Oil spill fund might not pay claims related to tourism


The director who’ll disperse $20 billion to victims of BP’s oil spill warned Wednesday that companies hurt because tourists have stayed away from the Gulf region may not be eligible for reimbursement.

Kenneth Feinberg, whom President Obama appointed to handle claims, told the House Small Business Committee in Washington that determining whether to pay businesses and individuals that didn’t suffer direct damage is among the most difficult issues he faces.

Indirect claims — such as those made by companies that lost revenue because wary tourists stayed home thinking a beach would be damaged — may not be “compensatory,” he said.

Feinberg, however, told committee members that the compensation fund would make initial payments equal to six months of reimbursement. Elected officials in the region have said month-to-month payments to small business are insufficient to help companies stay in business.

Calculating the payments may be complicated as long as the leak continues, he said.

“It sure would help if the oil would stop,” Feinberg said in his first congressional testimony since being named to run the independent claims operation. “It’s very hard to come up with lump-sum payments in total satisfaction of your loss when you don’t know if the oil is going to continue to spread and reach your business.”

Tourism officials and those who make their living from tourism have complained that the spill is driving away visitors and costing businesses billions of dollars.

Rep. Vern Buchanan, R-Fla., said tourists are staying away from beaches near Sarasota even though oil hasn’t washed ashore.

Feinberg acknowledged that businesses or property owners along the Gulf Coast may be harmed by public misperceptions of the spill, and a decision on resolving such claims remains to be made. But they may be left out.

“Property value has diminished as a result of the spill,” Feinberg said. “Let’s assume that’s right. That doesn’t mean that every property is entitled to compensation.”

“It’s a thorny issue,” he told reporters after the hearing.

After the Sept. 11 attacks, Feinberg said the victims’ fund that he also administered established “small, geographic areas” near the World Trade Center within which individuals could be compensated for health ailments.

Feinberg said his Gulf Coast claims facility may set zones of eligibility for certain claims when the damage suffered isn’t physical.

BP has said it has paid more than $128 million in claims as of the end of last week.

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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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