BP and the U.S. Department of Justice have responded to criticisms raised in a federal court about the handling of the oil spill claims process.
A filing last week by Florida Attorney General Pam Bondi raised four main concerns: The process is moving too slowly, the Gulf Coast Claims Facility has not been transparent enough about how it decides claims, there’s no meaningful way for most claimants to appeal the fund’s decisions and the release claimants have to sign waiving their right to sue the companies responsible is overly broad.
Her filing was part of unfolding legal battles over oil spill damages, described in a report by Courthouse News Service. The basic question is whether Feinberg’s process is following the law, including the Oil Pollution Act:
U.S. District Judge Carl Barbier, who is overseeing more than 350 oil spill-related claims in the consolidated multidistrict litigation, called for arguments on whether the claims process administered by Kenneth Feinberg is effective enough.
In response, documents from attorneys and attorneys general rolled in.
BP claimed in its memo that court monitoring would make the claims process less effective.
“Judicial supervision of OPA’s claims process would not promote, but instead would undermine, the fair and efficient administration of the process” according to the document filed by BP attorney Don Haycraft, with Liskow and Lewis of New Orleans.
The BP memo adds, “that there may be different ways to run a claims process does not mean that the GCCF’s chosen methods fail to comply with OPA.”
The U.S. Department of Justice offered its own opinions on some of the issues raised in Bondi’s filing:
The Justice Department appears to support Feinberg’s contention that the U.S. Coast Guard offers a secondary claims process through its National Pollution Funds Center that helps keep BP (the “Responsible Party”) and the claims fund honest:
When a Responsible Party denies liability for a claim or the parties are unable to reach agreement within 90 days, the claimant may present his or her claim in federal court or to the National Pollution Funds Center (“NPFC”) for payment from the Oil Spill Liability Trust Fund (Fund).
If the requirements are met, the NPFC itself will pay the claim from the Fund – and then refer the claim to the Department of Justice for recovery of the payment and related administrative costs from the Responsible Party. The Responsible Party thus has incentives to resolve claims through its claims process, because any valid claims that it fails to settle will be pursued by the United States.
Speed of interim payments
The filing notes that “the interim claim process must be a real one, not a disfavored afterthought,” to ensure that claimants concerned about the unknown future of the gulf can continue accepting payments without waiving their right to sue BP.
It also appears to support Bondi’s argument that “it is in the best interests of all parties for the GCCF to process any pending interim claims before – or well before – the 90-day claims period expires,” when claimants would be forced to seek compensation from the Coast Guard or go to court.
The Justice Department says the Oil Pollution Act “does not discuss releases in any detail.” The filing notes that the Coast Guard generally seeks a release preventing claimants from suing for the damages it pays for, and that “Responsible Parties in oil spills regularly seek releases as part of the claims process,” as Feinberg’s fund is doing for final and “quick pay” claims.
That still leaves the problem of how to handle the unknown future, which has become a contentious issue, as the Times-Picayune of New Orleans reports:
The plaintiffs say the releases go too far and shouldn’t keep claimants from seeking payments for damages from the spill that they don’t yet know about.
“Certainly (Feinberg) can devise a methodology to pay future payments, and he’s done that, arguably, for some cases,” said Brian Barr of Pensacola, Fla., one of four lawyers in charge of the plaintiffs’ side of the case. “But if he ends up being wrong, he can’t come back and say, ‘Well, you’ve released that.’ He has to pay that (additional) claim if it turns out his forecast is wrong.”
The Justice Department’s filing also notes that while Judge Barbier has ruled that Feinberg “is under contract with BP and has some responsibilities to BP,” he “operates as an independent decision-maker.”
Also, while the Justice Department has repeatedly called on Feinberg to pay all claims that are “the result of” the spill, as required by the Oil Pollution Act, in its filing the department contends that “the GCCF has repeatedly confirmed that, notwithstanding the language used, it is applying the OPA standard.”
Overall, the filing notes that the process of compensating victims of one of the largest manmade environmental disasters in the country’s history has been a “massive undertaking.” In a filing of his own, Feinberg says the process has been “nothing short of extraordinary,” according to the Associated Press.
Still, as he told Florida lawmakers last week, that doesn’t mean he can’t do better.