Gulf should recover from spill by 2012, funds czar says

Half of claims for settlements have been denied

Attorney Kenneth Feinberg acknowledges that nothing is certain but agrees with the assessment recovery is likely in 2012. Attorney Kenneth Feinberg acknowledges that nothing is certain but agrees with the assessment recovery is likely in 2012.
By Harry R. Weber and Brian Skoloff
Associated Press / February 3, 2011

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NEW ORLEANS —The Gulf of Mexico should largely recover from BP’s oil spill by the end of next year , and all final settlement offers to victims who lost revenue from the disaster will be based on that assessment, the administrator of the $20 billion compensation fund said Wednesday.

Kenneth Feinberg said the Gulf Coast Claims Facility used “various data and expert reports’’ to determine that a 30 percent recovery is likely in 2011, with full recovery in 2012. He says, however, that oyster harvesting will take longer.

The fund was set up by BP PLC in August to compensate residents, fishermen, and business owners for lost revenue following BP’s oil well blowout off Louisiana. It has so far paid about $3.3 billion to 168,000 claimants, but many are still waiting for any money, and thousands of others say they were shortchanged. About half of the total 485,000 claims filed have been denied because of ineligibility or lack of documentation.

Feinberg has faced repeated criticism about the slow pace of payments and the small size of checks to victims, as well as complaints about lack of transparency and perceived influence from BP. The hits continued yesterday.

“While this office had hoped that the methodology would finally provide some transparency, this document provides no useful information to claimants beyond a simplistic multiplier and is based on very optimistic assumptions about unknown environmental and economic conditions,’’ Attorney General Pamela Bondi of Florida said in a court filing.

Meanwhile, a federal judge ruled late yesterday that Feinberg is not independent from BP and he must stop telling potential claimants that he is.

US District Judge Carl Barbier said that he ordered Feinberg and any of his agents to change the way they communicate with people seeking money from the fund.

Barbier says Feinberg must clearly disclose in all communications that he is acting for and on behalf of BP in fulfilling its obligations as the responsible party under the Oil Pollution Act.

Feinberg announced his draft proposal for how final settlements will be paid, based on the recovery assessment. Under the proposal, claimants will receive twice their documented 2010 losses. Oyster harvesters will be offered four times their documented 2010 losses.

Documents released by Feinberg show he based the assessment largely on reports from a Texas professor and a consulting firm to determine the long-term impact to seafood harvests, the tourism industry, and the overall Gulf economy.

“I think I have canvassed the universe,’’ Feinberg said.

A two-week public comment period runs through Feb. 16 to give people an opportunity to comment on the payment proposal before it is made final.

Keath Ladner, a Mississippi seafood processor, has not been paid a dime on his roughly $1.7 million claim. He is one of the largest processors in the state, taking in seafood from about 70 boats.

He is considering suing and calls Feinberg’s assessment of recovery a guessing game.

“It’s just all uncertain,’’ Ladner said. “We still don’t know how long it will take perceptions to heal across the country. We may have certain species come back within a few years, but that doesn’t mean the nation is going to feel safe buying it.’’

Feinberg acknowledges that nothing is certain but agrees with the assessment that recovery is likely in 2012.

“I am comfortable with what I am doing today,’’ he said.

Those who are not ready to take a final settlement may instead file for interim quarterly payments through August 2013, provided they can show proof of continued losses. Claimants may also file for a one-time payment of $5,000 for individuals and $25,000 for businesses, but they would have to give up their right to file for any more money or to sue any responsible party. The same release is required for a final settlement. About 90,000 people have taken the one-time payment option. About 92,000 claimants are so far seeking final settlements.

Early on, the process allowed for claimants to seek six-month emergency payments to help keep them afloat, but many were not satisfied with what they received and felt the requirements were too cumbersome.

Under the new guidelines for final settlements, those documentation requirements would be even more rigorous and exacting than the minimal documentation previously required, according to the draft methodology.

Tony Kennon, mayor of Orange Beach, Ala., a tourist town hit particularly hard by the spill, called the new requirements absolutely astounding.

“We have businesses handing in 2,000 pages of documents,’’ Kennon said. “How much more rigorous can you get other than handing over your first born. The strategy continues to minimize BP’s payout.’’

Feinberg has repeatedly said he is operating the fund independent of BP’s influence. However, of the 92,000 claimants who have filed for a final settlement, only one company has been paid, and that was after BP intervened.

BP called it a unique situation when it sought a $10 million payment from the fund for a business associate, which Feinberg paid. He later said that claim was never reviewed by the Gulf Coast Claims Facility. BP reached an outside settlement with the business and told Feinberg to make the payment. BP would not disclose the name of the business, citing confidentiality.