BP Escrow ‘Czar’ Encounters Packed Town Halls with Frustration to Spare

Obama administration BP cleanup fund director Kenneth Feinberg told three Louisiana town hall gatherings in one day—in Houma, Port Sulphur, and Lafitte— the Gulf Coast Claims Facility (GCCF) will emphasize local input into the process.

Animated and lively, with a little Bostonian humor, Feinberg held the attention of each overflowing July 15 crowd for approximately 30 minutes, followed by 20 minutes of questions from the audience.

In June President Obama forced BP to create a $20 billion fund to pay for property damages and other losses caused by the Gulf of Mexico oil leak and put Feinberg in charge of it. Last year Obama named Feinberg to be his “pay czar” to oversee executive pay at firms that have received huge taxpayer bailouts. In the early 2000s Feinberg ran the government’s multibillion-dollar compensation fund for victims of the September 11, 2001 terrorist attacks.
 
‘Won’t Work from DC’
By coming to Louisiana and dealing with victims of the Gulf oil leak directly, at the invitation of Governor Bobby Jindal (R), Feinberg hoped to demonstrate his independence and concern for locals as lead administrator.

“I’m working for you,” he repeated, and he called for local collaboration. “It’s not going to work from DC. It’s got to be from here, particularly if we are to weed out fraud.… which could undermine the entire process.”
 
As Feinberg explained, the compensation plan includes two components: A no-obligation six-month payment and a terminal payment with acceptance of release for BP. All victims can apply for the six-month payment, up until three months after BP manages to contain the leak (which may end up being from the day of Feinberg’s town hall gatherings). Claimants who choose to accept the second and final GCCF offer waive any right to bring further court proceedings against BP.
 
If victims do not consider the offer sufficient, they may turn it down and pursue higher payments through the courts. However, Feinberg views limiting court proceedings associated with his facility as a win-win for both sides.

Faster Than Litigation
“Everyone should come in,” and the situation will be resolved within a matter of weeks or months rather than years, he said. To drive home his point, he mentioned other oil spills that still have ongoing litigation regarding compensation, decades after the event.
 
To further encourage participation, Feinberg assured confidentiality of all claims. Although overall statistics of the process will be made public, the GCCF will not release any information connecting it with any one individual or business. Feinberg indicated flexibility in the program by encouraging cash-only workers to apply, with whatever form of evidence they could use to verify their income.

Even those who may not be direct victims of the spill, such as manufacturers of oil industry parts and local fishing lodge owners, were encouraged to apply for compensation for lost business.
 
While defending the work of BP thus far, Feinberg said the company had been less reliable at handling business claims. This failure became evident during the question-and-answer period. Two business attendees voiced frustration at not having their claims handled. Mitchell Mark, president of SNEE Chemical Company, said he has 25 workers depending on him, and he has been waiting two months without receiving any compensation.
 
Hoping for More
Most audience questions dealt with the level of compensation, although one man, overcome with frustration, simply wanted to know whether the process was going to improve. “It’s going to get better,” Feinberg reassured the audience.
 
Many attendees claimed the summer’s Gulf fish and shellfish catch had been expected to be a bumper crop. Therefore, they argued, averages from the past few years would not be accurate, along with varying prices.

“Show me!” Feinberg responded repeatedly. “I’m not going to deal in speculation—we can’t just do this on a handshake—but if you have evidence to justify such a claim, let’s see what you have.”
 
Such questions brought out many of the challenges in handling the compensation, including whether the income is taxable and whether alternative employment ought to be deducted from payments. Although Feinberg did respond to these questions, some points remained unclear. Still, the facility is being set up, and Feinberg estimates it will be ready to go in the first or second week of August.
 
Fraud Worries
Although no one in the audience addressed Feinberg on the matter of fraudulent claims, he did mention it as a grave concern. When interviewed afterward, he explained the Department of Justice's Criminal Fraud Division would “examine any suspicious claims.” Additionally, “built into the process of the claims procedure, [will be] our own experts and consultants examining these claims for fraud.”

However, he has yet to appoint a leader for or arrange such a unit within the GCCF.

Fergus Hodgson (fhodgson@pelicaninstitute.org) is capitol bureau reporter for the Pelican Institute for Public Policy in New Orleans, which published a version of this article. Used with permission.