Moratorium claims to be considered with others from Gulf of Mexico oil spill


Kenneth Feinberg, administrator of the claims fund for victims of the Gulf of Mexico oil disaster, said Monday that the White House and BP have agreed to give him jurisdiction over claims from individuals and businesses harmed by the Obama administration’s six-month moratorium on deepwater drilling.

“Yes, I now have discovered — I didn’t realize this until yesterday — that the moratorium claims will fall under my jurisdiction,” Feinberg said in an interview Monday on CNN.

“That’s a huge development, and we didn’t know that before?” replied the CNN reporter.

“I didn’t either,” Feinberg said.

Feinberg’s new authority could vastly expand BP’s liability to include claims not just from those whose livelihood has been directly affected by the spill, but also to include those who work in the deepwater drilling industry.

Sen. Mary Landrieu, D-La., among others, have said the economic cost to Louisiana of the moratorium could be greater than the spill itself.

Last week, federal District Court Judge Martin L.C. Feldman in New Orleans issued a preliminary injunction against enforcement of the moratorium. Secretary of Interior Ken Salazar has said he will issue a new order imposing the moratorium, with additional information to back up his claim that it is necessary while the government investigates what led to the blowout of the Deepwater Horizon well April 20 and the largest oil spill in American history.

On Monday, Salazar met behind closed doors in Washington with leaders of most of the top companies in the drilling business in the Gulf. The meeting ended with the energy executives no more sanguine about the immediate prospects of getting back to drilling in the Gulf.

“We were dismayed at the lack of the serious attention paid to the horrible economic impact that is being experienced in communities along the Gulf Coast as a result of the uncertainty and delay created by the Department of Interior politics,” said one of the executives, who asked not to be identified by name. The industry officials plan to send Salazar a letter today detailing their displeasure with Monday’s meeting.

Rig workers excluded before

The contours of the June 16 deal between BP and the White House — if a formal document exists it has not been made public — appear to be evolving in ways that could prove far more costly to BP. The $20 billion, all the parties have agreed, is neither a floor nor a ceiling on BP’s exposure.

Only Thursday, Feinberg told Bloomberg Businessweek that rig workers idled by the moratorium could not make claims against the $20 billion escrow fund BP agreed to establish at the June 16 meeting at the White House. Those rig workers, Feinberg told Bloomberg Businessweek, were limited to making claims against a separate $100 million fund — also announced at the White House June 16 — that was explicitly earmarked for rig workers and that Feinberg revealed he would also be administering.

That same Thursday afternoon, Bob Dudley, the BP executive who is assuming control of the Gulf response and recovery effort from BP CEO Tony Hayward, said in an interview with about a dozen reporters in Washington that it was also his understanding that claims emanating from the moratorium were beyond Feinberg’s purview as administrator of the $20 billion fund.

“So part of Mr. Feinberg’s role is designing and developing a very comprehensive set of protocols for what would be, for paying claims, and he has a lot of experience in that,” Dudley said. “It is my understanding that those from the moratorium are not going to fall inside of his protocols.”

Dudley went on to say, “the moratorium was imposed as a result of a government decision, not as a result of the accident and the spill, and I’m not a lawyer, so I’m not going to get into how you define that, but I think it’s a debate people are likely to have.”

A day earlier, on Wednesday, Chrysanthe Munn of BP, acting as the company’s representative to Gov. Bobby Jindal’s unified command, delivered the same message — even more pointedly — to the governor and his Cabinet.

In an e-mail Monday, Munn said she told Jindal and company that “BP does not feel that we can be held liable or responsible for the federal government’s decision on instating a moratorium. As a goodwill gesture we have announced a $100 million fund for out-of-work rig workers.”

After the meeting with Munn, Jindal said, “today, BP told us for the first time that they will not pay for moratorium-related losses above the $100 million.”

“Moreover,” the governor said, “the $100 million set aside by BP to offset the wage losses of deepwater rig workers will cover only a few weeks of lost wages for those workers — and these funds will do nothing to offset the hundreds of millions in wage losses for workers in support industries that count on deepwater drilling activity for their livelihood.”

‘Significant legal questions’

White House spokeswoman Moira Mack said the administration’s position has been consistent throughout.

“Any individual or business who has a claim may submit it to the $100 million foundation or the $20 billion fund,” she said. “Rig workers impacted by the moratorium will absolutely not be precluded from presenting claims.”

But the day the deal was struck and made public, Carol Browner, the president’s energy coordinator, who was part of the White House negotiations with BP that day, said at the daily White House press briefing that the $100 million fund was created precisely because “there’s a very significant legal questions about (BP’s) liability” for claims emanating from the moratorium.

According to the White House, “whether or not a claim will be paid by the fund will depend on whether or not it is an appropriate claim under (the Oil Pollution Act) or another law. If a worker with a moratorium-related claim submits it to Feinberg, he decides in the first instance whether to pay. If he declines, the claimant can appeal to the three retired judges. If they deny, the claimant can sue in state or federal court.” According to the deal struck with BP, BP can only appeal Feinberg’s decisions on awards larger than $500,000.

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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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