State Officials Step Up Criticism of BP Oil-Spill Fund


Top officials in three states hammered by the BP PLC oil spill have emerged as some of the harshest and most combative critics of claims czar Kenneth Feinberg.

The $20 billion BP claims fund Mr. Feinberg is handling got a boost recently when several lawyers began instructing their clients to drop out of litigation and settle with the fund.

But officials in Mississippi, Florida and Louisiana—states where tourism was walloped and where fishing was banned in some places—have ramped up their criticism of Mr. Feinberg’s handling of claims.

They have blasted the slow pace and lack of transparency surrounding payouts to individuals and businesses—especially the lack of explanation for denials of certain claims made to the fund. And they have taken issue with Mr. Feinberg’s offer to victims that they can receive final payments in exchange for waiving their future right to sue BP and other related parties. The fund has paid out $3.37 billion to more than 168,000 claimants.

All this may come to a head next week when Mississippi’s attorney general plans to ask a federal judge to appoint him and his fellow Gulf Coast attorneys general to monitor the claims process, according to Jim Hood, the Mississippi attorney general. That would allow them essentially to audit the process and seek changes for any problems they find.

“What will it hurt for Mr. Feinberg and the process to be transparent?” Mr. Hood said in an interview.

Mr. Feinberg defended some of the criticized payout practices and declined to comment on the officials’ plans to seek claims oversight.

It won’t be the first time the states have appealed to U.S. District Court Judge Carl Barbier to rein in Mr. Feinberg. After they publicly questioned Mr. Feinberg’s repeated claim of independence, the judge recently ruled he must refrain from referring to himself as “neutral” or completely “independent” from BP, which is paying him and his law firm $850,000 a month to administer the fund.

“I intend to abide by every aspect of the judge’s ruling,” Mr. Feinberg said in an interview.

Last week, the attorneys general also asked the court to intercede to “correct deficiencies in the claims process.”

Mr. Feinberg is offering claimants three options. One lets those who have adequate documentation of losses receive quarterly payments for three years. The two other options require claimants to waive their rights to sue BP and other related defendants in the future, but they would get an immediate payout.

Mr. Hood says two-thirds of claimants were denied funds “with little or no explanation and no viable recourse.” Both Mr. Hood and Florida Attorney General Pam Bondi allege in court filings that claimants are being steered toward final quick-pay claims. “Claimants are submitting quick pay claims out of financial desperation and their lack of faith in the fairness of the…claims process,” Ms. Bondi wrote.

Mr. Feinberg denied people were being forced to settle for a quick payout. “It is clear to me that when 90,000 citizens of the Gulf accept a quick payment, it has nothing to do with economic compulsion but is the result of either having been adequately compensated or simply not being able to document any further damage,” Mr. Feinberg said.

In a ruling Feb. 2, Judge Barbier left open the possibility of court-mandated changes to the fund’s operations. He ordered further legal arguments due Feb. 18 on whether the fund is complying with a federal law governing compensation from oil spills.

“We are pleased with the judge’s ruling,” said a spokeswoman for Louisiana Attorney General James D. “Buddy” Caldwell.

Some state officials are turning to other authorities.

On Feb. 4, U.S. Sen. Bill Nelson, a Florida Democrat, asked President Barack Obama to order an administration review of the claims fund’s operations.

“In any other context involving a fund of this size, questions that touch on accountability and transparency would normally be reviewed by a regulator or outside auditor,” Mr. Nelson said in his letter to Mr. Obama.

Last week, U.S. Associate Attorney General Thomas J. Perrelli sent Mr. Feinberg a letter raising concerns that more of the fund hasn’t been spent. He also said that Mr. Feinberg needed to be more transparent, and that his Gulf Coast Claims Facility should take a second look at the emergency advance payments the fund paid to victims to determine if the process was fair.

Mr. Feinberg said he was revisiting denied emergency claims. “The Justice Department was absolutely right and as always we welcome constructive suggestions and try to follow through,” Mr. Feinberg said.

Write to Ann Zimmerman at

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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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