BP loses bid to block seafood fund payments

[February 27, 2014]  By Jessica Dye

(Reuters) - A U.S. federal judge on Wednesday denied BP Plc's <BP.L> request to halt payments from the $2.3 billion fund it has created to compensate commercial fishermen for financial losses claimed after the British company's 2010 offshore oil spill, according to court records.

BP had sought to block the payments after alleging that some individuals supposedly injured by the spill, clients of attorney Mikal Watts, did not exist. The company said it has already paid out more than $1 billion from the so-called Seafood Compensation Fund.

District Judge Carl Barbier in New Orleans, who is overseeing litigation stemming from the spill, denied the motion on Wednesday, according to an entry on the court docket. The judge also granted Watts's motion to stay BP's civil action against him over the alleged fraud pending a related federal criminal investigation.

In a statement, lawyers for BP plaintiffs, Steve Herman and Jim Roy, said they were "pleased the court will not let BP hold the entire seafood program hostage as part of its continuing effort to rewrite history and the settlement agreement."

BP and Watts did not immediately return requests for comment Wednesday evening.

The ruling followed a hearing in the New Orleans federal court, where litigation related to the Gulf of Mexico spill has been consolidated. Also on Wednesday, a federal judge in a related case indefinitely postponed a criminal trial set to begin March 10 for David Rainey, a former vice-president of exploration for the Gulf of Mexico.

Rainey was charged with obstructing an investigation by Congress into the Gulf spill, and another count of lying to law-enforcement officials. The judge overseeing his case, U.S. District Judge Kurt Engelhardt, dismissed the obstruction count, which federal prosecutors have appealed. Prosecutors later re-filed the obstruction of Congress charge in a superseding indictment.

In an order made public Wednesday, Engelhardt said that Rainey's trial will be delayed pending the appeals court's resolution of the appeal, which "will likely provide critical parameters for further proceedings in this matter."

(Reporting by Jessica Dye in New York; Editing by Ken Wills)

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