Kenneth Feinberg pays first interim oil spill claims, starts final settlement offers


Oil spill czar Kenneth Feinberg wasted little time following new rules issued last week and paying the first interim damage payments and offering the first batch of final settlements.

On Wednesday, Feinberg’s Gulf Coast Claims Facility paid 465 interim claims and announced that it had offered final settlement payments to another 1,477 claimants.

More than 168,000 claimants got emergency payments last year that preserved their right to sue BP or others responsible for last summer’s massive oil spill. More than half of them, over 90,000, have completed their claims by taking quick final payments of $5,000 for individuals and $25,000 for businesses.

The 465 interim claims paid marks a key turning point. Feinberg first told claimants in mid-December that they would have an option to collect quarterly payments based on real, demonstrable losses, without signing away their right to sue.

The idea was that claimants would be able collect compensation during the uncertain recovery period, without having to guess how much the spill would ultimately affect their future income.

But Feinberg took until Feb. 2 to come up with a methodology for calculating final payments and declined to pay the short-term interim claims until those rules were in place. The U.S. Justice Department and others have been questioning for weeks whether Feinberg really would give proper weight to the interim claims, or if they would simply be an “afterthought” as his organization pushed claimants to take the final quick payments or a lump-sum settlement to cover an estimate of their future losses.

After a two-week public comment period, he made the new procedures official last Friday, and now the payment process has finally begun.

So, too, have final payments to cover future losses. Feinberg paid one $10 million claim for a retail sector business near Houston back in December, but that – and one other small claim – were negotiated separately by the claimant and BP. Now, for the first time, Feinberg is sending claimants his own calculations of their proper compensation and is waiting to see if they will accept.

If they do take the final payment offered, the claimants will have to sign a release foreswearing any further claims or legal action against BP or other responsible parties for any losses due to the spill, even if they suffer more losses later that they don’t expect. Plaintiffs in a huge federal civil case in New Orleans argued recently that those releases go too far and should be revoked.

Generally, Feinberg’s final payment offers will be for twice a claimant’s documented 2010 losses. That’s based on Feinberg’s assumption that the Gulf economy will fully recover in 2012. Oyster harvesters and processors will get four times their documented 2010 losses. People with claims exceeding $500,000 will have their own, case-by-case calculation.

All claimants have the option of waiting until their losses are fully realized and claiming a documented amount that’s larger than what Feinberg is now assuming, as long as they make their final claim before the Feinberg program ends in August 2013.

David Hammer can be reached at 504.826.3322 or

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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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