BP Oil Fund Czar To Weigh Popularity Of $20B Claims Program

19th Jul 2010 17:00

By Tennille Tracy Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The top administrator of BP PLC's (BP, BP.LN) $20 billion oil-spill fund said it will take three to six months to determine roughly how many people opt out of the claims program set up by the company and elect instead to file lawsuits. The issue has become increasingly important in recent weeks as BP and its shareholders attempt to determine just how much money the company will have to pay to address to Deepwater Horizon oil spill. In June, BP agreed to set aside $20 billion to pay claims filed by workers and businesses whose wages and revenue were affected by the oil spill. Among them are fisherman and shrimpers operating in the Gulf of Mexico. By accepting a lump sum payment from the fund, the claimants are precluded from suing the company. As a result, the claims program allows BP to better calculate its liability within the next few years. The claims program represented "an alternative to years of protracted litigation," said Kenneth Feinberg, the fund administrator, speaking to reporters during an event of the Economic Club of Washington. Feinberg said he was actively encouraging workers and businesses in the Gulf of Mexico to file claims via the fund. Once legal fees are considered, Feinberg said these claimants will probably receive more compensation via the fund than they would through litigation. "It is, to my way of thinking, an easy call," he said. Feinberg is being paid by BP to administer the fund, but he has emphasized his independence from both BP and the Obama administration. He also oversaw a fund to compensate victims of the Sept. 11 attacks, and said 97% of those victims elected to receive compensation via the fund. Of the 3% who didn't, or 94 people, Feinberg said, "I'm sure they didn't do as well." Feinberg also said his experience at the helm of the 9/11 fund taught him that claimants "tend to stand back and wait" until the end of filing deadlines to decide whether to enroll. He added, however, that he would have a better idea of the number of people accepting BP payouts within three to six months. Feinberg has proposed to keep the fund open for three years. It replaces a claims process that BP has administered for the last several weeks and is expected to start making payments in August. BP has already doled out $200 million in claims. The $20 billion fund will also cover expenses incurred by the government during the clean-up effort. While overseeing the fund, Feinberg said he will face two major hurdles. The first is determining which claimants qualify for reimbursement, depending on the claimants' ability to establish a link between the oil spill and damage to their businesses. The second is to corroborate the level of wages and revenue that claimants say they lost. -By Tennille Tracy, Dow Jones Newswires; 202-862-6619; [email protected] (END) Dow Jones Newswires July 19, 2010 12:00 ET (16:00 GMT)