BP says Feinberg too generous with future spill lossesPosted On: Feb. 18, 2011 12:00 AM CST
LONDON (Bloomberg)—BP P.L.C. said Kenneth Feinberg, who runs the $20 billion compensation fund for victims of the company's Gulf of Mexico oil spill, is being too generous in calculating future losses.
BP took exception with a Feb. 2 report by Mr. Feinberg, the Washington lawyer heading the Gulf Coast Claims Facility, that outlined how he planned to judge final claims.
The “draft methodology's key assumptions regarding risk of future loss are not supported by actual data or by the analysis of the GCCF's own consultants,” London-based BP said in a response filed with Mr. Feinberg and posted on the fund's website.
BP created the $20 billion fund and named Feinberg its manager after negotiations with President Barack Obama's administration over damages from the company's April 20, 2010, blowout in the Gulf of Mexico, which spewed crude for 87 days.
Mr. Feinberg and the Gulf Coast Claims Facility have provided “benefits well beyond” what federal law requires, BP said.
Under the protocols Mr. Feinberg released, most spill victims would get lump-sum payments equal to double the documented damage for 2010. Oystermen will be paid four times their actual losses because oysters may need additional time to recover, Mr. Feinberg said.
BP said it recognizes “the benefits to all parties of a settlement process that will enable them to avoid the burden, expense, uncertainty and delay of litigation.”
The company suggested a lower estimate than Mr. Feinberg proposed, from 25% to 50% of a claimant's 2010 losses.
BP says federal law doesn't call for paying future losses and Mr. Feinberg's offer of quarterly interim payments should be sufficient to protect spill victims.
“For all of these reasons, BP respectfully requests” that Mr. Feinberg change the protocols, according to the response.
Dozens of comments have been filed with Mr. Feinberg since the draft was released for discussion two weeks ago. Mr. Feinberg has been faulted for not being generous enough.
“You are shutting businesses down along the Gulf Coast by intentionally dragging your feet on paying claims,” according to a comment from a Florida resident. The claims facility posts the responses anonymously. BP confirmed the contents of its letter.
“BP has done everything they can to spin the news and spin the damages,” said Jeffrey Breit, a Norfolk, Va.-based attorney and member of a plaintiffs' steering committee representing spill victims.
The payments Mr. Feinberg has offered are “hardly enough” given the uncertainty about how long it will take the Gulf to recover, he said in an e-mail.
Asked about the oil company’s comments, Mr. Feinberg said Thursday in an interview that the fund “welcomes input from any and all interested parties.”
The fund has paid $3.46 billion to people and businesses hurt by the spill, according to the facility’s website. Gulf Coast policy makers have complained that spill victims haven’t been compensated quickly enough, and have challenged Mr. Feinberg’s contention that he is independent of BP, which is paying for his work.
A federal judge in New Orleans ruled on Feb. 2 that Mr. Feinberg can’t identify himself as an independent administrator.
The New York Times reported on BP’s comments earlier Thursday.
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