BP Claims Process Compromised?

Petty Officer 3rd Class Ann Marie Gorden

Attorneys general representing Gulf Coast states are asking that a federal judge oversee BP’s process for paying damages related to last year’s massive oil spill.

by Adam Lynch
February 2, 2011

Mississippi Attorney General Jim Hood asked a federal judge last week to oversee Gulf Coast Claims Facility pay-outs to individuals the 2010 BP oil spill disaster injured.

Hood said he fears that the GCCF is asking claimants to surrender their legal rights in return for payouts from BP’s $20 billion escrow fund. He submitted a statement in U.S. District Court, in New Orleans, asking Judge Carl Barbier to facilitate the claims process.

The attorney general has been monitoring BP’s payout process since the oil company began making damage payments to spill victims. In his Jan. 24 letter of interest, he said that discussions between GCCF officials and a host of attorneys general representing oil-damaged states “have unfortunately met with only limited success.”

“The Attorney General agrees with (spill victims) that there are serious deficiencies in the structure and operation of the claims facility, and that this court is in the best position to correct them,” Hood wrote. The U.S District Court in New Orleans is the legal landing point for most legal disputes concerning the BP ecological and economic disaster.

Hood is not the only attorney general monitoring the process. Attorneys general representing the states of Florida, Texas and Alabama have joined him to submit a list of concerns to the Gulf Coast Claims Facility since the Obama administration set up the independent entity to act as BP’s surrogate to speed up the claims process for the millions of oil-spill victims in the tourism, fishing and casino industry.

Of chief concern to Hood is a “quick pay” option GCCF provided to claimants. White House-appointed attorney Kenneth Feinberg oversees GCCF, which made the quick-payment option available in December as a means to deliver fast restitution money to oil spill victims. The option is only available to individuals and businesses who have received an emergency payment from the GCCF. To qualify, GCCF says any “Quick Pay” applicant must “sign a full release giving up the right to sue BP and all other alleged defendant companies arising out of the explosion and spill.”

Hood argues that the option “unfairly encourages fast, low-dollar settlements for people who, at this point, are financially desperate.”

“No justification is provided for the $5,000 and $25,000 quick payment amounts,” Hood wrote in December to Feinberg. “The quick payment option benefits BP and the GCCF by resolving more claims on an expedited basis but provides no apparent benefit to claimants. All claims (of oil damage) should be evaluated and paid quickly, not just ones where the claimant is willing to sacrifice monetary value for speed.”

Hood added that the quick payment option is “particularly troubling” because of the “speculative nature of any estimate of final damages” to the victim this early in the process.

He told the Jackson Free Press last year that he expected scientists and economists would not be able to estimate total damages for victims in the tourism and fishing industry for many years. The fishing industry, he said, is sensitive to the spill’s delayed environmental effects, since young generations of sea life—including fish and crustaceans—may not exhibit the impacts of oil poisoning until, or if, they fully mature years later.

Other attorneys general are considerably more aggressive in their criticism. Alabama Attorney General Troy King submitted a letter to Feinberg in November complaining that Feinberg “shamefully” continued to cede concessions in favor of BP, whom King described as Feinberg’s “benefactor.” Those concessions include the quick-pay option and its requirement of a full release by the applicant of legal rights.

Feinberg told Mississippi reporters in June that Obama “made clear that (the Gulf Coast Claims Facility) will be run independently of the White House, independently of BP.” But King pointed to “startling revelations” that BP is paying Feinberg “$850,000 a month,” which he said underscores concerns that Feinberg has “every reason to act on behalf of BP and at the expense of those they have harmed.”

“While I never believed you were sincere, initially Alabama Gov. Bob Riley bought your line,” King wrote in the November letter to Feinberg, while pointing out that Riley’s Alabama Department of Homeland Security Director Jim Walker welcomed Feinberg to the Coast by assuring Alabamians that Feinberg doesn’t work for BP and works for the people of the Gulf Coast. King added, bitterly, that Walker referred to Feinberg as the peoples’ attorney, lawyer and advocate.

“You, yourself, told Gulf Coast residents that you were their fiduciary. You have proved to be none of these,” King wrote.

Gulf Coast Claims Facility spokeswoman Amy Weiss said GCCF would not comment on the issue.

For more coverage of the Gulf Coast, be sure to check out our Oil Spill Coverage.

COMMENTS

100 recent comments »