BP: Oil claims formula too generous

The embattled administrator of the €14.3bn fund for Gulf oil spill victims has been told by BP that his formula for determining final payments is too generous.

A document purporting to be from a major business was posted on the Gulf Coast Claims Facility’s website. The name of the business and other identifying references were removed, but a spokeswoman for the fund confirmed the comments were written by BP.

The document said Kenneth Feinberg’s methodology artificially inflated future expected losses for victims of the spill off Louisiana last April that killed 11 workers.

It claims there is no factual basis to assume Gulf-wide claimants will experience losses this year equalling 70% of their 2010 losses and losses in 2012 equalling 30% of 2010 losses.

Spokeswoman my Wei said the document was written by BP. The GCCF has been redacting comments posted on its website to remove the names of people and businesses.

Over the last two weeks, hundreds of Gulf residents and businesses have filed comments with the claims facility. Many have accused Mr Feinberg of moving too slowly in making payments. Others say the payments have been too small and many complain the methodology he has proposed for final payments lowers the future impact of the spill on victims.

The BP document that claims the final payment methodology is actually too generous was dated Wednesday, the last day of the public comment period that Mr Feinberg had initiated.

US Rep Edward Markey of Massachusetts, the ranking Democrat on the House Committee on Natural Resources, blasted BP for the comments.

“BP made errors in judgment that led to this oil spill, and now they’ve made another error in judgment by going after the very people their spill harmed,” he said.

“If you ever needed an example of BP being totally out of touch with reality, this is it. BP said they would make things right for the people in the Gulf, yet it seems all they really care about is making things right for its shareholders.”

Mr Feinberg has said he would consider all the comments. He has not indicated whether he planned to give more weight to one comment versus another.

An Associated Press review published on Monday that included interviews with legal experts, government officials and more than 300 Gulf of Mexico residents found a claims process beset by red tape and delay, and at the centre of it all a fund administrator whose ties to BP have raised questions about his independence.

Now politicians are demanding the White House step in, the Louisiana governor and others want a federal judge to intervene, and the people most affected by the Deepwater Horizon disaster are threatening to line the court steps if they do not get the changes they seek from Mr Feinberg.

Mr Feinberg, the Washington lawyer who runs the fund and was praised for his work overseeing the compensation fund for 9/11 victims, has insisted he is being fair.

He admits the system is clogged by the sheer volume of oil spill claims, along with inflated or outlandish requests.

Mr Feinberg recently said he did not think the entire €14.3bn will be needed to compensate victims and only half of that should suffice. So far about €2.5bn has been paid out to 169,000 claimants.

To date, only two final settlements for long-term losses – including a €7.3bn payment to a BP associate the fund refuses to identify – have been paid out.

While the US government helped force BP to set up the fund, it did not include a mechanism to oversee Mr Feinberg’s operations, which are not subject to state or federal open records laws.

Citing confidentiality requirements, Mr Feinberg has refused requests for information about who is getting the money, broken down not by name or address but by county, occupation, and amounts requested versus amounts granted.