decisions relating to the compensation of claims for losses that have no apparent connection to the spill," Morrell's statement said.

Attorneys Steve Herman and Jim Roy, lead lawyers for the steering committee of plaintiffs in the case, applauded the court's decision. "We are pleased that the Court of Appeals agreed that BP must honor its contract," they said in an email.

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