Feinberg Criticized for Spill-Compensation Terms


Kenneth Feinberg’s effort to set the terms for handing out BP PLC’s money to Gulf oil spill victims came under fresh attack Monday from state officials and private lawyers who said he planned to be too restrictive in deciding who gets paid.

“Mr. Feinberg seems to be completely tone-deaf to the concerns of people along the Gulf Coast,” said Alabama Attorney General Troy King, who blasted Mr. Feinberg as a “corporate shill” under the thumb of the oil giant.

Criticisms rolled in Monday as Mr. Feinberg began his first day as the official independent administrator of the Gulf Coast Claims Facility, formed as part of BP’s $20 billion compensation fund. Before Monday, BP was handling damage claims itself, and had doled out $375 million in payments to businesses and individuals hit by the massive spill. The new facility took in over 5,000 claims on Monday, compared to 78,000 claims that BP had processed since early June.

The White House and BP picked the prominent Washington lawyer in June to head the claims process. Since then, Mr. Feinberg has spent two months seeking input on how to run the fund from communities and policymakers along the Gulf Coast.

But the dozens of town-hall meetings he has held from the Florida Panhandle to the Mississippi Delta haven’t shielded him from accusations of secrecy and coziness with BP. Top state officials from Louisiana, Mississippi, Alabama and Florida have all raised alarms that Mr. Feinberg is laying down the rules for the claims fund with little input from the states most affected.

State officials and business owners took particular issue with a formal set of rulings Mr. Feinberg says will guide the payment of emergency claims to the tens of thousands of shrimpers, fishermen, hoteliers, property owners, restaurants and other businesses hit by the spill.

Under the guidelines, Mr. Feinberg has given aggrieved parties until Nov. 23 to file for temporary payments for losses suffered as a result of the spill. Payments could cover as much as six months of losses. After that, people will have three years to file for a final settlement of all damages. Critics complain that the time table is unrealistic, and allows ailing businesses little time to assess the long-term damages potentially caused by the spill.

State officials are also raising alarms over Mr. Feinberg’s plans to base payment decisions, at least in part, on how close a business is to the oil-slicked coastline. In a call Sunday with reporters, Mr. Feinberg said his office was beginning to sketch in rough boundary lines on maps to help guide decisions on individual claims.

The proximity issue is big in Florida, where tourism has taken a serious hit because of anxiety over the spill, even in places far from where any oil came ashore. Florida Attorney General Bill McCollum cited the proximity question in a letter to Mr. Feinberg on Friday, saying that the federal Oil Pollution Act laid out less stringent restrictions for liability than Mr. Feinberg was looking to impose. He blasted Mr. Feinberg’s approach as “completely unacceptable.”

In response, Mr. Feinberg said in an interview Monday that he “respectfully disagreed” with the criticisms from the state attorneys general. He underscored that his program “is entirely voluntary” and added that “if someone feels that they are better off fighting their claim for years in court, I say, ‘Go ahead.’ ”

Fishermen and their lawyers are also angered over a decision to deduct from any final settlement payment the amount BP paid boat owners and others for work helping to clean up the spill.

“What my clients are saying is, ‘If it hadn’t been for them, BP would have had to hire an outside company.’ Why should they be penalized?” said Stuart Smith, a New Orleans lawyer representing fishermen and others along the coast. Mr. Feinberg said it isn’t unusual under state law to deduct such earnings from final damage settlements.

The claims administrator has yet to issue a formal protocol for how he will handle final settlement claims, a process that will begin after Nov. 23. Mr. Feinberg plans to resume closed-door discussions early next month with private lawyers, state officials and federal and local lawmakers over how to craft those final guidelines—a process Mr. Feinberg warns will generate still more angst and anger along the Gulf Coast.

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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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