Judge orders BP to pay $130 mln fees to Gulf claims program

NEW ORLEANS Thu Aug 8, 2013 2:29am IST

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NEW ORLEANS Aug 7 (Reuters) - BP Plc must pay $130 million to a court-appointed administrator overseeing payments to thousands of people who claimed they were hurt by the 2010 Gulf of Mexico oil spill, a federal judge ruled on Wednesday, in a fresh legal setback for the oil company.

BP had balked at funding the third-quarter operating budget for the administrator, Louisiana lawyer Patrick Juneau, complaining that his bill contained "excessive costs."

But U.S. Magistrate Judge Sally Shushan in New Orleans ruled that it was "unreasonable" for BP to halt funding.

Fees have topped $560 million since Juneau's team started work in June 2012, shortly after BP reached an agreement with businesses and residents to compensate them for spill-related injuries.

The fees amount to about 18 cents for each of the $3.1 billion paid out so far, data from the claims administrator and the settlement show. BP's finance director projected last week that the fees could eventually top $1.5 billion.

BP did not comment on Shushan's ruling.

It is trying to halt payouts, at least temporarily, complaining that Juneau's payout formula is too generous, and that it has uncovered evidence of fraud and conflicts of interest in how claims are assessed.

Shushan's colleague, U.S. District Judge Carl Barbier, previously rejected BP's request to freeze payouts. BP is appealing that ruling, and its appeal is pending before a federal appeals court in New Orleans.

On Monday, BP submitted court papers suggesting new evidence of fraud and conflicts.

Juneau previously announced an internal probe of allegations that a former worker in the program referred claimants to lawyers in exchange for a share of payments.

The costs to BP of running the program include payments to court-appointed vendors and appeals panelists.

Also included are the administrative costs to process remaining claims from the Gulf Coast Claims Facility, a fund set up to pay claimants before the current settlement was reached.

BP has incurred about $42.4 billion of charges related to the April 20, 2010 explosion of the Deepwater Horizon drilling rig and rupture of the company's Macondo well. Eleven people died, and the resulting offshore oil spill remains the largest in U.S. history.

The company originally expected the payout program to cost $7.8 billion, but last week boosted its estimate to $9.6 billion and said it could go much higher.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

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