BP’s oil spill payments to Alabama governments only 22 percent of total claims


ORANGE BEACH, Ala. — Since the Deepwater Horizon rig exploded on April 20 and sent hundreds of millions of gallons of oil gushing into the Gulf of Mexico, BP PLC has paid out $2.5 million to Alabama governments to satisfy claims for lost tax revenue and expenses related to the spill.

The problem, coastal officials say, is that the payout amount represents only about 22 percent of the $11.3 million in claims that they’ve filed so far.

Orange Beach, for example, has filed claims of $440,581 for spill-related expenses, such as employee overtime and the use of city equipment, and for $2.5 million in lost tax revenue during April, May and June. So far, Finance Director Clara Myers said, BP has paid the city $308,492 for the expenses and $558,000 for lost revenue.

Orange Beach Mayor Tony Kennon said that he met with BP officials at the beginning of last week and told them the city badly needed the oil company to pay the remaining $2 million, and must hasten future claims payments.

“They told us they would, and we haven’t heard from them since,” Kennon said this week. “There’s no sense of urgency with these guys.”

BP will continue to handle government claims even after it handed off the process of compensating individuals and businesses on Monday to Washington, D.C., lawyer Ken Feinberg. BP spokeswoman Dawn Patience on Thursday verified the $2.5 million in payments and said that the company also has made $84 million more available to Alabama governments through grants disbursed by state agencies.

“We will continue to work closely with these communities to resolve outstanding issues and be responsive to their concerns,” she said.

Among those working daily with BP’s government claims adjusters in Hammond, La., is Gulf Shores Finance Director Cindy King. Gulf Shores has filed claims of $584,449 for spill-related expenses and been paid $187,666, King said. The hard-hit beach city also has asked the company to pay for about $7.5 million in wiped-out revenue — a figure that projects losses through the end of the year — but so far received a single payment of $1.3 million for June losses.

“That ($1.3 million) payment was timely because we would have been in a cash flow problem, and we were able to conduct business as usual,” King said.

But, she said, the documentation that BP has required for expenses is often excessive, even for a fully staffed municipal accounting department, and sometimes impossible to provide. In one instance, a BP adjuster said Gulf Shores would have to provide historical inventories of its paramedic provisions in order to prove a claim for $4,400 worth of supplies used to treat heat exhaustion cases among cleanup workers.

And while paying promptly for June tax losses, BP has refused to share its payment calculations with city accountants, and so far has ignored requests to reimburse city coffers for April and May revenue, King said.

“It’s frustrating,” she said. “And again, it’s going to become a cash flow situation.”

Baldwin County has had better luck with BP. Of the $271,446 it has billed for direct expenses, $246,162 has been paid, according to Clerk/Treasurer Kim Creech. So far, the county government has not filed a loss-of-revenue claim.

Dauphin Island officials said they have filed claims with BP and been paid for some invoices, but could not provide precise figures on Thursday.

Officials and spokesmen with Mobile, Bayou La Batre, Perdido Beach, Mobile County, the Baldwin County Public Schools, Daphne, Spanish Fort and Fairhope said that they have not filed claims with BP for lost revenue or direct expenses. Some of those are contemplating or preparing claims, however.

Baldwin County Schools spokesman Terry Wilhite said the system, which derives about 10 percent of its $288 million budget from tourism-related spending, is simply waiting for a state-commissioned economic study on which to base its claims.

In Perdido Beach, a year-old town of about 500 that lies across Perdido Bay from Orange Beach, there is only one paid employee and very little revenue to lose in the first place.

“But we’ve spent four months of our time laying the foundation of our town,” Mayor Patsy Parker said. “There is a loss, it’s just a matter of quantifying it.”

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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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