BP's oil spill payments: Are they enough?

Monday marks five years since the BP oil disaster began off the La. Coast. BP promised to "make it right" in the Gulf and set up a $20 billion fund for victims. Eyewitness Investigator David Hammer has been following that money from the start.

Monday marks five years since the BP oil disaster began off the La. Coast. BP promised to "make it right" in the Gulf and set up a $20 billion fund for victims. Eyewitness Investigator David Hammer has been following that money from the start.

NEW ORLEANS – Five years after the BP oil spill, the oil giant and its allies have a message for the Gulf Coast: Enough is enough.

A full-page ad in the April 8 Advocate newspaper captured the mood, from the chief executives of two major oil field service companies, Edison Chouest Offshore and PHI helicopters.

"We hope our state and our citizens will come to realize that to pursue BP with a mentality that says BP must be persecuted and punished beyond a fair bar of responsibility will hurt the reputation of our state," wrote Gary Chouest of Edison Chouest and Al Gonsoulin of PHI.

That sentiment – similar to what was expressed in more than a year of BP ads in national publications attacking plaintiffs' lawyers and the federal court's claims administrator for wringing too much money out of its settlement with spill victims – has picked up steam as observers take stock of the enormous amount of money BP has paid to date.

There's little doubt that the Gulf Coast's economy has recovered -- and even received a big boost – thanks to an influx of $28.3 billion from BP. But there are also a lot of bills still left for BP to pay, and fishermen, business owners and environmentalists complain that BP is giving some of the most deserving victims of the spill short-shrift.

5 years later, no final word on BP spill's effects

David Hammer sat down recently with Kenneth Feinberg, the claims administrator for the BP oil spill. Here is the full interview.

Local lawyers, accountants and insurance adjusters are raking in business from the BP litigation. Area marinas, boat owners, charities, health clinics, research institutions and construction companies got grants or steady business from BP as a part of the company's promise to "make it right" in the Gulf. BP gave millions to help coastal tourism, and Loren Scott, an economist used by BP as an expert witness in court, reported that sector of the region's economy actually came out ahead.

"I can't speak about responsibility on the rig, or the tragedy or who bears the blame," said Ken Feinberg, the first BP oil spill claims czar. "That's for others. But when it comes to compensating innocent people, I think that what we did and what BP did deserves a great deal of praise."

Villain or victim?

BP isn't just seeking praise, however. As its bills continue to mount, it says it's being victimized by greedy Gulf residents, businesses and governments. It set aside $43.5 billion to pay spill-related costs and has about $15 billion left in the kitty. But there are still some big-ticket items left to be assessed against BP that could push the total above $50 billion.

At a meeting with President Obama at the White House when the oil was still flowing in the summer of 2010, BP agreed to put $20 billion into an oil spill trust fund so that Feinberg could compensate individuals, businesses and governments with legitimate damage claims.

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"I don't know of any other Fortune 500 company, or any other company, that within weeks of a tragedy, without a finding of liability, decides to put up that type of money and turn over or delegate the process to a non-BP employee to try and process claims," Feinberg said.

Feinberg, a Boston-bred lawyer and mediator known as the "Master of Disaster" for his ability to hand out compensation to victims of nationally significant tragedies like the 9/11 terror attacks, began doling out BP's money just weeks after the well was capped. He ended up settling with 221,000 people and businesses, paying them $6.5 billion in just 18 months.

He was forced out when plaintiffs' attorneys struck a 1,000-page settlement with BP in March 2012. A court-appointed administrator, Patrick Juneau, replaced Feinberg. He has approved another $5.4 billion in payments to an additional 60,000 claimants.

Even though BP spent much of the last two years attacking Juneau and trying to get him removed as claims administrator, the Lafayette lawyer agrees that BP's payments have helped a lot of people and the regional economy as a whole.

"If you think through this whole region, the infusion of that capital into the Gulf Coast region has had a tremendous effect," Juneau said.

After the initial rush to show its dedication to the Gulf, BP's message has become much less neighborly, and its spending on economic recovery has slowed down considerably. After spending $24 billion on cleanup, penalties and compensation in the first three years, it has paid out just $4 billion in the last two years.

Some of that is a function of timing beyond BP's control: U.S. District Judge Carl Barbier has yet to rule on how much BP owes in Clean Water Act pollution fines, based on the amount of oil spilled, that could reach as high as $13.7 billion. But billions more have been held up by BP's repeated efforts to challenge its obligations under class-action settlements and to dispute the level of damage the oil spill caused.


BP and its defenders refer to the Deepwater Horizon rig explosion as an "accident." Many of those who are seeking compensation say that's a misnomer, pointing out that Barbier ruled BP engaged in "gross negligence" and "willful misconduct" that helped lead to the disaster. The company also pleaded guilty to manslaughter charges and obstruction of Congress for lying about the amount of oil coming out of the well.

Critics say these are reasons to question BP's motives, even when it is paying up. Environmental activist and scientist Ricki Ott alleged the $20 billion fund was a just a ploy, to protect BP America – and the whole industry -- from much larger liability.

"This was an orchestrated event between President Obama's administration and BP at a time when Congress was considering raising the liability limit that's in the Oil Pollution Act of 1990 and set at $75 million," Ott said Thursday on KALW Radio. "Everybody recognized with the BP disaster that the $75 million cap was a joke…. That low cap is still in place."

