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  • Louisiana Losing Patience With BP, Government on Oil Spill Claims

    BATON ROUGE, LA — BP has yet to make a single payment from the highly publicized $20 billion claims fund negotiated by President Obama last month at the White House. The fund, which Obama hailed as a breakthrough, is supposed to provide $5 billion by the end of the year to those impacted by the oil spill.

    The Pelican Institute for Public Policy, a free-market think tank in Louisiana, reports that while BP has paid $162.7 million in claims since the Deepwater Horizon explosion, that money is not part of the Victim Compensation Fund, managed by Obama’s former pay czar Kenneth Feinberg.

    Patience is wearing thin in Louisiana, which faces the dual economic impact of Obama’s offshore drilling moratorium and devastating toll on fishermen from the oil-infested waters.

    Feinberg doesn’t expect to start fulfilling the June 16 pledge until next month at the earliest. With $5 billion earmarked for 2010, that means he would be doling out more than $30 million per day through the end of the year.

    The delay, according to a BP spokesman, is the result of a transition to a new system for processing claims. The Victim Compensation Fund will be administered by Feinberg as opposed to BP.

    Feinberg visits Louisiana tomorrow for a series of town hall meetings. He’s likely to face a barrage of questions about the claims process from concerned citizens and state officials.

    Louisiana Department of Children and Family Services Secretary Kristy Nichols made clear her dissatisfaction in a July 10 letter to Feinberg. Nichols expressed her dismay about the claims process and the need for greater transparency.

    Last month Nichols hired a third-party administrator to audit the claims data. It revealed the number of reported claims increased at nearly double the pace BP hired claims adjusters. The audit also found BP began issuing fewer checks in the latter half of June — after Obama announced the new $20 billion fund. Nichols remarked:

    The head of BP Claims, Daryl Willis, has said several times in the press that the transition of the BP claims process to the independent commission set up by the federal government wouldn’t affect the speed of payments, but we are seeing just the opposite. The analysis by our third party consultant clearly shows a significant drop in payments at the end of the month, when the transition was put into place. The state needs BP to stand up to its word and put these claims payments into the hands of Louisianians who are struggling because of the oil spill.

    In her letter to Feinberg, Nichols questioned why BP began decreasing payments beginning July 1 to individuals whose claims were deemed incomplete. She said the state wasn’t notified about the change in policy and was never asked by BP for help to produce supporting documentation.

    BP has also decreased claims payments based on the seasonal nature of the fishing business and has yet to determine how it will handle claims stemming from the offshore drilling moratorium.

    These issues, coupled with other bureaucratic hurdles impeding the cleanup, should make for lively sessions with Feinberg tomorrow.

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    5 Responses to Louisiana Losing Patience With BP, Government on Oil Spill Claims

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    4. Bret Z, Cleveland Oh says:

      I personally believe BP is handling this appropriately, as are the Obama administration and Mr. Feinburg. There is only a finite amount of money to go around, and they need to be careful to avoid fraud. The people who are counting on this money will receive it, but being hasty is never a good thing when billions of dollars are at stake.

      In addition, I am personally under the impression that those who are unable to produce information about their normal earning to corroborate lost earning (aka: Tax Cheats) should not be fully compensation for their losses. They should get subsistence, but there should be an element of punishment for failing to properly pay (and thus document) their previous earnings. Also, many of these fisherman seem to be demanding outrageous sums of money, as if they are to be compensated for their gross earnings loss. They are not sending crew out, they are not utilizing fuel on their boats, and they are not paying a great deal of other associated variable costs associated with operating their businesses. They should get something comparable to their 'Net' Profits, MINUS an amount that would be considered 'labor', because they are not actually doing work right now.

      That would be fair. As far as lost tourism, I don't care about that. The economy comes and goes, hurricanes happen, and they are not compensated for other things outside of their control. Sorry, but 'speculative' profits is nonsense, they knew the risk upon entering these otherwise lucrative industries.

    5. Bob C says:

      I have no sympathy for the tax cheats who want money from BP. The old saw "If you can't do the time, don't do the crime," is perfectly applicable here. These folks have spent decades purposefully and knowingly stealing money from American taxpayers and business from their honest competitors. I'm in a business (construction) that's full of tax cheats, and I say give nothing to someone who won't submit their tax records. That's unfair? Are we going to compensate Bourbon St. pickpockets because tourism is down? Stealing is stealing.

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