Oil spill claims czar: Shrimpers' pain continues

October 27, 2011 - 11:40 AM

The administrator of the $20 billion fund set up to compensate individuals and businesses hurt by last year's Gulf of Mexico oil spill said Thursday new rules are being formulated to make payouts more generous for hard-hit shrimpers.

Washington attorney Kenneth Feinberg told a House Committee on Natural Resources hearing he hopes to announce the rules within two weeks.

He agreed with concerns from shrimpers that the length and extent of damage they have suffered because of the April 2010 disaster has been more significant than first thought.

"I think we've got to do better for the shrimpers," Feinberg said.

Feinberg remains under fire for the slow pace of payments and for denying many claims. Eighteen months after the spill, the fund has paid $5.5 billion to 213,408 claimants. More than 300,000 other claimants have been denied compensation. Feinberg agreed in July to a Justice Department audit. He said at the hearing the audit hasn't started. Justice officials didn't immediately respond to a request for comment.

The committee chairman, Rep. Doc Hastings, R-Wash., said that despite assurances from the White House following the oil spill that BP would be held fully accountable "that does not appear to be the case." He said the number of people paid to date, considering how many have applied for money, is "simply unacceptable."

Rep. Edward Markey of Massachusetts, the ranking Democrat on the committee and a frequent critic of BP, offered support for BP's efforts with regard to compensating victims through the fund.

"Here I believe the company did the right thing," Markey said. He said "the fund kept families and businesses afloat."

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

Critics say little has improved since then, and in some cases has gotten worse.

Many observers worry a big chunk of the $20 billion will be returned to BP when the Gulf Coast Claims Facility ceases making payouts, which is currently scheduled for August 2013. At one point, Feinberg told reporters that he expected half of the fund to be sufficient to compensate all victims. He took considerable heat for making that prediction, and he has declined to speculate on the issue in the months since then.

"The $20 billion was supposed to be the floor, not the ceiling," Rep. Steven Palazzo, R-Miss., told Feinberg at Thursday's hearing.

Eleven rig workers were killed when the Deepwater Horizon exploded roughly 50 miles off Louisiana while the crew was working to temporarily abandon an undersea well drilled by oil giant BP PLC. According to government estimates, some 206 million gallons of oil spewed from BP's Macondo well, making it the largest offshore oil spill in U.S. history. BP owned the well and was leasing the rig from Transocean Ltd.

BP is preparing to drill a new well in 6,000 feet of water in the Gulf — deeper than at Macondo — some 246 miles south of Lafayette, La., after receiving the go-ahead from the U.S. government on Wednesday. It's the first such permit BP has received since the oil spill.

The semisubmersible drilling rig West Sirius, owned by Norwegian offshore drilling firm Seadrill Ltd., is already at the site. BP says it will start drilling "as soon as operationally possible."

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