BP Oil Spill Compensation Fund is Being Misrepresented

Has the public been misled about the purpose of the much-vaunted $20 billion BP oil spill compensation fund? It seems so.

In the media, the fund has been presented as a vehicle for compensating people and businesses damaged as a result of the spill. But in reality, the fund can be used for other purposes – including clean-up and litigation costs incurred by BP.

The compensation fund was announced with much fanfare earlier this month by the Obama administration. The fund is being administered by Kenneth Feinberg, of the Feinberg Rozen law firm, who oversaw a similar fund for victims of the Sept. 11 terror attacks.

The White House has maintained that the $20 billion doesn’t represent a ceiling of what BP will pay, and has said the oil company will replenish the fund when and if the money runs out.

But at a conference in Atlanta last week, environmental activist and lawyer Robert Kennedy Jr. called the fund the latest example of BP’s “subterfuge” surrounding the oil spill. He asserted that the oil giant can use the fund to pay for anything it likes.

Now, according to a Reuters report, those suspicions have been confirmed by Michael Rozen, a partner in Feinberg Rozen.

“My present understanding is … that it is available for all manner of costs,” Rozen told Reuters.

That’s disturbing, because if the fund can be used to defray BP’s cleanup costs, in the end there could be very little money left for victims. Keep in mind, BP has already spent $2.5 billion on cleanup, and it hasn’t even plugged the gushing well in Gulf of Mexico yet.

It’s easy to imagine a scenario where the entire $20 billion could be spent on clean up. In fact, some lawyers representing oil spill victims have said cleanup in the affected states could easily amount to $30 billion.

Rozen told Reuters that all legitimate claimants would be paid. But he conceded: “Twenty billion maybe isn’t sufficient for the mass of stuff that’s aired, in which case BP will have to add more. If that should be the case, people still have their rights and remedies under law.”

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