Chime in on Payment of Oil Spill Claims

Since capping the leak, the news on the Deepwater Horizon oil spill has been sparse. But the multi-district litigation is progressing before the Louisiana federal court, and individuals and businesses continue to file claims for damages sustained with the Gulf Coast Claims Facility, an entity developed pursuant to BP’s statutory obligations as a responsible party. Many of these claims have gone unpaid and unanswered.

Claims Administrator Kenneth Feinberg will appear in Tallahassee next week before the Florida House Economic Affairs Committee to answer lawmakers’ questions about why claimants have had such difficulty in getting paid and speaking directly with decision-makers. The appearance is scheduled for February 18 at 8 a.m. in Webster Hall.

Until then, the public has the opportunity to chime in on the criteria for evaluating claims and the methodology for determining the amount to be paid to claimants. The Claims Facility has posted a proposal, which includes sample calculations for individuals and businesses and supposed expert reports.

The proposal sets forth the requirement that claimants establish an “identifiable link” between losses and the oil spill:

Evidence establishing this connection is required. For example, a claimant might provide documentation of cancelled orders for goods or services, disruptions to the supply of Gulf seafood, a termination of employment or reduction in wages that an employer confirms was caused by the Oil Spill, etc. Likewise, the GCCF will not presume that a claimant’s 2010 income or profits would have been greater or less than the claimant’s 2009 income or profits. Providing financial information about losses sustained in 2010 is but one form of proof, and will not be sufficient documentation for many individuals and businesses …

In discussing final payment calculations, the proposal states that the Claims Facility takes into account both documented losses and a “future losses factor,” which essentially assumes that losses in 2011 will be 70% of those sustained in 2010 and losses in 2012 will be 30% of those sustained in 2010. This works out neatly to a payout of two times any documented 2010 losses. There are exceptions for oyster harvesters, who get twice that amount, and those who sustained damages of at least $500,000. Those who don’t like the “future losses factor” are free to pursue an interim payments option.

Several comments have already been sent in via email and mail and are posted daily on the Claims Facility webpage. These comments often focus on the fact that not all businesses “fit the mold” of the proposal. The Claims Facility will review all public comments and then adopt final rules for determining and paying on claims.

The proposal and comments can be viewed here: http://www.gulfcoastclaimsfacility.com/methodology
All public comments must be received by February 16.