Gulf Coast on edge as 9/11 mediator assesses oil spill claims

BP, the government and an army of volunteers are fighting to contain and clean the millions of gallons of oil spewing from the site of the Deepwater Horizon explosion in the Gulf of Mexico.
By David A. Fahrenthold and Joel Achenbach
Washington Post Staff Writers
Saturday, August 21, 2010

On Monday, Kenneth R. Feinberg -- Washington's expert in the messy business of valuing tragedy in dollars and cents -- officially takes over one of the messiest cases of his career.

Feinberg, who oversaw compensation funds for victims of Agent Orange, the Sept. 11 terrorist attacks and the 2007 shooting rampage at Virginia Tech, was appointed by BP and President Obama to oversee claims from the oil spill.

Now the job of making the Gulf Coast whole is about to shift from BP to him.

On Friday, Feinberg released a "protocol" for parceling out emergency claims over the next three months. These were only vague guidelines, though they hinted that those closest to the oil might have the best chance of getting paid.

In interviews, legal experts and Gulf Coast residents say that Feinberg's job looks more complex than his famous work after the 2001 attacks. The spill's impact rippled through an interconnected economy, with losses at oil-free beaches in Florida and at oyster-shucking plants along the faraway Chesapeake Bay. And even when a loss is obvious -- as with gulf fishermen -- its value might be tied up in murky counterfactuals: Who can say how many shrimp one of them would have caught?

"None of these go swimmingly," Feinberg said in an interview Friday. "There are hurdles and challenges all along the way. Human nature being what it is, people have expectations. Inevitably some people are satisfied and some aren't. It goes with the territory. You do the best you can."

In the four months since the spill began, BP has handed claims for compensation of lost income. The oil company has received 153,974 claims as of Friday, and paid about 125,000 of those, for a total payout of $395 million.

On Monday, all pending claims will be handed to Feinberg. These will include murkier cases where the claim originates far from the spill itself, or involves indirect impacts on groups such as beach-town real estate agents.

Feinberg's job is to parcel out $20 billion in BP funds, from an escrow account the company established at the insistence of the White House. Fees to his law firm will be paid out of interest payments from the $20 billion.

The protocol issued Friday by Feinberg says that people and businesses still awaiting payment from BP must file new forms with his Gulf Coast Claims Facility before their claim will be paid. Between Monday and Nov. 23, they can file requests for "emergency advance payments," compensating for losses from the first six months after the spill.

After that, Feinberg will decide on "final" payments. On Monday, more details about claims will

be available online at

Feinberg said Friday that anyone receiving an emergency payment retains all rights to sue BP or any other company involved in the spill. A final claim, however, will carry a procedure for releasing BP -- and perhaps other companies -- from liability.

Around the Gulf Coast this week, there were worries that Feinberg's fund wouldn't do enough, or that the Washington lawyer would fail to understand the complicated connections that spread the spill's pain far and wide. Louisiana Gov. Bobby Jindal (R) complained about the need for his residents to file new paperwork, while Grand Isle, La., seafood dealer Dean Blanchard said he liked Feinberg but feared he wouldn't come through.

"If you got six months to live, you want Feinberg to tell you" because of his comforting manner, said Blanchard, who said he lived at "ground zero" for the spill's impact. But, Blanchard said, would Feinberg understand that the weather predicted a huge year for shrimp, before the oil killed the shrimping season? If he didn't, Blanchard might not get all of the $300,000-plus he still needs for unpaid bills. "I figured out what 'ground zero' means. That means zero money for Dean," he said.

Further from the well, the questions multiplied. In Alabama, fishermen said it would be unfair if those who worked for BP's cleanup, providing "Vessels of Opportunity," had their pay subtracted from their spill compensation.

"You're out there in a 121-degree heat index, pulling boom or skimming or scooping or picking up tar balls, and they're going to take that away from you," said Avery Bates of the Organized Seafood Association of Alabama.

In St. Pete Beach, Fla., a resort company that never saw a drop of oil has tallied $1.7 million in lost revenue -- reasoning that news reports about oil in the gulf scared people off. That will go in Feinberg's queue, along with a request from faraway Weems, Va. There, on a Chesapeake Bay tributary 800 miles from the gulf, W.E. Kellum Seafood had come to rely on oysters from the gulf. The oil spill cut its supply. Now, after receiving only a small payment from BP, it is waiting on Feinberg to cut the firm a check.

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