Feinberg Says Spill Victims May Be Able to Sue Some Companies

Kenneth Feinberg, who today will start drawing from a $20 billion escrow fund for Gulf oil spill victims, hasn’t decided whether they must waive their right to sue companies involved if they accept final reimbursement.

“The question of whether or not a final payment will require a claimant to release one defendant, BP Plc, or all defendants, has not yet been resolved by me,” Feinberg said yesterday in a telephone press conference with reporters.

Over the next 90 days the Gulf Coast Claims Facility will first pay out emergency compensation providing as much as six months of reimbursement for losses resulting from the disaster that left 11 people dead and led to the world’s largest accidental oil spill. Those who accept these interim payments retain their right to sue BP and other companies in court, Feinberg said.

The legal rights of victims who receive final compensation have been a subject of negotiations involving Feinberg, officials from BP and other parties. Potential defendants include Transocean Ltd., which operated the Deepwater Horizon drilling rig, and Anadarko Petroleum Corp., which owns a 25 percent stake in the well.

Victims who accept final payment from the fund can’t seek additional compensation from BP in court. The question Feinberg said he has yet to determine is whether victims could still sue other companies involved in the spill.

Photographer: Joshua Roberts/Bloomberg

Gulf Coast Claims Facility Administrator Kenneth Feinberg. Close

Gulf Coast Claims Facility Administrator Kenneth Feinberg.

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Photographer: Joshua Roberts/Bloomberg

Gulf Coast Claims Facility Administrator Kenneth Feinberg.

BP spokesman Daren Beaudo said on Aug. 20 that it was the company’s understanding that claimants would waive their rights to sue BP and companies tied to the spill in accepting final compensation from the claims fund.

“BP believes that any settlement should be a full and final settlement,” Beaudo said in an e-mailed statement.

Tough Lines

Feinberg yesterday reiterated his pledge to be more generous in determining who gets paid than a court would be.

“I’m going to have to draw some tough lines, but I’m hoping that I’ll be able to enjoy the benefit of saying, ‘Well, if I haven’t found you eligible and you opt out of this voluntary program, no court will find you eligible,’” Feinberg said.

“The most problematic area clearly is going to be tourism,” Feinberg said. Florida businesses in particular have argued revenue has suffered even though the state’s coastline has largely been unaffected by the oil spill except along the panhandle in the northwest part of the state.

Real estate agents and brokers have also pressed Feinberg to pay claims based on lost sales or commissions.

Feinberg said he’s agreed to set aside as much as $60 million to pay Realtors, which will be distributed by the Realtor trade associations in each of the five Gulf Coast states: Texas, Louisiana, Mississippi, Alabama and Florida.

Immediate Criticism

The news conference followed the release on Aug. 20 of the general framework Feinberg will use to judge the temporary payment claims.

The protocols immediately drew criticism. Florida Attorney General Bill McCollum, a Republican, said the protocols impose a higher burden of proof on claimants than required by federal law.

“The current process appears to be even less generous to Floridians than the BP process,” McCollum wrote on Aug. 20.

Other critics focused on the use of proximity to the spill to determine the validity of a claim.

“I think it’s unfair to draw arbitrary geographic lines when it is clear that many businesses rely on the natural resources of the gulf for their livelihood,” said Jeffrey Breit a Virginia-based attorney who represents more than 600 fishermen in the Gulf Coast in an e-mailed statement on Aug. 20.

Proximity will only be one factor in determining eligibility, Feinberg said. He will also weigh the type of business seeking payment and how much it depends on the natural resources of the Gulf or the coastline, he said. He also denied McCollum’s claim that he would judge claims on a higher standard than federal law requires.

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

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