HARVEY, La. -- In a shocking move, BP has decided to shut down its internal oil spill claims program, taking away an avenue for more than 10,000 claimants who have opted out of the oil giant’s controversial settlement agreement or others who are not covered by it.
BP won’t say how many claimants it served with the BP Claims Program over the last two years, but the amount paid through the end of April was a paltry $12 million. By contrast, over the exact same time frame, the court-supervised settlement program paid $3.8 billion.
With all the fighting over that settlement program and BP’s high-profile effort to undo the way it pays business claims, it's been easy to forget about the other claimants -- those relegated to BP’s internal program as the only alternative to an interminable wait for a court date.
Like owners of BP gas stations, who found themselves boycotted in droves after the spill because they happened to get their gas from the spill’s perpetrator.
Or businesses shut down by the drilling moratorium, the six-month work stoppage imposed while the government assessed the safety of offshore drilling operations.
Or seafood processors and others who were eligible for a settlement payment, but found the terms of the agreement prevented them from recovering their full losses.
That was the case for Dave Arnsby, whose Country Inn and Suites in Sarasota, Fla., lost 25 percent of its business and went into foreclosure nine months after the oil spill.
“When the foreclosure went through, I became a total loss and lost my entire investment, a lifetime's work, my income, future retirement,” he said. “Everything just went.”
The settlement terms only covered Arnsby for lost revenues – nothing for his lost $4.5 million investment in building and running a hotel for 25 years. At first, though, Arnsby was encouraged to learn that BP offered him an alternative to protracted litigation: the BP Claims Program.
The company had run its own claims program in the first few months after the April 2010 oil spill, to comply with compensation rules established by the Oil Pollution Act of 1990.
In August 2010, BP brought in Kenneth Feinberg to run the settlement program as a part of an agreement negotiated with the White House. When BP agreed to a settlement with a committee of plaintiffs’ lawyers, the court took over those payments on June 4, 2012, and on the same day, BP resumed its internal claims program for everyone else.
Arnsby remembers BP promising to process all legitimate claims in 90 days. He and his attorneys sent in documents showing his losses of revenue and investment, but BP wouldn’t offer him more than the revenue compensation.
When BP announced the end of the BP Claims Program last week on the same website that had promised a quick payment, Arnsby was angry.
“Every single article said, ‘We will pay all legitimate claims,’” he said, referring to an onslaught of BP advertising and press statements in major newspapers. “And I am a perfectly legitimate claim, fully documented, in an industry that was the most impacted in the state of Florida. They have everything they need to settle my claim, and it’s a point-blank refusal.”
BP, though, said it stopped the BP Claims Program because it was simply under-utilized.
“Since the (Court Supervised Settlement Program) began operating in June 2012, the majority of individual and business claims that have been filed have been submitted to the CSSP,” said BP Vice President Geoff Morrell. “Indeed, very few claims were being submitted through the BP Claims Programs when this decision (to close it) was made.”
Morrell said none of the claimants’ rights will be limited by the closure of the program and they can continue to pursue a settlement with BP on a one-on-one basis. But Arnsby doesn't believe that for a second.
“We're on a stay, we can't move, we're log-jammed, and the more time that goes by, they're just attempting to weaken the claimant,” he said. “Because this is not about making it right for the businesses of the Gulf Coast. This is a strategy.”
Indeed, critics see this as just the latest way BP has tried to slow or stop claims payments. After paying $3.8 billion between June 2012 and October 2013, the settlement program was virtually shut down for the last eight months by BP’s court appeals.
And the BP Claims Program put most of the opt-out claims on administrative hold last year. After paying $10 million in its first 16 months, the BP Claims Program paid just $1 million in the first four months of 2014.
Many of the opt-out claimants were able to collect some money before entering the BP Claims Program. During the transition from the Feinberg program to the court-supervised settlement program, they got 60 percent of the Feinberg offer with an option: They could either collect the other 40 percent while waiving their right to sue BP, or they could wait for a more favorable payment from the settlement or in court.
In May, BP sent letters telling those who had received the 60-percent transition payment that they had 30 days to sign away their right to sue if they wanted to collect the remaining 40 percent. BP told WWL-TV at the time that it was just an "administrative measure taken in an effort to reach out to non-responsive claimants."
One of those letters went to R&D Enterprises in Harvey, a small rig supply company that may have one of the most obvious claims of anyone, anywhere.
Its patented drilling-fluid storage tank was on the Deepwater Horizon oil rig that BP was using when its well blew out April 20, 2010, and the R&D equipment went to the bottom of the Gulf of Mexico with the rest of the rig two days later.
BP paid R&D 60 percent of their claim in the transition program, but it won’t pay the remaining $60,000 unless the company drops its other claim, for all the revenue R&D lost during the government's drilling moratorium.
It had dozens of other storage tanks and equipment on other deepwater drilling rigs, which had to stop working after the spill.
It will take years of litigation to determine if BP owes anyone for so-called “moratorium losses.” Nobody disputes that businesses like R&D were hurt by the moratorium, but the court will have to decide whether the Oil Pollution Act covers those losses as a direct result of the spill -- and therefore whether BP is liable for those losses.
After four years of fighting, and with little hope of resolving the moratorium claim any time soon, company owner Dan Bertucci and chief financial officer Joe Goodson are thinking about giving up on their claim for hundreds of thousands in lost revenues.
After all, they want to keep BP as a customer.
“When it was first announced that they kind of held everybody hostage with this, yeah, of course we were offended by it in the beginning,” said Joe Goodson, R&D’s chief financial officer. “But it is what it is and we're just ready to move forward with this and this is our way to do it.”