Feinberg Expects to Pay BP Oil Spill Claims “A Premium”

Is BP oil spill claims administrator Kenneth Feinberg being fair with victims of the spill? Someone at The New York Times seems to think so. Times business writer Joe Nocera recently sat down to lunch with Mr. Feinberg at NYC’s swanky Carlyle Hotel. The topic at hand was Feinberg’s current job, as overseer of the fund designated for paying BP oil spill claims victims. Since taking on the position (after being recommended by President Obama), Mr. Feinberg has borne the brunt of claims woes. He’s been accused of purposely dragging his feet on paying out claims, and was also recently accused of being paid off by BP – to the tune of nearly a million dollars a month.

400,000 people file for emergency claim payment

Since the spill ended and cleanup efforts began, Mr. Feinberg and the Gulf Coast Claims Facility (the organization in charge of accepting and paying out BP oil spill claims) have been reviewing claims applications for emergency funds. These are considered holdover payments, to help pay lost wages, cleanup costs and other expenses associated with the spill to people in need. So far, they’ve taken in over 400,000 claims from Gulf Coast businesses and residents. Of the $20 billion of BP money earmarked for oil spill victims, nearly $2 billion has already been awarded via emergency claims.

Lump Sum Payments to oil spill victims

The window on those emergency claims is about to close, however. On November 23rd, the emergency funds process of the claims cycle will end. After Thanksgiving, the remaining monies will turn to giving spill victims lump sum payments as a “one and done” solution for resolving damages. This is intended to avoid a costly and time-consuming class action litigation suit. “Look at the Exxon Valdez case,” said Mr. Feinberg. The Exxon Valdez spill took place in 1989, but victims didn’t receive payout for over 20 years due to a lengthy court battle. The award amount was reduced after judgment went out, and victims wound up with only about $15,000 each in damages.

80,000 claims still waiting a decision

So far, BP oil spill claims payouts are faring much better – an average of nearly $800,000 per paid out claim, according to data from the Gulf Coast Claims Facility. This is despite complaints that many people have received a reduced amount, or had their claims denied. He and the GCCF have said that many of the claims they’ve denied for emergency funds have been turned down due to fraudulent reasons. In interviews, Mr. Feinstein has also maintained that more than 80% of claimants have received the full amount requested. In the final days before the close of this phase of claims applications, nearly 80,000 emergency claimants are still awaiting a decision.

BP Final payment is what everybody is waiting for

The next round of BP oil spill claim applications, which will be for final payments, is expected to be expensive. This, says Feinberg, is intended to avoid the cost and frustration of a lengthy litigation battle that won’t be good for Gulf Coasters. “I have to offer them enough money that they’ll be willing to give up their right to sue,” he said. “A lot of people, and a lot of businesses are going to get a premium, no doubt about it.”

With the claims process already involving nearly half a million people and businesses, and more expected to file for non-emergency damages, coordination is bound to be difficult. Coordinating the process without a massive court battle stands to be even more of a challenge. While those affected by the oil spill might believe Feinberg and the GCCF are mishandling the claims process, it’s possible they’re just not seeing some of the behind-the-scenes work going on. As for Mr. Nocera, he believes that “until something better comes along, Mr. Feinberg’s is the fairest way to compensate the greatest number of people.”


Joe Nocera. “Justice for Spill Victims, Like It or Not.” The New York Times.