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Mississippi official seeks court oversight of BP fund

Posted On: Jan. 26, 2011 12:00 AM CST

JACKSON, Miss. (Bloomberg)—Mississippi Attorney General Jim Hood asked the judge overseeing oil-spill litigation against BP P.L.C. to take an oversight role to “correct deficiencies” in the $20 billion spill-claims fund run by Kenneth Feinberg.

Mr. Feinberg has been criticized by spill victims' lawyers for his administration of the claims process through which BP has said it would pay “all legitimate claims” filed by people and businesses damaged by the worst offshore oil spill in U.S. history. Critics contend Mr. Feinberg has delayed or denied claims without adequate explanation and established protocols that encourage cash-strapped claimants to accept small, quick payments to avoid years of litigation.

“It is the state's position that this court has jurisdiction over the Gulf Coast Claims Facility, including its administrator Kenneth Feinberg,” Mr. Hood said in papers filed Monday in federal court in New Orleans. Mr. Feinberg's fund “is nothing more than a surrogate for BP in the administration of the claims process that BP is required to provide” under federal law, Mr. Hood said.

More than 4.1 million barrels of crude spilled from BP's subsea well after the Deepwater Horizon rig exploded and sank off the Louisiana coast in April, fouling hundreds of miles of coastline and closing much of the Gulf's fisheries. Hundreds of property owners, hospitality businesses, fishing companies and seafood processors have filed lawsuits or submitted claims to the BP spill fund seeking compensation for lost income and property damage.

Amy Weiss, a spokeswoman for Mr. Feinberg, declined to comment.

‘Shell game'

Last month, lawyers representing spill victims suing BP and other companies involved in the Gulf oil spill accused Mr. Feinberg of “playing a shell game” by failing to disclose his ties to BP and the $850,000 in monthly compensation his firm gets from BP to run the fund.

The lawyers asked U.S. District Judge Carl Barbier, who is overseeing all spill-damage claims, to supervise Mr. Feinberg to ensure claims are paid properly. Mr. Hood said in Monday's filing that the state of Mississippi supported court oversight of the fund.

Mr. Hood said Mr. Feinberg hasn't cooperated with the attorneys general of the five Gulf Coast states or changed the fund's claims payment process as they requested. He attached 61 pages of correspondence between the state attorneys general and Feinberg fund officials.


“It is regrettable that you continue to exclude those with the greatest knowledge and interest in this process from the process,” Troy King, then Alabama attorney general, said in a Nov. 16 e-mail to Mr. Feinberg. “While I never believed you were sincere, initially Alabama Gov. Bob Riley bought your line.”

“Now, even Gov. Riley has come to call your process and the way it is being implemented ‘extortion,’” Mr. King said.

Requiring claimants to release BP and all companies involved in the spill from liability for any future damages to settle their claims quickly is unfair, Mr. Hood wrote Mr. Feinberg on Nov. 9.

“Only people who are beaten down, poor, and/or desperate would agree to the terms of the proposed release,” Mr. Hood said. “The excessive breadth of the release will lead the public to believe” that the fund’s goal “is not to assist people in the Gulf, but to assist BP in taking advantage of this downtrodden group of people,” he said.

The case is In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 2:10-md-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

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