‘In seven months we have paid out about $3.6 billion to 200,000 people'

BP claims fund administrator, Ken Feinberg, listens to citizen concerns from the fishing community in Lafourche Parish Monday, March 28, 2011 at a public meeting in Mathews, La. (   | Photo Credit: Julia Rendleman

One year after the worst oil spill in U.S. history, in the Gulf of Mexico, oil major BP is still making payments out of a $20 billion fund to compensate many thousands of individuals, families and businesses for incomes lost and livelihoods destroyed. One man, appointed by the Obama administration, has been at the centre of the compensation process — Kenneth Feinberg. Mr. Feinberg, an astute lawyer and experienced compensations negotiator, was also President Barack Obama's “pay czar,” charged with setting executive compensation for top management at seven Wall Street firms caught up in the financial crisis of 2008. He also led the disbursal of compensation for victims of 9/11. On the first anniversary of the oil spill he spoke to Narayan Lakshman about some of the thorny issues involved in setting post-disaster compensation. The full interview is online, on The Hindu's website.

To begin with clarifying what the status quo is with regard to the Gulf Coast claims, could you please outline how many claimants there are in total, and how many of them have been paid to date? Also, what is the total amount paid and when do you see the entire exercise winding up?

There have been about 500,000 claims from the Gulf, and really from many other states as well. We have paid about 200,000 claims. There are about 135,000 being processed. The remaining claims have been denied as either ineligible, lacking any proof, or what have you. In seven months we have paid out about $3.6 billion to 200,000 people and about 100,000 people have signed a final release that they are done, that they will not be back and that they will not sue. That is the statistical summary.

I had a question about how that damage is assessed and you have mentioned elsewhere that a direct causal link was quite important. Have many of the claimants been denied due to the indirectness of the causal link and do you have a way of mitigating that? The sheer scale of the disaster was so massive was it not?

We will not deny, outright, indirect causation. We will not. We have decided that anybody, however indirect, can file a claim. Whether or not they will be able to prove that their indirect damage was caused by the spill is an interesting issue. But I think it would be a bad idea under the credibility of this programme, to automatically deny somebody the right to file a claim.

Instead I think they should be able to file. Whether they can prove a causal connection to the spill is the issue.

On the subject of comments by the courts, since U.S. District Judge Carl Barbier issued a court order that you could not identify yourself as an independent administrator, what have been your thoughts on whether in fact you are independent in this role? Are you?

The judge concluded that since I stand in the shoes of BP in setting up the programme, I should not say that I am truly independent. On the other hand the judge pointed out in that opinion that I am independent when it comes to the treatment of any particular claim and that neither BP nor the government nor anybody else has any control over my decisions.

How would you be independent of BP if they were paying you?

They are paying the freight for the entire programme. Who else is going to pay me?

The government?

The government is not responsible for this programme. The government is not responsible for the spill. The government is like any claimant. The government was not any kind of wrongdoer here. So BP is the only one that can pay me. Otherwise there is nobody available to pay. BP is paying the freight for the whole claims process and all the accounts and all the claims evaluators and the adjustors. BP as the wrongdoer has to step up and pay the freight.

As per the structure of payouts for the BP spill fund some affected persons have first received an immediate emergency payment without any obligation as long as they have a demonstrably legitimate claim. However the claimant will be required to give up his right to sue to receive full compensation. Has this approach been seen as too harsh by some of the parties?

I do not think so. Everybody who wanted an emergency payment from August 23, 2010 to November 23, 2010 could take an emergency payment and come back again. Now everybody has three choices. One, [they can] take a final payment. [They would] document [their] past damage, I would consider [their] projected future damage, [they] would take a lump-sum payments, they would release no lawsuits, [they] would not be back. [This is] Option One.

Option Two [is one where each claimant would say,] “I am not too sure about the future. I do not want a final payment. I will document my damage for the last quarter, take an interim payment. [There will be no release [from bringing lawsuits] — like the emergency payment I can come back and sue. I will wait and see what happens in the Gulf.”

The third option [is for the claimant to] take a quick payment — $5,000 for an individual, $25,000 for a business. [The claimant] may have no more documentation [and] may have been over-paid. [He would provide] a final release [from lawsuits] and will not be back and will not sue.

Final payment, interim payment and quick payment — those are your three choices.

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