Not since Tony Hayward blurted out that he “wanted his life back” has BP come across as tone-deaf as it does in its latest blunder concerning claims payments to spill victims. New York Times legal reporter John Schwartz has broken a mind-blowing story on how the oil giant is now complaining that the Gulf Coast Claims Facility is being too generous with its final payment formula – arguing that Mr. Feinberg is vastly overstating the damage victims will likely suffer.
According to the NYT story, which is going viral today: “The planned payments far exceed the extent of likely future damages because they overstate the potential for future losses, the company insists in a strongly worded 24-page document that was posted on the fund’s Web site Thursday morning” (see document here: public_comments)
In yet another shameless attempt to limit its liability, BP ignores mountains of research in saying that there is “no credible support for adopting an artificially high future loss factor based purely on the inherent degree of uncertainty in predicting the future and on the mere possibility that future harm might occur.”
And let’s not forget that the GCCF, in determining final payments, is already using a laughably optimistic, BP-funded study from Texas A&M (in the heart of Oil Country), that predicts the Gulf will be completely restored to its pre-spill state by 2012. You really have to wonder what planet these people are living on. Remember the Exxon Valdez spill? That disaster happened in March 1989 and was a much smaller spill, estimated at 260,000 to 750,000 barrels (compared to BP’s 5 million barrels). More than 20 years later, Prince William Sound still hasn’t fully recovered. A team of academics from the University of North Carolina says some parts of the Sound may take 30 years to recover.
Schwartz reports:
BP argues in its filing that the Feinberg estimate vastly overstates the likely damage, which it places in the range of just 25 percent to 50 percent of a claimants’ 2010 losses. The company noted that almost all of the closed fishing grounds had reopened, and economic recovery in tourism was well under way, with hotel and sales tax revenues in the fall of 2010 similar to those from the same period in the year before.
The GCCF has been basing its payments on the following assumptions: 2011 damages will be 70 percent of 2010 losses, and 2012 damages will equal 30 percent of 2010 losses.
BP’s “too generous” argument is being met with a new level of outrage and frustration up and down the Gulf Coast from victims who had been arguing that the GCCF loss assumptions were already way too low. The BP comment document apparently made the deadline for public comments on Mr. Feinberg’s payment proposals. He has promised to consider “all comments” (regardless of how ridiculous they may be).
One of the stronger reactions to the BP comment comes from U.S. Rep. Edward J. Markey, the Massachusetts congressman who has been one of BP’s most outspoken critics.
Mr. Markey: “…BP made errors in judgment that led to this oil spill, and now they’ve made another error in judgment by going after the very people their spill harmed… If you ever needed an example of BP being totally out of touch with reality, this is it. BP said they would make things right for the people in the Gulf, yet it seems all they really care about is making things right for its shareholders.”
What remains to be seen is what impact, if any, this has on claims payments going forward.
Here’s the NYT report from John Schwartz: http://www.nytimes.com/2011/02/18/us/18bp.html?_r=1&scp=1&sq=Ken%20Feinberg%20too%20generous%20John%20Schwartz&st=cse
© Smith Stag, LLC 2010 – All Rights Reserved
