BP Says Fed Judge Is Blocking Payment Review

NEW ORLEANS (CN) - Attorneys for BP returned to a 5th Circuit hearing room on Monday striving to claw back what the energy company claims have been hundreds of thousands of dollars in oil spill overpayments.

Among the issues, from BP's perspective, are alleged overpayments accepted by non-profit organizations that suffered no actual harm from the oil spill and yet have received hundreds of thousands of dollars in oil spill money simply because of the way the settlement agreement was crafted.

Thomas Hungar, a partner with the Washington D.C. firm of Gibson, Dunn & Crutcher LLP, told the three-judge appellate panel the district Court that approved the settlement is making it impossible for BP to seek review of payments.

Hungar said BP has been barred from putting certain documents on the district court docket and said BP's documents exist in a "shadow docket" state, which keeps them off the public record and, without record, makes it impossible to seek appeal.

In response, attorneys for several plaintiffs argued that it is up to BP to create its own docket.

U.S. District Judge Carl Barbier, who is overseeing the consolidated oil spill litigation, has consistently ruled that because BP's own attorneys helped to create the 2011 settlement agreement, and because BP had ample opportunity to verify its various elements and make changes before it was signed, it is now too late for the company to dispute the agreement's payment terms or methods.

Last month Barbier ruled against letting BP claw back certain oil spill overpayments. That ruling did not affect the overpayments BP argued over yesterday.

In regard to Barbier's ruling, Hungar said that in the instances the judge allowed to be considered, BP was able to show it "undisputedly overpaid."

Hungar said that one of class council's arguments was the oil company should have to pay because it failed to appeal the settlement or the amounts as they were initially approved.

Hungar said BP could not appeal the payments because it has been denied appeals of that sort.

U.S. Circuit Judge Edward Prado, "asking for selfish reasons," asked how many overpayments BP might appeal, assuming it could.

Hungar said of the 200,000 claims that have been processed to date, BP has only appealed around 5,000, and of those, only a few have wound up before the 5th Circuit.

Judge Prado said he remembered there being a release clause, or "something of the sort," attached to the settlement agreement, which prevents BP from appealing payments.

Hungar said BP should nevertheless be entitled to appeal and indicated that only the claimants are "bound" by the terms of the settlement agreement.

Arguing on behalf of plaintiffs, Samuel Issacharoff, a professor at New York University School of Law, told the judges that no 5th Circuit decision has ever addressed anything "so trivial" as BP's nitpicking its own settlement agreement.

"I don't mean to minimize it," Issacharoff added.

Issacharoff said seven different circuit judges have so far have had to address "some application" of this issue.

Looking to U.S> Circuit Judge Jerry Smith's previous opinion, Issacharoff paraphrased Smith saying the 5th Circuit doesn't take up this sort of issue; it belongs to the district court.

Issacharoff said, with regard to BP's overpayments to nonprofits, the particular facts of the case are "non-reviewable."

He said the determination of settlement payments is "across the board" and has been used to calculate the losses of "thousands upon thousands upon thousands" of applicants.

Issacharoff said appeals must be both "timely" and "important." He additionally argued that BP's claims it cannot enter docket or appeal are false. BP, he said, could enter documents into docket themselves and can enter notice of appeal without docketing.

In his rebuttal, Hungar cited a previous order from the district court that he said was specifically intended to keep BP off the docket.

BP wants to do away with the "gamesmanship" of the settlement agreement, Issacharoff said.

Senior U.S. Circuit Court Judge Fortunato Benavides said of the settlement agreement and BP's complaints: "It's not the implementation, it's the interpretation."

Issacharoff disagreed, saying "otherwise, everything becomes a matter of interpretation."

Immediately after the hearing, BP issued a lengthy written statement amplifying its attorney's statements in the courtroom.

"In the course of BP's challenge of those awards, on May 20, the District Court issued an order that denied judicial review of all awards by the settlement program that turn solely on specified policies issued by the Claims Administrator, improperly depriving BP of its appeal rights," said the statement, which was attributed to Geoff Morrell, the former Defense Department press secretary who joined BP in the wake of the April 2010 oil spill.

"The order also improperly blocked the parties form filing requests for judicial review on the public court docket, thereby denying the public the opportunity to be informed about ongoing judicial proceedings and impermissibly interfering with BP's right to make an appropriate record for appeal. To uphold the District Court's order would violate federal rules, and conflict with the case law not only in the Fifth Circuit but in other judicial circuits as well. These important issues implicate awards involving tens of millions of dollars," the statement said.

Class counsel declined comment.

Last month Judge Barbier found BP grossly negligent for its part in the April 2010 Deepwater Horizon disaster that killed 11 and dumped 4.9 million barrels of oil and more than 1.8 million gallons of chemical dispersant into the Gulf of Mexico.

The third phase of the trial over the spill is scheduled to begin in January, and will be heard in Judge Barbier's courtroom without a jury. This final phase is to determine exactly how much oil was spilled. BP could face up to $18 billion in Clean Water Act fines.

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