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.