Businesses won’t have to return BP oil spill payouts, judge rules

NEW ORLEANS – BP wants its money back – hundreds of millions of dollars of it – but a federal judge said Wednesday that the oil giant must stand by the agreement it made with the companies it compensated for losses blamed on the 2010 Gulf oil spill.

BP argued that a flawed funding formula enabled nearly 800 businesses to overestimate their spill-related claims.

One construction company hundreds of miles from the coast received $13.2 million, but deserved $4.8 million at most, BP said. Another company selling “animals and animal skins” was overpaid about $14 million, and about 50 others shouldn’t have been paid at all, the company said.

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 was not 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 deal, 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,” company spokesman Geoff Morrell said. “We asked the Court, as a matter of equity and fairness, to order the return of excessive payments.”

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.

BP is still facing a financial nightmare from the nation’s worst oil disaster, which began 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.”