BP Oil Spill Compensation Fund Not Living Up to Promise

People along the Gulf Coast are reporting dissatisfaction with the BP oil spill compensation fund. According to a report on NPR, some claimants have had to submit documentation multiple times, and are still awaiting word on emergency payments.

BP agreed over the summer to fund the $20 billion compensation account. In addition to submitting claims for emergency payments for six month of losses, people and businesses impacted economically by the spill can also apply for payment of long term damages. While claimants don’t have to surrender their right to sue BP and other responsible parties if they accept emergency payments, they will have to give up that right to collect for long term damages.

Ken Feinberg, the Washington D.C. lawyer tapped by the White House, took over the administration of the $20 billion BP oil spill compensation fund last month. At the time, he promised the claims process would be faster than it had been when BP was handling claims.

But it appears reality is falling short of that promise. One restaurant owner whose business lost $45,000 this summer, and only got $15,000 when BP was taking care of claims, told NPR that the process is still bogged down. The diner filed for $120,000 to stay afloat through January, but has only received $4,500 since the August takeover.

The new claims process does not allow appeals for the emergency payment, so the diner’s options are limited.

“We can file the final claim, give up all right to sue,” the business owner said. “Or we can retain an attorney. Or we can file bankruptcy and walk away from it all.”

Feinberg told NPR that he realizes now that he promised more than he has been able to deliver given the complexity and sheer volume of claims. The process, he said, has been made difficult by problems that include duplicate claims, or no proof of lost income.

“It’s taken longer than I thought,” Feinberg says. “And that criticism, the false expectations that have been raised, I think are justifiable.”

In an interview with USA Today, Feinberg promised a better response times as his staff weeds through old claims. “I’ve inherited a huge number of claims that have never been processed that need to be processed, especially business claims,” he said. Such claims, he said, were placed on a “side track” by BP when it was handling the process.

According to USA Today, more than 46,000 people have filed claims since Feinberg took charge. By September 8, his staff had paid 10,252 claims for nearly $80 million. Most claims paid are small, with payouts of $5,000 or less, USA Today said.

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