‘There is no Interim Payment Program,’|Louisiana Says in Knock to Feinberg’s Process

NEW ORLEANS (CN) - "The bottom line is that there is no interim payment program," Louisiana said Thursday in a memo to the federal judge overseeing the Deepwater Horizon oil spill litigation. Louisiana's governor and attorney general wrote that the Gulf Coast Claims Facility overseen by Kenneth Feinberg does not - and cannot - claim to comply with BP's obligations as a "responsible party" in the Deepwater Horizon catastrophe.

Terms for a "responsible party" as laid out in the Oil Pollution Act require the responsible party to establish an interim claims payment process to pay short-term claims quickly.

But Louisiana claims the final claims payment process Feinberg is pushing is based on a recovery report "that contains serious flaws." The state claims Feinberg's estimate of how long recovery of the Gulf Coast will take is unrealistic, particularly when compared with the number of years of losses the final claims payments are intended to cover.

The legal memorandum was filed on behalf of Gov. Bobby Jindal in response to U.S. District Judge Carl Barbier's Feb. 2 ruling that Feinberg cannot say he and his claims process through the Gulf Coast Claims Facility (GCCF) are entirely independent of BP.

Feinberg was chosen by BP in August as administrator of the $20 billion fund BP put up to pay oil spill claims. The April 20 oil rig explosion killed 11 and released more than 200 million gallons of oil into the Gulf of Mexico.

"Section 2705 of OPA [Oil Pollution Act] states the 'responsible party shall establish a procedure for the payment or settlement of claims for interim, short-term damages,'" the memo states.

"Mr. Feinberg has admitted that the 'interim claims program has not been implemented yet.' Clearly, the failure to implement such a program violates OPA.

"Should the argument be advanced that the Emergency Advance Program instituted by Mr. Feinberg satisfied the requirement for interim payments, this court should note that as of November 23, 2010, this program terminated and applications for such payments were no longer accepted."

The memo states: "Louisiana concurs with the court that it does not want to impede or interfere with the Gulf Coast Claims Facility's ('GCCF') ability to quickly and proficiently process and pay claims. Successful economic recovery of the Gulf Coast, however, including Louisiana's businesses and citizens harmed by the Gulf oil spill, is directly tied to the implementation of a fair and efficient claims process. ...

"The state's objective has always been to make sure BP was implementing a process that provides prompt payments, applies uniform and understandable standards, and complies with the Oil Pollution Act of 1990 ('OPA'). This goal is still achievable, however, the present process implemented by Ken Feinberg and the GCCF falls short of this goal. Payments have not been prompt, the rules are not uniform and understandable, and the process does not comply with OPA." the memorandum states.

Louisiana claims that the recovery report upon which Feinberg wants to base final payments contains "serious flaws."

"The basic premise of this methodology is that the duration of recovery is to be determined and set by the GCCF on the basis of a report by John W. 'Wes' Tunnell, Jr. of the Harte Research Institute for the Gulf of Mexico Studies," the memo states. "The Tunnell report concerns the predicted time of recovery by four categories of fisheries (crab, oyster, finfish, and shrimp). Any proposed methodology that is based solely on this report necessarily contains serious flaws.

"For example, the Tunnell projections do not address industries other than the four categories of fisheries and it does not logically follow that you could extrapolate his conclusions on other industries such as tourism, gaming, etc.

"As relates to oyster harvesting, Tunnell limits the future losses to four times their 2010 losses. Tunnell's own report says 'in areas where oyster reefs were heavily oiled, oyster reefs may not recover for 6-8 or even 10 years.'

"Additionally, according to the methodology, the GCCF will pay two times the documented loss for 2010, 70% for 2011 and 30% for 2012. Under this methodology, claimants would be negatively affected as the 2010 losses are not based on a full year of analysis. The losses calculated by the GCCF would only be for the period of April 20 to December 31 2010. These are a few examples of the defects that exist in the proposed methodology."

The state recommends that the GCCF "immediately implement an interim payment program and commence interim payments; or alternatively, order that emergency payments be resumed immediately and continued until the court approves the protocols and shifts to the revised 'interim' process.'"

It also recommends using final payment submissions to support interim payments, and requiring interest payments according to the terms of the Oil Pollution Act.

Finally, the state suggests that people and businesses who accept payment from the GCCF should not have to give up their right to sue responsible parties other than BP in order to get payment. Instead, as outlined in the OPA, claimants should simply sign a waiver stating they will not seek '"double recovery.'"

The Oil Pollution Act was amended in 1990 after the Exxon Valdez oil spill and is the primary safety net for people hurt by the oil spill, in the absence of paying work.

After public meetings in January in which Feinberg was assailed by hundreds of frustrated claimants who said they hadn't yet seen a dime for their losses, Feinberg has not appeared publicly in Louisiana.

The memorandum was filed by Elizabeth Baker Murrill, deputy executive counsel for Gov. Bobby Jindal.

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