Faster Action for Spill Claims


WASHINGTON—Businesses and individuals claiming damages from BP PLC’s $20 billion oil-spill compensation fund can expect larger and swifter emergency payouts, but many will have to provide stronger proof that they have suffered losses, according to new rules released Friday.

The new guidelines mark the first formal proclamation from Washington lawyer Kenneth Feinberg, who will take control of the BP-run claims process on Monday after months of public hearings and town-hall meetings.

Under the new system, Mr. Feinberg promises to evaluate six-month interim payments within 24 hours to individuals and within seven days to businesses such as hotels and restaurants. BP previously was sending out monthly payments, many of which took weeks to process.

The guidelines for interim payments leave unanswered some broader legal questions about how Mr. Feinberg will handle payments for damages to property owners, fishermen, resorts and other businesses and individuals hit by the spill.

BP agreed with the White House earlier this summer to put $20 billion into what is now called the Gulf Coast Claims Fund to settle widespread damage claims and to discourage people from suing in court. Anyone who accepts a final settlement through the facility will have to waive their right to sue BP in court.

One big issue that is still in flux is whether claimants, in accepting a final payment, also would have to waive their rights to sue other companies involved in the spill, such as Transocean Ltd., which owned the Deepwater Horizon drilling rig that exploded and sank in April.

BP lawyers have pushed for the broad waiver to keep successful claimants from then suing other companies, which could then counter-sue BP or put in claims to the BP fund.

In an interview, Mr. Feinberg said such issues hadn’t been settled. “Nothing has yet been finalized, and I am working closely with all interested parties in that regard,” he said.

Mr. Feinberg said it could take until Thanksgiving to nail down how he would weigh final damage payments.

Several lawyers said that a blanket waiver for all companies involved in the spill could raise a legal stink.

“I would have to tell my clients to refuse such a waiver,” said Chris Seeger, a prominent New York-based lawyer who is representing hundreds of clients involved in the spill. “That is just a nonstarter.”

Much else about the fund remains unclear. The amount that Mr. Feinberg and his law firm will receive for administering the fund hasn’t yet been disclosed. Mr. Feinberg—who has made clear that he isn’t doing the BP job pro bono—said he will disclose his salary next month, once he finalizes his budget.

Mr. Feinberg is expected to receive payment from interest gained on the fund, instead of directly from BP.

Private lawyers involved in talks with Mr. Feinberg said that the administrator had agreed to drop an early proposal that would have allowed BP to appeal to a three-judge panel any awards exceeding $500,000. Tort lawyers had argued that an appeals process for BP made no sense, since BP would have no say over other parts of the process and that the whole idea of the claims facility was that it was to remain nonadversarial.

Mr. Feinberg, however, said that that issue, too, remained unresolved.

Last week, Mr. Feinberg agreed to set aside as much as $60 million to pay claims from real-estate dealers who say they have lost thousands of home sales because of buyer jitters over the spill.

The agreement struck with the states of Texas, Louisiana, Mississippi, Alabama and Florida will turn the money over to state chapters of the National Association of Realtors, which will decide how to distribute the money.

In various town-hall sessions last month, Mr. Feinberg had appeared skeptical that brokers deserved to paid for sales that fell through. But he says he was eventually swayed.

“I concluded that it would be the right thing to do, the compassionate thing to do, for the brokers who lost commissions along the coast,” he said.

Add comment

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

Follow Us

© Stuart H Smith, LLC
Share This