Oil spill claim calculations depend on estimates of future losses, Kenneth Feinberg says


Oil spill claims czar Kenneth Feinberg told a Senate subcommittee Thursday that he expects to begin issuing final and interim payments for damages related to the BP oil spill in the Gulf of Mexico on or about Feb. 18, after he gives the public two weeks to comment on new payment calculation methods.

Facing critical questioning by a handful of senators on the Homeland Security Committee’s Disaster Recovery Subcommittee, Feinberg acknowledged that his operation has had some difficulty ensuring payments are uniform, and promised that next Tuesday he would post on the GCCF website new methodologies for calculating interim and final payments.

But Feinberg has failed to deliver on that promise before.

Two weeks ago he told The Times-Picayune that the methodologies would be available by this week. Sen. Richard Shelby, R-Ala., also said Thursday that Feinberg promised last month to disclose the calculation methods, but has yet to keep his word.

Feinberg acknowledged that he is a month late, but said he’s still trying to understand what kind of future losses the spill is going to inflict, a speculative and difficult endeavor.

“The reason, Sen. Shelby, that it took longer than I promised you, I’ve got to get this right,” Feinberg said.

Shelby said he understands how complex Feinberg’s job is, but he urged the administrator to get payments to the most vulnerable victims of the spill. There are desperate fishers struggling to get through the winter on the heels of a season destroyed by oil, and they should not have to wait so long for a resolution, he said.

Feinberg introduced the interim and final payment options in mid-December. Since then, 40,000 have filed for interim quarterly payments, and a whopping 90,000 claimants have sought a final payment and relinquished their right to sue BP.

So far, a total of 480,000 people and businesses have applied to the Gulf Coast Claims Facility and 168,000 have received emergency payments. Half of those have gone on to complete their claims by taking quick payments of $5,000 for individuals and $25,000 for businesses.

Generally, the senators expressed admiration for Feinberg’s credentials administering disaster relief, noting his work handling compensation for the victims of the 9/11 terror attacks and the Virginia Tech shooting. But they pulled no punches about the weaknesses they see in the oil spill claims process.

Sen. Mary Landrieu, D-La., the subcommittee chairwoman, said the claims payments have not been “as consistent or transparent as they should be.” She was especially concerned that denial letters contain no specific information about why the claim was refused.

Sen. David Vitter, R-La., expressed concern that half the individuals who have been compensated so far – and more than 57 percent of those paid in Louisiana – have opted for a quick payment of $5,000. Vitter said the figures indicate that GCCF was giving undue priority to the “low-hanging fruit.”

“I think these numbers do represent the easiest cases, and my concern is that the folks most hard-hit by the oil spill are not in that category,” Vitter said.

Feinberg defended his quick-pay process, arguing that it’s a good thing that fishers and others with difficult, ongoing claims are generally not taking the quick payments out of desperation.

“Usually, I get criticized for the exact opposite reason,” Feinberg said. “They say that those who take the quick payment are desperate. But I agree, commercial fishermen, shrimpers, have waited too long for the final payments and interim payments.”

Landrieu said she’s becoming more convinced that while Feinberg has a good “vision” for the program, he does not have a strong handle on details. She said she would like to have his deputies testify before the subcommittee in about a month to give the committee more specifics.

Ve Nguyen, a Plaquemines Parish fisher, also testified and complained about the problems Feinberg has had paying subsistence claims. The GCCF has received more than 16,000 claims of a loss of subsistence, a particularly important issue for Vietnamese fishers, some of whom consume and barter a portion of their commercial catch. Only 15 subsistence claims have been paid.

Nguyen, who delivered his remarks through an interpreter, asked Feinberg why GCCF’s internal appeals process is available only to those who receive at least $250,000.

Feinberg said that any claimant has the right to appeal to the Coast Guard’s National Pollution Funds Center, and he limited his own appeal panel’s purview because of concerns about delaying the process.

Craig Bennett, head of the Coast Guard center, said his organization is authorized by the Oil Pollution Act of 1990 and stands ready to hear any appeals challenging the GCCF’s determinations. The Coast Guard center has received just 507 appeals. All 200 that have been adjudicated were denied, Bennett said.

Feinberg, who was chosen to oversee the claims process by both President Barack Obama and BP, also defended his Gulf Coast Claims Facility from critics who say he is not truly independent. His law firm, Feinberg Rozen, is paid $850,000 a month by BP, and critics say he’s influenced by BP in how he doles out payments. Feinberg reiterated that he has not been influenced.

GCCF’s proposed methodology will be available for review starting Tuesday, online at www.GulfCoastClaimsFacility.com and on paper at the 35 GCCF claims offices. There will be translations available in Spanish, Vietnamese and Khmer, GCCF said in a news release.

Comments submitted to the GCCF during the two-week public comment period will also be posted online. To submit a comment, send it to MethodologyComments@gccf-claims.com or by mail to GCCF, P.O. Box 9658, Dublin, Ohio, 43017-4958.

David Hammer can be reached at dhammer@timespicayune.com or 504.826.3322.

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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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