Federal judge rules proof of direct causation unnecessary for BP oil spill claimants

[JURIST] US District Judge Carl Barbier for the US District Court Eastern District of Louisiana [official website] ruled [order, PDF] on Tuesday that BP [corporate website] could not require businesses to provide proof their economic losses were directly caused by the 2010 Deepwater Horizon Oil Spill [JURIST news archive] under the terms of their prior settlement agreement. Under the $9.2 billion settlement, BP had agreed that businesses in certain geographical regions were presumed to have economic losses from the oil spill if those losses followed a specific pattern. BP had challenged those terms [Bloomberg report], arguing that businesses could only recover if their damages directly linked to the spill, and stating that spill payments had been wrongly inflated through fake claims and poorly calculated economic losses. Barbier wrote that "the delays that would result from having to engage in a claim-by-claim analysis of whether each claim is 'fairly traceable' to the oil spill...are the very delays that the Settlement, indeed all class settlements, are intended to avoid" and that not only was the framework BP previously agreed "an efficient and 'economically appropriate' method of determining causation," but that a showing of direct causation "would bring the claims administration process to a virtual standstill." BP has indicated that it will appeal the ruling. However, Barbier did side with BP on one issue, holding that spill-related losses should be calculated with matched revenue and expenses, overruling a previous decision that said that some expenses and revenue did not need to be matched.

Tuesday's ruling is the most recent development in a long series of legal battles that have arisen from the Deepwater Horizon Crisis in April 2010, which killed 11 people and released millions of barrels of oil into the Gulf of Mexico. The US Court of Appeals for the Fifth Circuit [official website] in October reversed a district court ruling that interpreted a settlement agreement [JURIST reports] between BP and the class of parties injured in the Deepwater Horizon oil spill in a way that permitted recovery for artificial and inflated claims. In September, Halliburton Energy Services [corporate website; JURIST news archive] pleaded guilty [JURIST report] to charges that it had destroyed evidence in connection with its role in the BP oil spill in US federal court. In January a judge for the US District Court for the Eastern District of Louisiana accepted a plea agreement [JURIST report] between BP and the US Department of Justice (DOJ) [official website] for the company's criminal liability in the spill. Earlier in January Transocean Ltd. [corporate website] pleaded guilty [JURIST report] to "negligently discharging oil into the Gulf of Mexico," in violation of the Clean Water Act (CWA) [EPA summary] and agreed to pay $1 billion in civil penalties and $400 million in criminal penalties for its role in the Deepwater Horizon spill. According to JURIST Guest Columnist Tim McEvoy, the BP settlement is an appropriate step [JURIST op-ed] toward dealing with the spill's harmful consequences.

 

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