NEW ORLEANS (CN) - BP has until Monday to pay $130 million from its oil spill claims program despite its complaints of the program's "poor productivity and excessive costs," a magistrate judge ruled.
U.S. Magistrate Judge Sally Shushan on Wednesday gave BP until Monday to hand over the money, finding that BP's approval of the Court Supervised Settlement Program's third quarter budget had "been unreasonably withheld,"
Shushan added that "going forward, the Claims Administrator shall submit its proposed quarterly budgets to the parties 60 (sixty) days prior to the quarter."
Last Monday, Aug. 5, BP asked the court for a second time to suspend settlement program payments, claiming it had found new evidence of fraud in the claims program. BP that day sent a letter to the claims program , denying the program's request for third-quarter funding.
"It would be unreasonable to approve a budget that validates and incentivizes the various claims administration vendors to perpetuate their track record of poor productivity and excessive costs," BP claims director Maria T. Travis wrote.
The letter states that vendor fees in the claims program increased in April and May by 7 percent, and vendor expenses increased by 41 percent in April.
Before issuing her order Wednesday, Judge Shushan held a hearing for BP to show cause why the claims administration's third quarter budget should not be funded.
Shushan's four-page order denying BP's request begins: "On June 18, 2013, I attended a meeting at the request of the Claims Administrator. The meeting involved representatives of BP, Class Counsel, and the major vendors for the Court Supervised Settlement Program ('CSSP'). The meeting lasted all day and BP was given the opportunity to question the Claims Administrator and the vendors regarding the administration of the CSSP and the expenses incurred in running the program for which BP provides the funding.
Shushan's order states that four days later, on June 21, an attorney for BP sent a letter to U.S. District Judge Carl Barbier, who is overseeing the multidistrict oil spill litigation, and asked for an "examination of the CSSP for four reasons, one of which is applicable here: 'Significantly higher than expected administrative costs and expenses.'"
On July 1, Patrick Juneau, the claims administrator sent a letter to BP.
"As an initial matter, the Claims Administrator pointed out that BP had not followed the provisions of the Settlement Agreement, specifically Section 4.3.4 whereby a three person Claims Administration Panel is convened to address and attempt to resolve unanimously any issues or disagreements that arise regarding the Claims Administrator's oversight responsibilities, settlement administration, or any other issues involving the settlement program. Only then will a dispute be brought to the Court for resolution," Shushan's order states.
The claims center sent its third quarter budget to BP on July 17 and said the fund would be out of money within 10 days.