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BP seeks to recoup 'windfall' Gulf spill payments

Fri, 27th Jun 2014 22:41

By Jonathan Stempel

June 27 (Reuters) - BP Plc has asked a U.S. judge todirect what it called a "vast number" of businesses to repayhundreds of millions of dollars it says were wrongly awarded ascompensation on claims stemming from the 2010 Gulf of Mexico oilspill.

In a Friday court filing, BP asked U.S. District Judge CarlBarbier in New Orleans to require businesses to make restitutionplus interest of excess payments, which it called "windfalls."It also requested an injunction to stop the businesses fromspending these excess sums.

BP said letting the overpayments stand would creatediscrepancies that reward some businesses whose awards were madesooner. It also said "there is no public interest in permittingdissipation of assets to which claimants had no right."

Friday's request escalates BP's legal battle over how tointerpret its 2012 settlement to resolve claims by businesseswho said they suffered economic losses because of the spill.

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

The London-based oil company has said the uncappedsettlement 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 topay claims as it pursues legal challenges to the payouts.

Friday's filing came six months Barbier directed Juneau tochange his policy in reviewing claims applications, and ensurethat claimants be able to "match" revenues with costs for thepurpose of calculating financial losses.

BP said Juneau's new policy, which won court approval on May5, will lead to "dramatically different calculations of lostprofits," and justifies recouping earlier, inflated awards.

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

Juneau's earlier interpretation "resulted in claimantsreceiving awards well in excess of what they are entitled tounder the settlement agreement - in some cases by millions ofdollars - or awards that weren't warranted at all," BP spokesmanGeoff Morrell said. "Letting these erroneous awards standuncorrected would violate basic principles of fairness andequity."

Steve Herman and Jim Roy, the lead lawyers for businessclaimants, said in a statement: "This is just another attempt byBP to back out of the commitment it made to the Gulf."

A spokesman for Juneau did not immediately respond to arequest for comment.

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

The case is In re: Oil Spill by the Oil Rig "DeepwaterHorizon" in the Gulf of Mexico, on April 20, 2010, U.S. DistrictCourt, Eastern District of Louisiana, No. 10-md-02179. (Reporting by Jonathan Stempel in New York; Editing by BernardOrr)

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