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BP Pushed to Speed up Emergency Claims

Source: CNN

Posted on 21 Jun 2010

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The man overseeing a $20 billion claims fund told CNN on Monday he wants the claims payment process accelerated and its transparency increased.

"We've got to get the claims out quicker, we've got to get them out with more transparency so claimants understand the status of their claim, and we've got to ease the burden on these folks in the Gulf," Kenneth Feinberg said.

He said that emergency payments need to go out "with less corroboration than you would if you're giving a lump sum payment that is the total compensation. For the emergency payments, we've got to err on the side of the plaintiff."

BP said in a statement Monday that costs from the disaster now total about $2 billion, including the cost of the response, containment, relief well drilling, grants to Gulf states, claims paid and federal costs.

To date, more than 65,000 claims have been submitted and more than 32,000 payments totaling more than $105 million have been made, the company said.

Critics of the Obama administration have questioned Feinberg's independence, claiming he is on the White House payroll as executive compensation czar.

Feinberg disputed that: "I'm not on the payroll. I'm doing the White House pay czar role pro bono, without compensation. ... I don't think anybody will ultimately question the independence of this program."

As with a fund established for those affected by the September 11, 2001, attacks, "the emergency payments that are going out under my watch do not require that any claimant give up any of his or her rights to litigate or go forward in court," Feinberg said.

But he added he would not advise victims to do so, as they would face an uncertain and expensive battle that could drag on for years.

On Monday, New Orleans Mayor Mitch Landrieu will host a group of more than a dozen mayors from Gulf States. While tourism in his city remains strong, Landrieu said, much depends on the coastal situation, and if the problem isn't fixed, the economy will suffer.

Nevertheless, New Orleans officials have asked BP for a grant of $75 million over three years to mitigate the long-term effects on its tourism industry, the head of the city's Convention and Visitors Bureau said.

"The catastrophic nature [of the oil disaster], I still believe, is not fully known to us," Landrieu said. "It's really huge."

As far as the federal response, as seen in previous disasters such as Hurricanes Katrina and Rita, "it's never good enough. It's never fast enough," he said.

But Landrieu said he believes the federal government turned a corner last week as far as getting people on the ground.

"There is no quick fix here," Landrieu said, "and I think people need to kind of get focused on that fact." Also Monday, a federal judge will hear arguments from companies seeking an end to a temporary moratorium on deepwater drilling while oil continues gushing into the Gulf of Mexico from a ruptured undersea well.

The six-month ban, instituted by the government last month, halts all drilling in more than 500 feet of water and prevents new permits from being issued.

But a company that provides boats and equipment to the offshore drilling industry said in a lawsuit the government has no evidence that existing operations pose a threat to the Gulf.

Hornbeck Offshore Services LLC and other oil service companies named as plaintiffs in the case said they want a court order declaring the moratorium invalid and unenforceable. A federal judge will hear their arguments Monday morning.

The office of Louisiana Gov. Bobby Jindal filed a friend of the court brief in federal court Monday supporting the removal of the moratorium.

Government lawyers argue the temporary suspension of deepwater drilling is necessary to assess the safety and regulation issues and reduce the risk of another environmental disaster.

As much as 60,000 barrels (2.5 million gallons) of oil may be gushing into the Gulf every day, government estimates found last week.

White House press secretary Robert Gibbs defended the moratorium on deepwater oil and gas drilling last week, saying it was an essential safety measure.

"The president told us that because we don't know what caused this accident, we can't afford to continue drilling those 33 [deepwater] wells without knowing what happened. The president didn't feel comfortable with that," Gibbs said.

BP has agreed to set aside $100 million to compensate oil workers idled by the moratorium, company Chairman Carl-Henric Svanberg said last week.

But critics argue that the six-month moratorium will hinder economic recovery in a region that is largely dependent on the oil industry.

"That's like kicking a man when he's down," country music singer Trace Adkins, a former rig worker, told CNN's Anderson Cooper last week. "That is the most idiotic, juvenile overreaction. It's an uninformed decision."

A CNN/Opinion Research Corp. survey released Friday said opposition to increased offshore drilling has grown 10 percentage points since May and is twice as high as it was in 2008.

Fifty-eight percent of those questioned support a six-month moratorium on new drilling in the Gulf and other offshore sites; 68 percent favor increased regulation of the oil industry.

An internal BP document released Sunday by Rep. Edward Markey, D-Massachusetts, indicates the company believed that the worst-case scenario of oil gushing into the Gulf could be as high as 100,000 barrels, or 4.2 million gallons of oil per day -- the highest figure yet to surface regarding the leaking oil well.

The document, submitted in May, maintains the 60,000 barrel estimate BP told the House Energy and Commerce Committee but stipulates that if the "blowout preventer and wellhead are removed and if we have incorrectly modeled the restrictions, the rate could be as high as 100,000 barrels a day."

BP spokesman Robert Wine said the May estimate cited in Markey's document is irrelevant to the current situation because the oil company has no intention of removing the well's blowout preventer.

Asked about that estimate Monday, Landrieu said, "it upsets me, but it doesn't surprise me." He said he does not believe the underwater oil gusher will be stopped until a relief well under construction is complete in August.

Meanwhile, about 23,290 barrels of oil -- slightly more than 978,000 gallons -- were collected from the ruptured well in the 24-hour period ending at midnight Sunday, Coast Guard Adm. Thad Allen said Monday.