Payments from $20 billion BP spill fund halted for now

The ongoing $20 billion payout to people and businesses harmed by BP’s 2010 Gulf of Mexico oil spill has hit a bump in the road.

The Gulf Coast Claims Facility (GCCF) halted payments Dec. 30 as it seeks clarification of a court order to place 6 percent of payments into an escrow account for plaintiffs' fees in spill litigation.

An attorney for the independently run fund, in a Jan. 3 letter to the Louisiana federal judge hearing consolidated lawsuits over the massive spill, asks whether the withholding should be applied retroactively to claims paid since early November.

The letter from attorney David Pitofsky to Judge Carl Barbier of the U.S. District Court for the Eastern District of Louisiana also asks the court to review other aspects of how the fund is carrying out the recent withholding order.

“Effective Dec. 30, 2011, the GCCF has temporarily frozen all payments to claimants and the issuance of any payment determination letters,” the letter states. “This was necessary both because the GCCF must take various administrative steps to implement the order’s requirements in order to begin withholding amounts from payments and because the GCCF seeks to confirm its interpretation of the order with the court prior to the beginning of the process of instituting the hold-back requirements.”

The letter and the court order are posted here.

BP agreed to fund the GCCF in 2010 amid the spill that dumped millions of barrels of oil into the Gulf of Mexico, a disaster that dealt a blow to the region’s fishing and tourist economy.

The company, as of Dec. 1, has paid over $7.4 billion to individuals, businesses and governments, according to a report on BP’s website.