Senator tells claims czar: don’t let BP off the hook
“BP doesn’t need to be protected from the citizenry. It’s the other way around.”
July 11, 2011
WASHINGTON, D.C.- U.S. Sen. Bill Nelson charged today BP is trying to break its promise to residents and businesses in Florida’s Panhandle by trying now to limit future Deepwater Horizon oil spill claims.
Nelson leveled the charge in a letter to Kenneth Feinberg, the attorney in charge of administering the payment of loss claims stemming from the April 2010 oil spill off Louisiana. News broke Friday that BP wants to limit future claims because the company argues the Gulf coast economy has recovered enough and there’s no evidence to suggest that the effects of the spill will be long-term.
But Nelson, in his letter to Feinberg, noted that the fishing industry near the Exxon-Valdez spill in Alaska in 1989 never fully came back.
“BP doesn’t need to be protected from the citizenry,” Nelson wrote to Feinberg. “It’s the other way around.”
It was Feinberg who set up the process to cover future losses if, for instance, more oil surfaced and drove away tourists or tainted seafood. He did that in February.
BP is now asking Feinberg to abandon the process, according to a 28-page document it sent Feinberg July 7. Under BP’s scenario, it could end up paying out less than $5 billion of the $20 billion it initially promised to set aside right after the Deepwater spill.
“BP made a commitment,” Nelson wrote. “People are still hurting. And we don’t know what will happen in the future, plus there’s still claims in an appeals process and large claims that haven’t even been submitted yet.”
Nelson said he thinks it could take years before we know the full extent of damages and based on that, alone, BP should not be allowed to change the claims process.
Following is the text of Nelson’s letter to Feinberg along with an Associated Press article on the issue:
July 11, 2011
Mr. Kenneth R. Feinberg
1455 Pennsylvania Ave NW
Washington, DC 20004-1008
Dear Mr. Feinberg,
On July 7th, 2011, BP Exploration and Production Inc. provided the Gulf Coast Claims Facility with supplemental comments regarding the methods you use to process future claims stemming from the Deepwater Horizon oil spill. In a 28-page document, BP pushes for limits on payments for future losses.
I believe this would shirk the company’s responsibility under the Oil Pollution Act to fully compensate those who sustain damages related to the spill. BP made a commitment. People are still hurting. And we don’t know what will happen in the future, plus there’s still claims in an appeals process and large claims that haven’t even been submitted yet.
BP doesn’t need to be protected from the citizenry. It’s the other way around.
At this point, we don’t know the full extent of damage to the Gulf Coast—environmentally or economically. Scientists are in the process of determining just that. Even today, more than 22 years after the Exxon-Valdez oil spill, Pacific Herring populations are not recovering in Alaska. The commercial fishing industry has sustained extremely long-term losses. We don’t know yet whether there will be similar damage to the Gulf.
You responded to BP’s comments by saying that you would take them “under advisement.” Please ensure me that each claim is processed on an individual case-by-case basis and that all compensable losses—past, present, and future—are fully accounted for. Anything less would be legally and morally insufficient.
BP wants to end future loss claims over Gulf spill
11:24 AM, Jul. 9, 2011
Written by Kevin McGill
NEW ORLEANS — BP is arguing that victims of last year's Gulf oil spill should not be paid any more claims for future losses because the areas affected by the spill have recovered and the economy is improving.
The British oil company makes its case in a 29-page document filed with the Gulf Coast Claims Facility, which administers the $20 billion fund for victims.
It criticizes several aspects of the fund's policies and claims that at some times it has paid victims more than is allowed under the federal Oil Pollution Act.
"Multiple lines of evidence demonstrate that, to the extent that portions of the Gulf economy were impacted by the spill, recovery had occurred by the end of 2010, and that positive economic performance continues into 2011, with 2011 economic metrics exceeding pre-spill performance," the BP document said.
To back up its argument, the document notes that all commercial fisheries have re-opened, hotel industry statistics indicate strong occupancy rates and news reports on tourism venues reporting strong business.
The company is not arguing against paying out claims for documented losses. And those who feel more damages for future losses are warranted, or who are otherwise unsatisfied, can reject the final compensation offer and pursue litigation.
