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BP oil spill claims czar to base payouts on full recovery in 2012

The Gulf of Mexico should largely recover from BP's oil spill by the end of 2012, 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.

Attorney 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 notes, however, that oyster harvesting will take longer.

The fund was set up by BP 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 — including $1.3 billion in Florida — but many are still waiting for any money, and thousands of others claim 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 Wednesday.

"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," Florida Attorney General Pam Bondi said in a court filing.

Just hours after Feinberg released his plans, U.S. District Judge Carl Barbier in New Orleans ruled that Feinberg must stop telling potential claimants that he is independent from BP. The ruling cuts at the heart of one of Feinberg's central arguments that because he's independent, thousands of people who have been denied any money at all or less money than they feel they deserve should trust his decisions. It could prompt more people to sue rather than accept relatively quick settlements with the fund.

Barbier said 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 was appointed in June by BP and the White House to oversee the fund. His Washington law firm was paid $850,000 a month for its work through the middle of January, and now Feinberg is discussing with BP how much he should be paid going forward.

Barbier said: "The court finds that BP has created a hybrid entity, rather than one that is fully independent of BP."

BP did not immediately respond to a request for comment. Feinberg did not return a call to his cell phone. A Feinberg spokeswoman said the Gulf Coast Claims Facility would have no comment on the ruling and would move forward paying claims.

Lead attorneys in hundreds of lawsuits filed over last year's rig explosion and massive oil spill had asked Barbier to intervene in the communications between Feinberg and fund claimants. The attorney generals in Mississippi and Louisiana have expressed support for the motion, and Bondi, on Florida's behalf, joined in Wednesday.

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.

Some Pinellas hotels were paid for financial losses from visitors who stayed away because they believed the oil spill reached local beaches.

That perception will likely linger beyond 2012, said Keith Overton, chief operating officer at the TradeWinds Island Resorts on St. Pete Beach. "The perception is getting better, but it's going to take time," he said.

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

"I think I have canvassed the universe," Feinberg said.

Gregg Nicklaus, an owner at the Sirata Beach Resort in St. Pete Beach, doesn't think anyone can predict at this point when the gulf will be healed.

"It will be a long time before that's known," he said. "The dispersants are still floating in the gulf and there's a large deposit of oil that dropped to the bottom."

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

"I am comfortable with what I am doing today," he said.

Those who aren't ready to take a final settlement can instead file for interim quarterly payments through August 2013, provided they can show proof of continued losses. Claimants can also file for a quick cash one-time payment of $5,000 for individuals and $25,000 for businesses, but they would have to give up their right to 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 quick cash. About 92,000 claimants are so far seeking final settlements.

Early on, the process first allowed for claimants to seek six-month emergency payments to help keep them afloat, but many weren't 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. How much more rigorous can you get other than handing over your firstborn?" Kennon said. "The strategy continues to minimize BP's payout."

Times staff writer Steve Huettel contributed to this report, which also used information from the Associated Press.

.Fast Facts

How to comment

A two-week public comment period on the payment proposal runs through Feb. 16. Comments may be e-mailed to MethodologyComments@gccf-claims.com or mailed to GCCF, P.O. Box 9658, Dublin OH 43017-4958. Learn more at gulfcoastclaimsfacility.com/methodology.

BP oil spill claims czar to base payouts on full recovery in 2012 02/02/11 [Last modified: Wednesday, February 2, 2011 9:58pm]
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