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Gulf Oil Spill Fund Chief Feinberg Defends Record on Claims Payments

November 24, 2010 at 12:00 AM EDT
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Jeffrey Brown speaks with Kenneth Feinberg, the independent overseer of BP's $20 billion oil disaster compensation fund, about how the claims process is proceeding and what he makes of criticism from Gulf Coast residents and business owners.

JEFFREY BROWN: And we’re back live now and joined by Kenneth Feinberg, the administrator of the compensation fund.

And welcome to you back — Welcome Back, Ken Feinberg.

KENNETH FEINBERG, independent administrator, Gulf Spill Independent Claims Fund: Thank you. Thank you very much.

JEFFREY BROWN: Well, you just heard — you heard John Young say the process up to now has been too slow, too cumbersome, confusing as to who gets paid and who doesn’t.

KENNETH FEINBERG: First, I must be doing something right.

We have spent or paid out — over the last three months, it will turn up to be about $2.3 billion in the Gulf to about 150,000 individuals and businesses. Louisiana has received over $700 million in the last 12 weeks.

Now, there are problems. This is a massive undertaking. But I do believe that the fund, up to now at least, is doing what it was intended to do.

JEFFREY BROWN: Do you feel that this is more of a perception problem, the perception that — there has been the perception, it’s been said, that you appear to be too tied to BP and helping them.

KENNETH FEINBERG: Well, I mean, you know, that — that is a perception.

I’m totally independent. Both BP and the administration turned this program over to me. We are now moving into a new phase, where every single eligible claimant who can document the damage has two choices. They can either take a lump sum payment. You heard the parish president, how the seafood is delicious, and it’s safe, and everybody should eat it.

You can take a lump sum payment and release your right to litigate and move on as best you can. Or — the parish president is correct — if there are individual businesses or individual claimants that don’t want to waive that right yet to litigate, who believe that the future is still uncertain, still risky, they can instead take every three months for the next three years, Jeff, interim payments, document their damage — not easy — document their damage, their past damage.

And, every three months for the next three years, they can continue to receive payments, and not waive any of their rights to litigate.

JEFFREY BROWN: But your — your hope — and we have talked about this before — your hope is still to convince people that they do better coming to the fund than going to court, right?

KENNETH FEINBERG: I think that’s absolutely clear. We don’t want to repeat Exxon Valdez. For 20 years, that litigation continues. It is still going on.

This program, which will be around until 2013, is designed to offer a voluntary alternative. If people want to litigate, that’s their right. They have every right to do that, if they do so desire. I in no way want to impede that right.

If, on the other hand, they want to come into this fund voluntarily and take compensation sooner, rather than later — if they don’t think it’s fair, they don’t have to take the money, or they can appeal my decisions to the Coast Guard or to the judges in the courts. I’m trying to do the best we can for the greatest number of people in the Gulf.

JEFFREY BROWN: What’s been the hardest type of claim for you to date? Is it still — and we have talked about this proximity question — how close someone or how far someone is to the actual oil in the water? What’s been the toughest for you?

KENNETH FEINBERG: That’s one problem.


KENNETH FEINBERG: That’s one problem.

Do you pay a golf course that’s 100 miles from the Gulf that claims damage, or a restaurant in Washington, D.C., that says it can’t get Gulf shrimp for scampi? That’s one problem.

The other problem — the parish president made a very good point, very good point — and that is, there’s still a fair amount of uncertainty about the future in the Gulf. The scientists haven’t agreed. The biologists haven’t agreed. It’s very early.

I’m doing my best, in making a lump sum payment offer, to take into account all of the available neutral data about the future in the Gulf. And I’m hoping that the offers will be sufficiently generous that claimants will accept that final payment.

But, if they don’t want it, they shouldn’t take it. They can get interim payments going forward without releasing any of their litigation rights.

JEFFREY BROWN: Well, you heard him put forward one idea of payments now as a kind of credit. You must be getting all kinds of advice. You heard the Alabama governor with some tough language, referring to this plan as extortion.

Why — you have had a lot of experience at this game. I mean, why has this seemed to be harder and tougher than perhaps you thought at the beginning?

KENNETH FEINBERG: Well, I think it’s harder and tougher than I thought at the beginning based on the sheer volume of claims.

I have received 450,000 claims. Half of them have no documentation whatsoever, none, no tax stubs, no check receipts, no checkbooks, nothing. And yet these — the huge number of claims is a problem.

The emotion here is a problem. But you will recall 9/11. And when we had to design and administer the 9/11 fund, for the first year, there was plenty of criticism, plenty of emotion.

And I’m confident that, at the time this program ends, years from now, I think that it will work and that people will continue to get paid fairly.

JEFFREY BROWN: All right, Ken Feinberg, thanks for joining us once again. And happy holiday to you.

KENNETH FEINBERG: You, too. Thanks so much.