US appeals court says BP bound by Gulf spill accord

By Jonathan Stempel

March 4 (Reuters) - A divided U.S. appeals court has

rejected BP Plc (LSE: BP.L - news) 's bid to block businesses from recovering

money over the 2010 Gulf of Mexico oil spill, even if they could

not trace their economic losses to the disaster.

By a 2-1 vote, the 5th U.S. Circuit Court of Appeals in New

Orleans late Monday upheld a Dec. 24 ruling by U.S. District

Judge Carl Barbier in New Orleans, authorizing the payments on

so-called business economic loss claims. It also said an

injunction preventing payments should be lifted.

The decision is a setback for BP's effort to limit payments

under a multi-billion dollar settlement over the April 20, 2010,

explosion of the Deepwater Horizon drilling rig and rupture of

BP's Macondo oil well.

That disaster killed 11 people and triggered the largest

U.S. offshore oil spill.

Geoff Morrell, a BP spokesman, said the company may appeal.

BP had previously asked the full 5th Circuit to review a Jan. 10

decision by another three-judge panel that upheld the settlement

itself.

BP previously settled U.S. criminal proceedings over the

spill, and has completed two phases of a three-part civil trial

before Barbier, where it could face more than $17 billion of

penalties.

The company has set aside $42.7 billion for cleanup,

compensation, legal and other costs related to the spill,

. It has estimated that business economic loss

claims in the latest appeal totaled about $1 billion.

"Each $1 billion extra on claims equates to just 2 pence per

share for BP," Investec (LSE: INVP.L - news) analysts said in a note.

BP shares traded down 0.3 percent at 491.6 pence in late

afternoon trading in London.

RESUMPTION OF PAYMENTS EXPECTED

Barbier ruled that BP would have to live with its earlier

interpretation of a Dec. 2012 settlement with businesses and

individuals harmed by the spill, in which certain businesses

claiming losses were presumed to have suffered harm.

BP argued that this would allow businesses to recover for

fictitious losses, but the 5th Circuit rejected its appeal.

"The settlement agreement does not require a claimant to

submit evidence that the claim arose as a result of the oil

spill," Circuit Judge Leslie Southwick wrote for the majority.

Terms of the settlement "are not as protective of BP's

present concerns as might have been achievable, but they are the

protections that were accepted by the parties and approved by

the district court," the judge added.

The 5th Circuit also said claims administrator Patrick

Juneau retained the authority to root out bogus claims, without

having to perform the "gatekeeping" function that BP sought.

Circuit Judge Edith Brown Clement dissented, saying the

decision wrongly helps claimants whose losses had "absolutely

nothing to do with Deepwater Horizon or BP's conduct."

Steve Herman and Jim Roy, who represent the business

claimants, said in a joint statement: "Today's ruling makes

clear that BP can't rewrite the deal it agreed to."

Juneau, in a statement, said the decision "appears to clear

the way" for the resumption of payments on business economic

loss claims, and that he will resume making such payments upon a

formal direction from the district court.

BP originally projected that the settlement would cost $7.8

billion. As of Feb. 4, it had boosted this estimate to $9.2

billion, and said this sum could grow "significantly higher."

As of Monday, about $3.84 billion had been paid out to

42,272 claimants, according to Juneau's website. ()

The case is In re: Deepwater Horizon, 5th U.S. Circuit Court

of Appeals, Nos. 13-30315 and 13-30329.