Offshore InjuryBlog

BP Officially Takes Appeal of Settlement Agreement to Supreme Court

Several months ago after having its appeal of the settlement agreement rejected by the Fifth Circuit Court of Appeals, BP made its intention known that the company would take its appeal all the way to the Supreme Court. On Friday, August 2nd, BP officially filed its petition with the United States Supreme Court. The petition asks the Supreme Court to dismantle the current settlement agreement that BP negotiated with the Plaintiff's Steering Committee (PSC) over two years ago. Over the past 12 months, BP has stopped payments through the Deepwater Horizon Economic Claims Center as it asked the appeals courts to set aside the settlement agreement, which BP claims is being misinterpreted by Claims Administrator Pat Juneau, resulting in tens of millions of dollars in illegitimate payments.

The crux of BP's argument is an issue known as "causation." This determines whether a business's financial losses were caused by the 2010 Gulf oil spill or a different set of causes. The settlement agreement that BP helped author and sign with the PSC laid out certain zones along the Gulf Coast. If a business was in a particular zone and could meet the "V-Test" – a financial model that shows a decline in revenue shortly after the oil spill followed by a sharp increase in revenue in 2011 – the business's losses would be presumed to be caused by the oil spill.

BP initially agreed to the presumed causation clause as a part of a compromise and to eliminate a certain amount of subjectivity in the claims review process. BP later claimed that it should not have to pay any losses that were not directly caused by the spill and began the appeals process.

When the U.S. Fifth Circuit Court of Appeals rejected BP's appeal of the settlement agreement, BP asked the Supreme Court to put a stay on payments from the DHECC until it had decided whether to hear BP's final appeal. That request was rejected in June.

The Supreme Court is currently on summer break, but could decide as early as October whether to hear BP's appeal. Until then, BP has been ordered by the 5th Circuit Court of Appeals to resume payments of business economic loss claims.

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