The oil spill's economic cleanup

Alicia Paul of Panama City Beach washes the deck of her charter fishing boat after the ban on commercial and recreational fishing was lifted in the Florida Panhandle this month.
Alicia Paul of Panama City Beach washes the deck of her charter fishing boat after the ban on commercial and recreational fishing was lifted in the Florida Panhandle this month. (Terry Barner/associated Press)

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Friday, August 27, 2010

WHEN BP HEEDED President Obama's urging, endowed a $20 billion fund to compensate victims of the gulf oil spill and said it would play no role in awarding the dollars, one aim was to remove controversy and politics from the process of determining who deserves cash, and how much. Instead, it seems, the heat has only been displaced -- onto Washington lawyer Kenneth R. Feinberg, who is administering the Gulf Coast Claims Facility after having run a similar Sept. 11 victim compensation fund.

Mr. Feinberg has designed a two-step process. Within the next 90 days, people can apply for temporary relief, and they can do so without giving up any legal rights. After that the fund will weigh claims for final settlements; for those, claimants will have to give up their right to sue BP. Mr. Feinberg is urging people to apply. He argues that they're unlikely to get a better deal any other way, especially since suing BP will take years, have a highly uncertain outcome and entail sharing with lawyers a large cut of any award.

For this reasonable suggestion, Mr. Feinberg is labeled a "corporate shill" by Alabama Attorney General Troy King, and no doubt that's just the beginning.

Beyond the name-calling, though, what are the arguments of Mr. Feinberg's critics? Gulf state attorneys general complain that 90 days isn't enough time to apply for temporary relief. Mr. Feinberg counters that if you can't apply for an emergency payment within 90 days, how urgent can your emergency be? You can always just apply for a final settlement instead.

The critics also object to Mr. Feinberg using geographic proximity as one criterion in determining who deserves help. After all, many businesses that rely on the gulf aren't next to the water. But geography isn't Mr. Feinberg's only consideration; the circumstances of the applicant -- whether it be a shrimp boat captain in Biloxi, Miss., or the owner of a shrimp processing facility in Chattanooga, Tenn. -- can override geography.

There are complaints about the protocol Mr. Feinberg is developing for final settlements, too, such as that wages earned in the spill cleanup effort could be deducted from payouts. But this is only fair; the whole point is to compensate claimants for their net losses due to the oil spill.

Lost amid the outcry is that applying to the claims facility is entirely voluntary. If victims feel they can get a better deal in court, prosecuting their liability claims as they would have without the fund, they are free to do so. If they worry that experts underestimate the damage to the gulf -- and, therefore, the losses they might suffer -- they can delay their application for final payment.

Still, victims would be wise to discount some of the shriller rhetoric and look carefully at what Mr. Feinberg is offering. His first priority is to serve victims' needs in a fair and reasonably expeditious process. It's not clear how many of his critics can say the same.


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