Oil Spill Compensation Rules May Block Lawsuits

Although the compensation fund for victims of the massive BP Gulf oil spill is open for claims, some rules could block victims from seeking further recovery via legal action.

The most current guidelines for the $20 billion fund state that those who are more geographically adjacent to the spill and who rely on natural resources from the Gulf of Mexico, have an increased chance of receiving payment, said the Associated Press (AP). Guidelines also come with a secondary rule set scheduled for release this autumn that mandates businesses and individuals forfeit their right to sue BP—and other involved companies—if they seek compensation under the fund, said the AP. This rule could save Big Oil billions.

The new claims process rules were just released by Kenneth Feinberg, a Washington lawyer picked by President Barack Obama to run the fund, said the AP. While many find the compensation unfair, Feinberg claims ethical and generous compensation will be made versus what might be received if lawsuits are pursued, explained The Marketplace previously.

According to Feinberg, he came up with the idea for the fund saying, “It is not in your interest to tie up you and the courts in years of uncertain protracted litigation when there is an alternative,” quoted The Marketplace. Feinberg, the so-called “pay czar,” managed executive compensation for recently bailed-out banks as well as the 9/11 victims fund. The Marketplace noted that Feinberg also placed restrictions on the 9/11 payouts.

According to a fact sheet detailing the agreement released by the White House, the fund will pay damage claims filed by businesses and individuals who suffered economically because of the spill through the Gulf Coast Claims Facility, as well as judgments and settlements reached with those who decide to file damage claims with the courts. It will also be used cover natural resource damage costs and state and local response reimbursement. BP will not be able to use the fund to pay any fines the federal government assesses to it over the spill.

Payment involves proof that losses suffered were a result of the spill and not the recession and involve proximity to the spill so that a determination can be made regarding “injured natural resources,” quoted the AP. Some worry about the issue of proximity since some businesses and individuals who might not live near the disaster site could rely on the Gulf’s natural resources, explained the AP.

Emergency claims can be made until November 23 at Gulf Coast claims offices, either by mail or through the Internet, said the AP, which added that according to Feinberg, he plans on sending emergency checks within 24 hours for individuals and seven days for businesses. Those seeking emergency payments will not be required to waive their rights to sue; however, final, long-term settlements will include that waiver, said the AP.

Those seeking emergency payments will not have to give up their right to sue BP and other companies, but the rules for final, long-term settlements will include a waiver of that right, forcing claimants into making a difficult decision between seeking legal compensation prior to the full extent of the spill’s damage can be realized—consider health and environmental issues that could take years to surface—or to accept a payment from BP.

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