"Any claimant who is of the view that, notwithstanding the economic data, there is too much risk of future loss to enter a final settlement has the right to file an interim claim and seek the payment of past loss without signing a release of liability," the BP document said.
The fund's administrator, Kenneth Feinberg, said BP's arguments would be considered, but he declined further comment.
As for BP's claims that various GCCF payments exceed that authorized by federal law, Feinberg said the GCCF was authorized to use that law as a guideline. "Many of our claims, I readily admit, go beyond what's required by federal law," he said. "But it was always understood in our original protocol establishing the GCCF, that the GCCF would use the federal law as a guide, that's all."
BP notes evidence of recovered fisheries and government assurances that seafood is safe to eat as part of its argument. New Orleans seafood processor Harlon Pearce says that doesn't address the lingering effect of the spill on the seafood business.
"For someone to say we don't have damage in the future is clearly wrong," Pearce said.
While BP comments cited evidence that Gulf Seafood is safe, Pearce said the public's perception hasn't caught up with that reality. He estimated his distributions are down about 25 percent and it will take years to regain the trust of consumers and a place in the national market.
Pearce, who is president of the Louisiana Seafood Promotion and Marketing Board, said the board's research indicates it took three to five years for the Alaskan seafood market to rebound after the Exxon Valdez spill, and noted a study commissioned by the board that says 75 percent of consumers around the country are still concerned about seafood safety.
Lawyers for the state of Louisiana also don't think things have turned around, according to a court document filed Friday in an ongoing lawsuit over the spill.
Allan Kanner, an attorney for the state, wrote: "The state's economy is still battling the prolonged downturn brought on by the Deepwater Horizon event and resulting spill, including the impacts of the offshore drilling moratorium imposed in direct response to the spill. The State's revenues depend on a robust coastal economy, and that very economy continues to struggle in the wake of the spill."
Economist Loren Scott in Baton Rouge said there are points favoring BP's argument. He cited sales and "bed tax" revenue from tourist-dependent areas of northwestern Florida, which were only beginning to recover from the Great Recession when the April 20, 2010, Deepwater Horizon explosion killed 11 offshore workers and caused the spill.
And, while the seafood industry can point to a drop in consumer confidence, Scott said, BP lawyers would likely argue that it was the industry's own complaints of oil spill damage that contributed to the drop.
"As it has from the outset, BP supports the payment of legitimate claims, and to the extent that a claimant can substantiate future losses, a final offer covering past and future losses and a release of claims are appropriate," spokesman Tom Mueller said in a statement. "Given the strong evidence of recovery, what we are objecting to is GCCF's practice of assuming future losses on certain claims," he said.
Still, the BP comments stirred lingering animosities.
"They go back on their word. They try to weasel out of everything they told you they'd do," Orange Beach, Ala., Mayor Tony Kennon said.
Kennon said BP still owes Orange Beach $2.5 million for lost revenues during 2010. While the summer season is off to a good start this year, it's too soon to say whether different sectors of the coastal economy — including lodging, restaurants, seafood, retailers and tourist attractions — have fully recovered because there's no data yet to show whether visitors are spending as much as they once did.
In Mississippi, Tom Becker, head of the Charter Boat Captains Association and a fisherman in Biloxi, said he has only booked eight trips for this month, when before the oil spill he would have expected three times as many.
Becker said some charter boat captains are still hoping to get money out of BP and he thinks it's premature for BP to seek to end any payments.
He said potential customers still ask if the seafood is safe to eat.
"It hasn't recovered," Becker said. "I wish they wouldn't come out with statements like that. It's just depressing. It's like, 'Here we go again.' A lot of us don't believe that this is over with."
Ocean Springs Mayor Connie Moran said she was "astounded. I was really just flabbergasted."
"While I understand BP is still committed to paying losses from last year and early 2011, there are many businesses that continue to be negatively impacted by the spill, among them the seafood industry and charter fishing," Moran said.
Moran said it will take years to fully recover and the long-term impact on delicate ecosystems is not clear.
Associated Press writers Holbrook Mohr in Jackson, Miss., Jay Reeves in Birmingham, Ala., and Harry R. Weber in Charleston, W.Va., contributed to this story.