BP Spill Fund Doesn’t Need Oversight, Administrator Says

BP Plc (BP/) spill-claims fund administrator Kenneth Feinberg doesn’t need court supervision to ensure victims of the worst offshore spill in U.S. history are compensated fairly and quickly, his lawyer said.

The Gulf Coast Claims Facility, created to resolve claims spawned by the April 2010 explosion of the Deepwater Horizon oil rig off the Louisiana coast, has paid out almost $5 billion to spill victims who wished to bypass the court system and receive immediate compensation, David B. Pitofsky, Feinberg’s lawyer, said in a filing today in New Orleans federal court. The fund’s accomplishments show there’s no need for court oversight, Pitofsky added.

“The GCCF is already effectively supervised by the Coast Guard and several committees of Congress, and it has voluntarily agreed with the Department of Justice to an independent audit of the claims process,” Pitofsky said in the filing.

Lawyers for victims suing BP over damages from last year’s Gulf of Mexico oil spill have for months urged U.S. District Judge Carl Barbier in New Orleans to take a supervisory role over the $20 billion fund. BP created the fund to comply with a U.S. law requiring polluters to compensate oil spill victims.

Attorneys general from four Gulf Coast states have also asked Barbier to investigate complaints that the GCCF is intentionally dragging out and denying interim payments to “financially desperate” victims to pressure them into accepting quick, cheap final settlements that prevent them from suing BP.

Interim Relief

Feinberg’s “near-complete failure to pay interim claims” is signaling victims that “the only way to ever get any more compensation is to take the quick payment amount and sign a release” agreeing not to sue for more, the lawyers said.

Feinberg’s lawyers counter in their filing that the fund has paid almost $2.6 billion in emergency payments to Gulf Coast residents damaged by the spill and another $250 million in interim payments.

“It’s hard to grasp how plaintiffs can assert as fact that GCCF has failed to provide interim relief,” Pitofsky said in the filing.

On the question of whether the fund is strong-arming Gulf Coast residents into signing away their rights to sue in exchange for inadequate compensation, Feinberg’s lawyer noted some claimants are drawn by the prospect of immediate cash for their claims.

‘Rational Decision’

“It can be a perfectly rational decision to accept an assured short-term payment over a possibly larger, but postponed long-term payment,” Pitofsky said in the filing.

BP faces more than 350 lawsuits by thousands of property owners, fishing interests and tourism businesses claiming harm from the spill linked to the explosion and sinking of the Deepwater Horizon rig.

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

To contact the reporters on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha in San Francisco at mhytha@bloomberg.net.

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