Final Settlement Phase Starts for BP Oil Spill


Now comes the hard part.

In the months since the Deepwater Horizon rig explosion in the Gulf of Mexico, hundreds of thousands of people and businesses have filed for emergency payments from the $20 billion BP fund administered by Kenneth R. Feinberg. More than $2.2 billion is being paid to some 150,000 individuals and businesses with documented claims, according to fund estimates.

That emergency program came to an end Tuesday, and now the next phase begins: the negotiation of lump-sum final settlements for those affected by the spill. The rules for those settlements will be announced on Wednesday by Mr. Feinberg, after consulting with lawyers, state attorneys general, the Department of Justice and BP.

“I have received a wide range of views about every issue under the sun,” he said.

A copy of a 12-page document laying out the claims process, obtained by The New York Times, describes in detail a program that will run for three years. It does not require those seeking reimbursement to give up their right to sue BP or other companies involved with the spill until they accept a final offer.

Anyone accepting the final settlement, however, will give up the right to file future claims against BP or any other company involved in the disaster. The fund will also allow people to continue to receive money while weighing a final settlement. And there will be an appeals process for those unhappy with their offer.

The document addresses the contentious problem of proximity to the spill.

Mr. Feinberg has long argued that his program will be more generous than the court system because he has greater flexibility to address claims that would be prohibited under the Oil Pollution Act.

That act creates a high bar for certain claims, particularly from people and businesses near beaches that were not directly affected by the spill, including Florida tourism businesses that experienced a downturn.

Mr. Feinberg, though, has said he would consider such claims, and he is releasing a 48-page memorandum by Prof. John C. P. Goldberg of Harvard Law School that argues that such claims “would not be entitled to recover” through the courts.

Sandi Copes, the communications director for Florida’s attorney general, Bill McCollum, said Mr. McCollum appreciated Mr. Feinberg’s willingness to consider claims without any limitation on geographic proximity.

The rules also allow people to ask for expenses they paid to estimate their damages — another point requested by Mr. McCollum, Ms. Copes said.

Lawyers involved in federal litigation against BP expressed skepticism about the new rules, however.

Stephen J. Herman, a member of the steering committee of plaintiffs’ lawyers in the litigation, said that people filing claims needed to know more details about how the process would work — “these are the claims we pay or don’t pay, this is the basis we use to determine compensation,” he explained.

Another member of the steering committee, James Roy, criticized the general release of all companies involved in the spill.

“Thousands of individuals and businesses will be victims of BP a second time if Mr. Feinberg requires releases of punitive damages and claims against the other parties,” he said.

Buddy Caldwell, Louisiana’s attorney general, also criticized Mr. Feinberg’s rule on releases.

Instead, he said, the rules “should be putting as much effort into protecting the rights of the claimants as they do the rights of British Petroleum.”

The Department of Justice has also urged Mr. Feinberg to provide those filing claims with more information about how the process will be conducted.

In letter dated Friday, Associate Attorney General Thomas J. Perrelli evaluated a draft of the rules and appeals process and told Mr. Feinberg that “additional transparency about the claims process is critical.”

Mr. Feinberg said it was a “fair criticism” that the claims process had been opaque, and he pledged to improve the information available. “A detailed description of the methodology and the process will be posted in the next few weeks,” he said.

BP agreed to the $20 billion fund in negotiations with the Obama administration after the spill. Despite praise for his efforts and the billions of dollars that have been distributed already, Mr. Feinberg has come under criticism, especially in Alabama.

The state’s governor, Bob Riley, has compared the fund to “extortion.”

Mr. Feinberg responded, “No good deed goes unpunished.” Some $350 million has gone to Alabama under the program.

Mr. Feinberg also noted that the challenge has been far greater than he expected. The emergency program has received about 475,000 claims, with about half coming in a rush since Oct. 15 — “about four times what I thought it would be,” he said.

Gov. Mitch Daniels of Indiana proclaimed himself a fan of Mr. Feinberg, who “has taken on some of the most mind-bending and difficult sets of judgment calls that anybody’s been asked to make.”

Such tasks can be thankless, Mr. Daniels said. “He knew in advance there’d be no way to satisfy everyone, but somebody had to do 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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