BP says oil spill claims formula is too generous


NEW ORLEANS – The administrator of the $20 billion fund for Gulf oil spill victims, under fire for red tape and delays, has been told by BP that his formula for determining final payments is actually too generous.

A document purporting to be from a major business was posted on the Gulf Coast Claims Facility’s website. The name of the business and other identifying references were removed, but a spokeswoman for the fund confirmed the comments were written by BP.

The document said Kenneth Feinberg’s methodology artificially inflates future expected losses for victims of the spill.

It claims there is no factual basis to assume Gulf-wide claimants will experience losses this year equaling 70 percent of their 2010 losses and losses in 2012 equaling 30 percent of 2010 losses.

Spokeswoman Amy Weiss said the document was written by BP. The GCCF has been redacting comments posted on its website to remove the names of people and businesses.

Over the last two weeks, hundreds of Gulf residents and businesses have filed comments with the claims facility. Many have accused Feinberg of moving too slowing in making payments. Others say the payments have been too small. And many complain that the methodology Feinberg has proposed for final payments low-balls the future impact of the spill on victims.

The BP document that claims the final payment methodology is actually too generous was dated Wednesday, the last day of the public comment period that Feinberg had initiated.

U.S. Rep Edward J. Markey of Massachusetts, the ranking Democrat on the House Committee on Natural Resources, blasted BP for making the comments.

“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,” Markey said in a statement. “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.”

Feinberg has said he would consider all the comments. He has not indicated whether he planned to give more weight to one comment versus another.

An Associated Press review published Monday that included interviews with legal experts, government officials and more than 300 Gulf residents found a claims process beset by red tape and delay, and at the center of it all a fund administrator whose ties to BP have raised questions about his independence.

Now, lawmakers in Washington are demanding the White House step in, the Louisiana governor and others want a federal judge to intervene, and the people most affected by the Deepwater Horizon disaster are threatening to line the courthouse steps if they don’t get the changes they seek from Feinberg.

Feinberg, the Washington lawyer who runs the fund and was lauded for his work overseeing the compensation fund for 9/11 victims, has insisted he is being fair.

He has acknowledged that the system is clogged by the sheer volume of oil spill claims, along with inflated or outlandish requests.

Feinberg recently said he doesn’t think the entire $20 billion will be needed to compensate victims. Only half of that should suffice, he said. So far, roughly $3.4 billion has been paid out to 169,000 claimants.

To date, only two final settlements for long-term losses — including a $10 million payment to a BP associate the fund refuses to identify — have been paid out.

While the government helped force BP to set up the fund, it did not include a mechanism to oversee Feinberg’s operations, which are not subject to state or federal open records laws. Citing confidentiality requirements, Feinberg has refused requests by the AP for information about who is getting the money, broken down not by name or address but by county, occupation, and amounts requested versus amounts granted.

In other oil spill developments Thursday:

  • A presidential oil spill panel said BP had problems with work by its cement company long before the massive Gulf oil well blowout, which investigations have blamed on cement failing at the bottom of the hole. But BP apparently didn’t do much, if anything, about it.
  • A group of oil companies led by Exxon Mobil said it has built a system that can stop an undersea oil spill within weeks, a critical step towards resuming drilling in the deepest parts of the Gulf of Mexico. Regulators have demanded that oil companies demonstrate the capability to contain the blowout of an underwater well before granting permits to drill again in Gulf waters deeper than 500 feet. Exxon Mobil said this system meets that demand.
  • Three workers who helped BP in its oil spill cleanup efforts after last year’s disaster accused the oil giant in a federal lawsuit of denying them overtime pay and other benefits. The suit filed in U.S. District Court in New Orleans seeks a notice to allow others with similar complaints to join in the action. The initial plaintiffs, Jon Brewer, Nathan Cohen and Quentin Doyle, say they were among tens of thousands of workers who were assigned to do cleanup work along the Gulf Coast following the April 20, 2010, disaster off Louisiana. The plaintiffs seek back pay and damages.

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