BP’s Spill Bill Just Got Longer
The estimated cost of the settlement BP (NYSE:BP) — made with the individuals and businesses harmed by the effects of the 2010 Gulf of Mexico oil spill — has soared above the company’s initial calculation by billions. In its second-quarter results, the oil producer revealed that restitution-related costs grew by $1.4 billion, leaving the $20-billion fund set up to compensate oil spill victims close to exhausted.
Just $300 million remains, and the deadline for Gulf Coast business is not until April of next year, which account for the majority of the payouts to file claims of economic loss.
BP has blamed the run-up of its spill bill on court-appointed fund administrator Patrick Juneau, who the company has said compensates “fictitious and inflated losses.” Payments were meant to compensate those Gulf Coast residents who endured the months-long oil leak that befouled beaches, killed wildlife, and disrupted the economies of their states. However, BP has said that the Court Supervised Settlement Program has been approving excessive or false damage claims. BP has already spent an estimated $42 billion on cleanup, compensation, and penalties.
In a U.S. District Court in New Orleans, the company has tried to argue that Juneau has made payment awards much more generous than the settlement intended. In fact, the oil producer has said that he was giving “unjustified windfall payments.” But so far, the company has failed to convince U.S authorities to stop the payments and conduct a review.
Judge Carl Barbier has even refused to freeze the payments while former Federal Bureau of Investigation Director Louis Freeh investigates allegations of misconduct on by a lawyer who worked for Juneau.
In a letter penned by BP on Monday, the company alleged that the claims process was plagued with problems. While Magistrate Sally Shushan did say BP’s concerns about Juneau’s operation of the program are “legitimate,” reported The Wall Street Journal, she ordered the company to pay more than $130 million to the administrator of the multibillion-dollar settlement. Shushan said that BP was required to finance the settlement fund’s third quarter despite claims that Juneau did not provide adequate documentation for the requested money.
After the Macondo well exploded, killing 11 men and causing 4 million barrels of oil to leak into the gulf, BP said it wanted to clean up the mess, pay what it owed, and get back to business. But three years have passed and the company is still at war with plaintiffs lawyers.
“Quite frankly, the results have been really strange,” said the company’s Chief Executive Officer Robert Dudley, regarding the ongoing legal dispute, in a recent interview with Bloomberg. “The claims going through a claims facility have resulted in absurd results, and millions of dollars are going out to pay people who suffered, in many cases, no losses from the spill.”
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