Greater Transparency and Efficiency for Deepwater Horizon Claims in Florida

Following the Deepwater Horizon disaster, a $20 billion fund was established to compensate Gulf Coast businesses and residents for damage and loss of business due to the spill. The process for evaluating and paying claims has been criticized for its lack of transparency.

Now, Gulf Coast Claims Facility Administrator Kenneth Feinberg, after consulting with Florida’s governor and attorney general, has agreed to make changes in the way claims are processed in Florida. Many of the new procedures in Florida will improve transparency and should lead to a more fair and efficient process.

Among the changes Feinberg will institute at GCCF are:

• Committing to processing at least 25 percent of pending claims by March 31, 2011.
• Expanding staffing in Florida to provide more localized support and more efficient reporting throughout the state and in Washington.
• Assist claimants in finding independent accounting firms to review claims, and reimburse claimants for the expense of hiring an accountant.

Feinberg will return to Tallahassee in April to evaluate the impact of these changes and discuss next steps.

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BP Responds to GCCF Claims Methodology

Today’s New York Times reports that BP has weighed in on the proposed claim and compensation methodology set forth by the Gulf Coast Claims Facility. The proposal outlines the steps and methods GCCF will use to determine how much to compensate the people who were harmed by BP’s Deepwater Horizon oil spill.

The oil giant is arguing that if anything, Mr. Feinberg’s proposed settlements are too generous. The planned payments far exceed the extent of likely future damages because they overstate the potential for future losses, the company insists in a strongly worded, 25-page document that was posted on the fund’s Web site Thursday morning.

Basing its estimates on much of the same data Mr. Feinberg used, the company concluded that there was “no credible support for adopting an artificially high future loss factor based purely on the inherent degree of uncertainty in predicting the future and on the mere possibility that future harm might occur.”

BP has pledged a fund of $20 billion to compensate the victims of their oil spill. Feinberg has famously estimated that the GCCF will pay out only $10 billion in claims. Now it seems that BP is putting pressure on Feinberg and the GCCF to pay out as little as possible, disregarding arguments for a more cautious, fair, and transparent approach.

AFJ also analyzed the GCCF’s proposed methodology, and found that, contrary to BP’s claims, it does not contain sufficient provisions to protect the rights and interests of the spill victims.

AFJ applauds GCCF for taking the step of releasing its methodology to promote greater transparency in the claims process. We take this opportunity to suggest a number of improvements that should be made to better protect claimants’ rights. Namely, because the projection of when the Gulf will fully recover is inherently speculative, the methodology should include a mechanism to address harms greater than those forecasted in the projection relied upon by GCCF. Moreover, the methodology should more clearly inform claimants of the documentation requirements, causation standard, and eligibility criteria GCCF will use in administering claims. Finally, going forward there needs to be more transparency in the way the methodology is applied to individual claims.

You can read our entire analysis and our recommendations online. You can also view other recommendations received by the GCCF on their website.

AFJ’s award-winning short film, Crude Justice, explores many of the legal issues Gulf Coast victims face as they fight for justice in a system that often seems dominated by corporate interests. You can now watch Crude Justice on YouTube.

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Gulf Coast Claims Methodology Needs Changes

As part of its ongoing effort to promote justice for the individuals struggling to recover from the Deepwater Horizon oil spill, Alliance for Justice has sent recommendations to the Gulf Coast Claims Facility (GCCF) on the proposed methodology for processing claims and calculating damages.

Many Gulf Coast claimants face tough legal and procedural difficulties as they fight for fair compensation for their losses, and AFJ’s analysis has found that GCCF’s proposed methodology does not adequately protect residents’ rights. We found numerous ways in which the methodology needs to be improved if it is to offer a fair and transparent process for Gulf Coast residents.

Some of the problems AFJ recommends be addressed in the methodology are:

• The methodology relies upon an unreliable and inherently speculative projection of when the Gulf will recover.
• The methodology should better inform claimants of the specific documentation and eligibility standards used by GCCF.
• GCCF’s proposed methodology does not explain how GCCF will handle some of the claims BP is required to pay under the Oil Pollution Act of 1990, such as subsistence use claims for residents who rely on seafood for subsistence.
• The methodology’s underlying assumptions and the GCCF’s processes need to be more open, transparent, and free from corporate influence.
• GCCF’s proposed methodology calculates economic loss based on 2008 and 2009 figures, despite the fact that those years represent a low point in the US economy.

A PDF of AFJ’s analysis and full set of recommendations can be found here.

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Judge Holds that Feinberg and GCCF Are Not Fully Independent of BP

Yesterday, Judge Carl Barbier, who is overseeing the Gulf oil spill litigation against BP, held that Gulf Coast Claims Facility (GCCF) and its administrator, Ken Feinberg, are not fully independent of BP. As such, the Court held that GCCF must abide by certain limitations when communicating with people who might have claims against BP and other potentially liable parties.

BP hired Feinberg to discharge its statutory duty to process claims for damages under the Oil Pollution Act (OPA). Judge Barbier wrote that in this sort of third-party arrangement, transparency is essential. The administration of the $20 billion trust fund has been plagued by criticisms that it is not sufficiently consistent and transparent. The Court noted that Feinberg and GCCF’s hybrid role has led to “confusion and misunderstanding by claimants, especially those who are unrepresented by their own counsel,” and that GCCF’s claimed independence and neutrality constitutes a “direct threat” to the legal challenge currently underway against BP.

