Feinberg Challenged by Attorneys General on BP Fund

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

Kenneth Feinberg’s effort to pick among claims on BP Plc’s $20 billion fund for victims of its oil spill has attracted a group of self-described watchdogs: attorneys general from affected Gulf Coast states.

“I’m certainly not going to give it my Good Housekeeping seal of approval,” Mississippi Attorney General Jim Hood, a Democrat, said in an interview.

Feinberg, a Washington lawyer, took over operations of the BP fund on Aug. 23. Backing from the attorneys general may be crucial to winning broad participation in the fund that BP and the Obama administration created to minimize protracted legal fights, according to Jon Mills, director of the University of Florida’s Center for Governmental Responsibility in Gainesville.

“If Feinberg’s work is viewed as inadequate by a large group of legal officials, including AGs, then people will seek alternatives,” Mills, a former Democratic speaker of the Florida House of Representatives, said in an interview yesterday. “Then we start to lose the fundamental benefit of this, which is speed.”

The Gulf Coast Claims Facility, which will draw on the escrow fund to pay people and businesses harmed by the largest U.S. oil spill, received 20,062 claims through yesterday, Amy Weiss, a spokeswoman for Feinberg, said today in an e-mail.

The attorneys general, including Republicans Bill McCollum of Florida and Troy King of Alabama, have said Feinberg may reject claims for indirect damage from the spill, such as those from hotels that lost guests who feared beaches might become tarred by oil.

Feinberg’s Position

Feinberg said he “respectfully disagreed” with the criticism from the attorneys general.

“No good deed goes unpunished,” Feinberg said in a phone interview Aug. 25. He repeated his intention to be more generous in judging claims than state and federal laws require, and said individuals and businesses remain free to go to court instead of settling with the fund.

Feinberg has “consistently ignored our suggestions” and requirements of the federal Oil Pollution Act, McCollum wrote in a letter today asking for a meeting on the claims fund with U.S. Attorney General Eric Holder.

‘Unnecessary Litigation’

The protocols set by Feinberg for emergency funding of claims “may well hamper injured parties as they seek to be made whole and lead to unnecessary litigation,” McCollum said. He sent a similar letter to BP’s U.S. general counsel.

The Justice Department expects Feinberg “to provide a fair, independent and efficient process, and we look forward to continuing work with our state partners,” Hannah August, a department spokeswoman, said in an e-mailed statement.

The Florida attorney general has cited language in the protocols limiting payments to damage “proximately caused” by the spill.

Distance from the spill will be only one consideration in the decisions, according to Feinberg, who said he will also weigh how dependent a claimant is on the Gulf’s resources.

A shrimp processor 100 miles (161 kilometers) from the Gulf Coast that depends on Gulf shrimp would likely have an eligible claim, Feinberg said.

The state officials have questioned whether claimants will have to waive their rights to sue before the long-term costs of the spill are known. Feinberg has set a three-year deadline for choosing between accepting a final claim and going to court.

Prepared for Worst

“As AG for the state, I have to be prepared for the worst, which would be that this process does not operate fairly, it is not consumer-friendly, you are cutting people’s rights off,” Hood said in the interview Aug. 23. He said he is “cautiously optimistic” after meeting with Feinberg.

People and businesses have 90 days to file claims with Feinberg for emergency payments, which can provide as much as six months of reimbursement. Accepting the interim checks won’t limit their option to go to court later.

Trial lawyers, who in effect are competing with Feinberg for business, say he should extend the period during which claimants may seek emergency payments.

“There is not one scientist worth his weight who can tell us with any certainty what the seabeds in the Gulf are going to look like in the spring,” Jeffrey Breit, a Norfolk, Virginia- based attorney representing more than 600 Gulf Coast fishermen, said in a phone interview today.

Feinberg has said he is weighing whether those who accept final payments later must waive their rights to sue companies such as Transocean Ltd., which owned the Deepwater Horizon drilling rig that exploded, as well as London-based BP. Hood called such a blanket waiver a “horrible idea.”

Hood, the Mississippi attorney general, said he asked Feinberg this week to provide daily reports on claims filed, paid or rejected each day, and the fund administrator agreed.

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