Designing the Gulf Coast Claims Facility in the Shadow of the Law: A Template From the Superfund §301(e) Report

• Date: 01 November 2010

11-2010 NEWS & ANALYSIS 40 ELR 11121

Designing the Gulf Coast Claims

Facility in the Shadow of the

Law: A Template From the

Superfund §301(e) Report

by Alfred R. Light

Alfred R. (Fred) Light is Professor of Law and Director, LL.M., Environmental Sustainability,

St. omas University School of Law, Miami Gardens, Florida.

About two months after the Deepwater Horizon explo-

sion, BP and the Obama White House a nnounced a

novel agreement under which BP created a new $20

billion oil-spill fund to pay individuals and businesses suer-

ing losses arising out of the d isaster.1 Kenneth R. Feinberg

moved from his post as “pay cz ar” for nancial institutions

receiving federal assistance in order to undertake admin-

istration of this Gulf Coast Claims Facility (the Facility).

Feinberg is the sa me Washington-based lawyer who ran t he

victims’ compensation fund after Sept. 11 terrorist attacks.2

Feinberg testied before the U.S. Congress in July that to his

knowledge there was no written document embodying the

arrangement negotiated between BP and the W hite House

and that he did not view himself as answering to either BP or

the White House in his “independent” administration of the

Fund—working “for the people of the gulf region.”3

e bottom line at this writing (the last week of August)

is t hat few deta ils of how the Facility ultimately will work

were available for this Special Report.4 Feinberg indicated

in a newspaper interview in August that it could take until

anksgiving to nail down how he would weigh nal dam-

age payments.5 A federal Deepwater Horizon National Inci-

dent Command, Integrated Services Team (IST ), had been

established to monitor BP’s claims process and to focus on

1. Jesse Lee, e White House Blog, A New Process and a New Escrow Account

for Gulf Oil Spill Claims From BP, e White House Blog, June 17, 2010,

available at http://www.whitehouse.gov/blog/2010/06/17/a-new-process-and-

a-new-escrow-account-gulf-oil-spill-claims-bp.

2. See Kenneth R. Feinberg, Why He Matters, Who Runs Gov (Wash. Post), available

at http://www.whorunsgov.com/Proles/Kenneth_R._Feinberg.

3. Ken Feinberg Talks BP Compensation, Fox News Sunday with Chris Wallace

(Fox broadcast July 4, 2010), available at http://webcache.googleusercontent.

com/search? q=cache:67Qo n5TGAqsJ:www.foxne ws.com/on-a ir/fox-news -

sunday/transcript/kenneth-feinberg-talks-bp-compensation+testimony+ken+

feinberg+bp+agreement&cd=1&hl=en&ct=clnk&gl=us.

4. See Richard Fausset & Rong-Gong Lin II, Admiral: Oil So Broken Up Now, It’s

Hard to Find, S-S (S F), July 27, 2010, at 3A.

5. Neil King Jr., Faster Action for Spill Claims, W S. J., Aug. 21-22, 2010, at

A5.

timely claims processing a nd payments; to create condence

in the process through greater cla rication and transpar-

ency; to identify the services gaps that ex ist in each state

and community and to coordinate the delivery of services

and benets to meet those gaps. Nonetheless, despite BP

ocial Darryl Willis’ and Feinberg’s testimonies before con-

gressional committees and before various federal a nd state

“response” commissions, such as the IST and Florida’s Gulf

Oil Spill Economic Recovery Task Force, there continue to

be extremely basic questions about how the claims process is

operating or even is supposed to operate.6 It was even unclear

at the end of August how much Feinberg is being pa id from

interest on money in the Fund.7

Although the Facility was announced on June 16 after

a meeting between BP executives and President Barack

Obama, preliminarily BP itself handled claims from the

April 20 blowout until August, when Feinberg ocially

took over claims management from BP ocial Willis.8 is

process ramped up fairly quickly, with t he establishment of

a website; dedicated toll-free claims lines; simple forms for

major categories of claimants (commercial shermen, crab-

bers, oyster lease owners, and commercial shrimpers) in three

languages (English, Spanish, and Vietnamese); and 35 claims

oces spanning four states (Louisiana, Alabama, Mississippi,

and Florida) with 950 adjusters. e initia l BP Claims pro-

6. See Deepwater Horizon Integrated Services Team, Key Issues for Claims Pro-

cess, June 28, 2010 (on le with author).

7. Ian Urbina, BP Settlements Likely to Shield Top Defendants, N.Y. T, Aug.

20, 2010, available at http://www.nytimes.com/2010/08/20/us/20spill.

html; John Pacenti, Plaintifs Attorneys Knock BP Administrator, D

B. R., July 26, 2010, available at http://www.law.com/jsp/article.

jsp?id=1202463865302&src=EMC-Email&et=editorial&bu=Law.com&pt=

LAWCOM%20Newswire&cn=NW_20100726&kw=Plaintis%20Attorneys

%20Knock%20BP%20Fund%20Administrator.

8. BP hired a contractor, ESIS, to administer claims under its direction. See ESIS

Home Page, http://www2.esis.com/ESISRoot/ESIS/. ESIS was the rst com-

pany to handle workers compensation claims on a third-party basis. See ESIS’

History, http://www2.esis.com/ESISRoot/ESIS/About+ESIS/History/. ESIS

is also administering BP’s separate Government Entity Claims Process.

Copyright © 2010 Environmental Law Institute®, Washington, DC. reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.