Fair fishing compensation?

Fishermen offered some of the loudest complaints about how the compensation programs worked.

"When we were doing the meetings with Ken Feinberg, we tried to present him with our idea of what adequate compensation should be and he never did agree with us," said Clint Guidry, head of the Louisiana Shrimp Association and one of the people who pushed hard for Feinberg to be more generous.

Feinberg settled quickly with 14,000 fishermen, but 10,000 of them took the so-called "Quick Payments," settlements that required no additional documentation from the claimants, but also required them to sign away any further claims against BP.

Guidry said many fishermen took it under duress.

"So they were stuck in the middle of December, two weeks before Christmas (2010), couldn't pay their bills, couldn't buy toys for their kids and actually just went in a signed their life away for $25,000," Guidry said.

But Feinberg refuses to believe that.

"I've never seen any evidence of duress," he said. "I can either get a great deal more money with documentation, or I don't even need documentation and I can get a check in the next couple of weeks or months. I'm not surprised at all, human nature being what it is. I see no duress. I see each fisherman making the decision of what's best for the fisherman."

Juneau replaced Feinberg in mid-2012, after BP and a committee of plaintiffs' lawyers signed an economic damage settlement. Juneau has received more than 300,000 claims and more than 100,000 of them are still awaiting payment or denial. More could pour into claims centers before a June 8 filing deadline.

BP estimated the agreement would cost it $7.8 billion. The latest estimate had jumped to $9.9 billion and that did not include any guess of how much the company could owe for recalculated business claims or claims filed before June 8.

The settlement included a $2.3 billion compensation fund just for the seafood industry. BP pointed out that figure was five times greater than the whole industry's annual revenues in any of the three years prior to the disaster.

But Guidry, the shrimp association president, said the constant delays in the court process have kept that money from effectively making fishermen whole.

"Every day that we stall and don't have all our money, we're losing the value of the settlement," Guidry said.

Only half of the 10,000 claimants in that program got paid before Juneau decided to move on to a second round of payments recently.

"I didn't think it was right to hold up all these people who ain't got a problem because of the ones that may have a problem," Juneau said.

St. Bernard Parish oysterman Brad Robin says he and his brethren are hanging on by a thread, and higher prices have done more to help overcome the losses than BP's payments.

"The product is more expensive, and it's helping us," Robin said. "But my business, as for quantity that we were delivering, the amount we are delivering – we are still 75 percent off."

Business, medical claims muddled

Based on figures released by Juneau's office, there were more than 30,000 businesses that filed claims and were stuck in neutral during a 10-month period when there was a stay on payments.

After expressly telling Juneau they agreed with his payment methods, BP officials reversed course and claimed that Juneau had "hijacked the settlement." BP lost again and again in court, but succeeded in holding up the payments.

One of BP's appeals against Juneau was successful and forced him to change the accounting method used to calculate claims payments. That appears to be affecting most of the 50,000 business claims still in Juneau's queue.

One is Digital Designers, a company that supplies security systems for hotels and workboats. The company was beginning a promising period of growth when the oil spill hit. As soon as tourism and offshore work returned to normal, Digital Designers' business took off again, but it had to go into debt during the tough times right after the spill.

Partner Nat Krasnoff thought the company was about to receive a final settlement check in July 2013 because BP had declined to take a final appeal.

But then the new accounting method, known as "Policy 495," was applied to Digital Designers' claim. Twenty-one months later, Krasnoff and his partners are still waiting.

"It's more than a little frustrating," he said. "I mean this has been almost a half a decade since more than half of our business literally went away in one day. Half a decade, that's a long time."

Juneau acknowledges that disputes over whether he is implementing Policy 495 correctly are holding up thousands of claims. Plaintiffs' attorneys say accountants working for Juneau are triggering accounting reviews without cause to make more money. Juneau said he is keeping a close eye on the accountants and making sure they are processing the reviews of profit-and-loss statements as quickly as possible.

"The process is failing us. So, if it's failing us, it's failing thousands of other companies. It's a failed process," Krasnoff said.

And then there is the largely forgotten – but equally large – group of cleanup workers and coastal residents who claim exposure to the oil and chemical dispersants made them sick. They too were promised money – for skin, eye and breathing ailments, in a class-action settlement signed in 2012.

There are more than 40,000 claimants in the medical settlement. But three years after it was signed, administrator Matt Garretson has paid just 900 workers a total of $1.3 million.

Garretson acknowledges the payments have been slow, again due to a series of court appeals and disputes. But he says his operation is picking up the pace and hopes to finish processing claims by the end of 2016.

"Like any system where you're processing claims, you get better as you go, you get more efficient, you figure out what was causing any bottlenecks and you work through technology, people and process to improve them, and I think we've done that," Garretson said.

Garretson made a controversial decision last summer that plaintiffs' attorneys believe will force most claimants out of the settlement to pursue compensation for chronic illnesses. Garretson decided a provision in the settlement that was intended for cancer and other illnesses that take time to manifest was actually a deadline for diagnosis of a chronic condition.

If the claimant did not get a specific diagnosis from a doctor of a chronic illness by April 2012, they will only be able to collect basic, $1,300 payments for acute symptoms suffered when they were first exposed. They will have to fight BP one-on-one in arbitration to collect larger settlements for lingering maladies.


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