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BP Spill Claims From 50 States Confront Administrator Feinberg

Gulf Coast Claims Facility Administrator Kenneth Feinberg. Photographer: Joshua Roberts/Bloomberg
Gulf Coast Claims Facility Administrator Kenneth Feinberg. Photographer: Joshua Roberts/Bloomberg

Aug. 16 (Bloomberg) -- Claims from all 50 U.S. states confront Kenneth Feinberg as he prepares to tap BP Plc’s $20 billion escrow account for victims of the company’s Gulf of Mexico oil spill.

“The farther away you are from the Gulf and the Gulf shore the less likely it is that you will have a valid claim,” Feinberg, administrator of the fund, said Aug. 13 in a telephone interview. “But I will take a look at each claim.”

BP has received more than 142,400 claims, representing every state, for damages from the well that gushed for almost three months, and most will be turned over to the Feinberg-run Gulf Coast Claims Facility that goes into operation on Aug. 23, according to Robert Wine, a BP spokesman in Houston. BP said last week that 114,100 emergency payments totaling $352 million had been provided pending Feinberg’s decisions.

The Obama administration and London-based BP chose Feinberg, 64, to run the $20 billion fund based on his expertise in handling disputed claims. The Washington lawyer administered payments to Vietnam War veterans who suffered health effects from the defoliant Agent Orange as well as victims of the September 11th terrorist attacks and the 2007 Virginia Tech shootings.

The BP fund is different because most claims from the spill are based on economic losses, rather than death or injury, and the disaster had a broad reach, Feinberg said.

“Trying to get a geographic handle on this, trying to get a handle on what constitutes a valid causal link between a business loss and the spill -- these are going to be unique challenges,” Feinberg said.

‘Creativity’ of Claims

The filing of claims from far away “gives you some idea of the creativity of the claimant population,” he said. Some of the claims are from people who live far from the Gulf and have businesses there, according to Wine.

Hotels that are 50 miles (80 kilometers) inland are unlikely to be compensated for tourism losses, Feinberg said.

That would be unwelcome news for businesses in Florida, where state officials call tourism a $60 billion-a-year business. Hotel operators say visitors stayed away on the mistaken impression that all of Florida’s beaches were tarred by oil even though it washed ashore only along the northwestern Panhandle.

“They think Florida equals oil: ‘Honey, let’s go to San Diego,’” said Mick Ball, who owns Tropi Rock Resort in Fort Lauderdale on Florida’s Atlantic coast. Ball, who said he may file a claim, estimates business declined 15 percent from a year earlier, when revenue was already down because of the recession.

Golf Courses

Duncan Millar, executive director of the Gulf Shores Golf Association in Alabama, said golf courses as far as 25 miles from the beach have been affected.

“Golf courses have seen a significant impact on the tee sheets, play volume and therefore revenues,” Millar said.

Revenue at one course declined $130,000 in July compared with a year ago, said Millar, whose association represents 12 courses in the area. He estimated claims from the courses could total more than $1 million.

Feinberg said he has set aside a “modest amount,” which he didn’t disclose, to compensate the Gulf region’s Realtors, whose trade association met with him last week.

The Realtors have “suffered a great deal” in lost sales, rent and commissions, he said.

Independent academics and environmentalists will join government officials to help assess the spill damage, he said. Judging each claim by the same criteria is important, Feinberg said.

“We have to be absolutely consistent in our application of the facts,” he said.

BP’s success in capping the well and estimates that most of the oil has dissipated may limit the claims coming in, Feinberg said.

“As the news continues to be positive, I begin to contemplate that maybe, just maybe, there won’t be as many claims as one originally thought, but we’ll have to wait and see,” he said.

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

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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