BP-Claims Chief Faces Knotty Task


BILOXI, Miss.—Along the Gulf Coast, people call Kenneth Feinberg the $20 billion man.

The government-appointed administrator who will run the huge oil-spill compensation fund starting next month has assured thousands of business people and fishermen that he is here to heal their pain and make them whole. He has hugged distraught crabbers and slipped his business card to boat captains.

He has been welcomed everywhere as he has toured communities stricken by the worst offshore oil spill in U.S. history, from the Florida Panhandle to the Louisiana bayou.

In a series of meetings this week, Mr. Feinberg heard pleas from business owners and fishermen, and reassured them with the declaration: “You have a claim.”

Soon, though, he is going to start telling people they don’t have a claim.

“I’m going to have to lay down some lines,” says the Washington-based lawyer, talking backstage before a town-hall meeting Thursday, his fifth such meeting along the coast in two days. “That means some people will be excluded—and unhappy.”

Mr. Feinberg has put most of his energies so far into explaining the process and getting as many people as possible to apply for help. He has shown only occasional flashes of the skepticism he says will kick in once he actually takes over the unwieldy claims process and begins issuing rules to clarify who stands to get money from the escrow account funded by BP PLC, and who doesn’t.

Many who want money from the spill fund—from realtors and bankers to inland motel owners and most people along Florida’s west coast—could be left empty handed.

The White House and BP picked Mr. Feinberg in June to administer what is known as the Gulf Coast Claims Fund. His mission, as he describes it: Compensate individuals and businesses hit by the spill, and minimize litigation against BP.

In scope and complexity, Mr. Feinberg’s task on the Gulf Coast dwarfs what he and others grappled with after the Sept. 11th terrorist attacks or the 2005 Hurricane Katrina.

Unlike the federal 9/11 victims’ fund, or insurance payouts following Katrina, Mr. Feinberg has no legislation or contracts to steer him as he determines who is entitled to money and who isn’t.

Some potential questions he faces: Do you reimburse only those businesses within a mile of shore? Do all businesses potentially qualify, from barber shops to fish-processing factories? What do you say to the crabber with no proof he ever earned a salary?

“The law provides little certainty on who should be eligible and who shouldn’t,” said Marshall Shapo, a tort-law expert at Northwestern University. “What comes out the other end of his sausage maker won’t be pretty.”

Mr. Feinberg says he will weigh three key criteria: proximity to the coast, dependence on the natural resources harmed by the spill and the hierarchy of industries most clearly affected.

The upshot, he said, is that businesses and individuals who are once—or twice—removed from the spill could be out of luck. And that, he said, would likely exclude all of Florida south of Panama City.

“In my business,” he said, “there is no such thing as happy or grateful. All I want to do is help people get compensation.”

Mr. Feinberg first plans to enlarge and speed up the emergency payments that BP has already been making to individuals and businesses. Then he will begin to weigh much larger lump-sum offers to those harmed.

Dressed in a blue suit and polished wingtips and fielding questions in a cavernous civic center in Houma, La., on Thursday, Mr. Feinberg urged nearly every questioner to file a claim.

When the head of the Houma Nation, Chief Thomas Dardar Jr., stepped forward to say that his tribe’s “very existence is being threatened” by the spill, Mr. Feinberg shot back: “Absolutely you have a claim.”

He urged the tribe to file for damages to habitat and scenery, and for each member of the tribe—which numbers around 17,000— to file individually.

Danny Babin, owner of Gulf Fish Inc., said his shrimp-processing plant eked out a “meager profit” in May and June, despite its shrinking inventory, which was now barely 15% of what it was last year. And yet BP would only make up for lost profits, not diminished inventory.

Mr. Feinberg made a spot ruling.

“If you are out of inventory, you have already suffered losses,” he told Mr. Babin. “You have a claim.”

On the thorny issue of people making claims with no firm documentation to prove lost earnings, Mr. Feinberg came close to laying down a firm line.

“You will have to offer some form of corroboration,” he told the crowd in Houma. But lacking all paperwork, he said, people should at least bring in their “priest, mayor or sheriff” to vouch for them.

But in Biloxi the next day, Mr. Feinberg faced real-estate agents asking to be made whole for house sales that had fallen through, and a local banker seeking reimbursement for a series of busted loan deals.

Mr. Feinberg was dubious. To one out-of-work Realtor he said, “Too bad you’re not a ship’s captain.”

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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