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BP appeal to stop 'fictitious' U.S. oil spill claims fails

A hard hat from an oil worker lies in oil from the Deepwater Horizon oil spill on East Grand Terre Island, Louisiana June 8, 2010. REUTERS/L
A hard hat from an oil worker lies in oil from the Deepwater Horizon oil spill on East Grand Terre Island, Louisiana June 8, 2010. REUTERS/L

(Reuters) - One of BP's attempts to curb payouts for what it says are "fictitious" and "absurd" claims related to the 2010 Gulf of Mexico oil spill has failed after a legal appeal was rejected by a U.S. court.

BP had argued in its appeal that the administration of a 2012 settlement agreement was faulty because it allowed claimants without actual damages to join in.

But a panel of the 5th U.S. Circuit Court of Appeals on Friday affirmed a federal judge's approval of the multi-billion dollar settlement between the oil company and businesses and individuals who lost money and property in the spill.

The ruling is a blow to the company's attempt to curb payouts to what it says are undeserving claimants.

Two out of three judges on the appeals court panel rejected BP's arguments. The court's findings said that the company had failed to explain "how this court or the district court should identify or even discern the existence of 'claimants that have suffered no cognizable injury.'"

BP said in an emailed statement on Saturday that it was assessing its legal options following the court's decision.

"BP will continue to press its position on the proper interpretation of the settlement agreement's provisions requiring a causal nexus between a claimant's injury and the spill," BP spokesman Geoff Morrell said.

BP had originally projected that its settlement in the case would cost $7.8 billion. As of late October it had boosted this estimate to $9.2 billion, and said this sum could grow "significantly higher" with billions of dollars already having been paid out to claimants who range from hotel owners to oyster gatherers.

Amongst the claims against which BP has protested are one for $21 million from a Louisiana rice mill which is located 40 miles from the coast and which earned more revenue in 2010 than in any of the previous three years.

Three years on, the shadow of the explosion of the Deepwater Horizon drilling rig continues to hang over the company. The blast ruptured a BP well killing 11 people and triggering the largest-ever U.S. offshore oil spill.

BP still faces potential fines under the Clean Water Act. It has filed numerous lawsuits to curb payouts related to the spill after taking provisions for $42.4 billion to cover the clean-up, compensation and fines.

(The story is refiled to clarify in headline one of several appeals)

(Reporting by Alex Dobuzinskis and Sarah Young in LONDON; additional reporting by Andrew Callus; Editing by Toby Chopra)

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