Judge Barbier set forth a number of specific restrictions GCCF must abide by in communications with claimants, such as refraining from claiming to be “neutral” or “independent,” prominently disclosing the fact that individuals have a right to consult with an attorney, and telling claimants that they can join the litigation against BP if they decline to accept a settlement through GCCF.

In the order, Judge Barbier also indicated that he will soon issue a ruling on the broader question of whether BP is fully complying with OPA. Such a ruling could address whether several GCCF policies run afoul of the law, such as the requirement that individuals sign a release of liability in order to receive a final payment, and the methodology used to evaluate claims. Under the current GCCF protocol, to receive a final payment, claimants must give up their right to sue more than 100 named entities in addition to BP and must even waive claims not subject to OPA – provisions that have been criticized as overly broad. Judge Barbier wrote that “whether or not seeking such broad releases is appropriate, the GCCF is clearly acting to benefit BP in doing so.”

The ruling came after lawyers for individuals pursuing claims against BP in court, as well as Attorneys General from Mississippi, Louisiana, and Florida filed motions arguing that serious deficiencies in the handling of GCCF necessitated judicial oversight. The process has been criticized as not being sufficiently transparent, with inadequate explanation provided as to whether and at what amount claims are paid. Many claimants have also complained of apparent inconsistencies in the way claims are valued. Some have argued that GCCF is interpreting OPA too narrowly and is not adequately paying claims that would be recognized in court, such as subsistence claims for those who live off of damaged resources, and claims for punitive damages. Most recently, GCCF’s projection that the region will largely recover by 2011 has raised ire amongst the Spill’s victims.

Alliance for Justice’s short film, Crude Justice, explores many of the issues currently being raised by the legal process unfolding in the Gulf. The film and additional resources, including Judge Barbier’s ruling, can be found at www.crudejustice.org.

Crude Justice from Alliance for Justice on Vimeo.

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Activists organize screenings of Crude Justice throughout the country

Last Tuesday was the deadline for Gulf Coast residents impacted by the explosion of the Deepwater Horizon oil rig to file claims for emergency payments from the BP compensation fund administered by Kenneth Feinberg. More than 400,000 claims were filed before the deadline, and approximately 150,000 individuals and businesses have received an estimated $2.2 billion. The next phase in this process is the negotiation of lump-sum final settlements for those affected by the spill, a process which will play out over the course of three years.

This fall, AFJ released Crude Justice, a short documentary film narrated by actor and environmentalist Ed Begley Jr., that highlights the impact of the oil spill on individuals, families and small business owners, and explores the legal landscape they are facing while seeking justice and fair compensation from BP and other liable parties. Along with over 5,000 online viewers, scores of activists have organized screenings of Crude Justice throughout the country. Here are a few highlights:

On October 6, the Eric R. Neisser Public Interest Program at Rutgers School of Law–Newark sponsored, “Crude Oil: Legal Implications of the Deepwater Horizon Oil Spill,” an event that included a screening of Crude Justice and a panel discussion exploring the environmental and community impact of the BP disaster in the Gulf. The panel was moderated by Steve Gold, Director of the Environmental Law Clinic at Rutgers-Newark and a former senior attorney in the Environmental Enforcement Section of the U.S. Department of Justice, and included Sarah Chasis Senior Attorney, Natural Resources Defense Council, and Rachel Jacobson, Principal Deputy Solicitor, U.S. Department of the Interior.

On October 25, the Environmental Law Society at the University of Mississippi School of Law organized a screening of Crude Justice and a discussion of the legal options open to Gulf residents. The discussion was led by professor David W. Case, who teaches environmental and toxic torts and environmental law, and professor Stephanie Showalter, who serves as Director of the law school’s National Sea Grant Law Center. The event drew over 50 students from the campus community.

A screening of the film organized at Golden Gate University School of Law on October 25 by the Environmental Law Journal, Environmental Law Society, and American Constitution Society featured a discussion with Deborah Behles, an associate professor of law and clinical staff attorney at the GGU Environmental Law and Justice Clinic; Leila Monroe, an attorney for the Natural Resources Defense Council; and Thomas Azwell, a doctoral candidate in Environmental Science, Policy and Management at UC Berkeley.

Harvard Law School’s Environmental Law Society held a screening of Crude Justice on October 27. Following the film screening, a panel of students who performed pro bono legal work in the Gulf spoke about their experiences. The event drew a record number of attendees for a Harvard Environmental Law Society event.

On November 3, University of the District of Columbia School of Law chapters of the Environmental Law Society, American Constitution Society, and National Lawyers Guild brought together more than 50 students for an event that featured a screening of the film and a discussion with Danielle Franco-Malone, Dorot Fellow, Alliance for Justice, and Jenny Rasmussen and Kate Degravelles, attorneys with the American Association for Justice. Law professor John Brittain moderated the discussion. Event organizer Diane Saey opened the screening, saying “My hope is that, after the film and discussion, each student will leave with a quick, short list of ways to contribute toward the betterment of the environment.” At the conclusion of the event, scores of students pledged to join with the Alliance for Justice to monitor the situation in the Gulf Coast and urge BP CEO Robert Dudley to make the Gulf and its people whole again.

Crude Justice calls on all of us to join the fight for justice and full recovery in the Gulf. Sign up today to bring Crude Justice to your campus and community and ensure that the people of the Gulf continue to be heard!

Connect with Alliance for Justice online to stay updated on legal and environmental developments and take action to help the people of the Gulf.

Click here to view the 17-minute film online.

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