[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
GULF COAST RECOVERY:
PRESIDENT OBAMA'S BP
COMPENSATION FUND:
HOW IS IT WORKING?
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
Thursday, October 27, 2011
__________
Serial No. 112-77
__________
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COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member
Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
PJon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV
Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
David Watkins, Democrat Chief Counsel
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CONTENTS
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Page
Hearing held on Thursday, October 27, 2011....................... 1
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 1
Prepared statement of.................................... 3
Markey, Hon. Edward J., a Representative in Congress from the
State of Massachusetts..................................... 3
Prepared statement of.................................... 5
Statement of Witnesses:
Feinberg, Kenneth R., Gulf Coast Claims Facility
Administrator.............................................. 6
Prepared statement of.................................... 8
Response to questions submitted for the record........... 13
OVERSIGHT HEARING TITLED ``GULF COAST RECOVERY: PRESIDENT OBAMA'S BP
COMPENSATION FUND: HOW IS IT WORKING?''
----------
Thursday, October 27, 2011
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to call, at 9:30 a.m. in Room
1324, Longworth House Office Building, Hon. Doc Hastings
[Chairman of the Committee] presiding.
Present: Representatives Hastings, Thompson, Wittman,
Fleming, Flores, Runyan, Duncan of South Carolina, Lamborn,
Landry, McClintock, Southerland, Markey, Holt and Grijalva.
Also present: Representatives Bonner, Miller of Florida,
Palazzo, Scalise and Jackson Lee.
Mr. Hastings. The Committee will come to order, and the
Chairman notes the presence of a quorum, which under Rule 3[e]
is two Members.
The Committee on Natural Resources is meeting today to hold
an oversight hearing on ``Gulf Coast Recovery: President
Obama's BP Compensation Fund, How Is It Working?'' Under
Committee Rule 4[f], opening statements are limited to the
Chairman and the Ranking Member of the Committee. However, I
ask unanimous consent that any Member that wished to have an
opening statement inserted into the record do so before the
close of business today, and without objection so ordered.
I also note that several Members of the Gulf Coast that are
not members of this Committee have requested an opportunity to
sit on the dais, and ask questions during that timeframe. We
have requests from Mr. Bonner of Alabama, Mr. Miller of Florida
and Mr. Palazzo of Mississippi, Mr. Scalise of Louisiana, Ms.
Jackson Lee of Texas, and without objection those Members will
be able to sit on the dais and ask questions at the appropriate
time. Without objection, so ordered.
I will now recognize myself for my opening statement, and
hopefully the Ranking Member will be here in a very timely
manner, and I am sure that his staff is franticly emailing him
right now in that regard.
STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WASHINGTON
Mr. Hastings. Nearly a year and a half ago, President Obama
called BP to the White House for a meeting that resulted in the
President personally announcing an agreement to establish a $20
billion Presidential-BP Compensation Fund. At the time, the
President assured those affected by the Deepwater Horizon
disaster and oil spill that legitimate damages would be paid,
and I quote, ``quickly, fairly and transparently.''
When President Obama announced the appointment of Mr. Ken
Feinberg as Administrator of the Compensation Fund, there was
no doubt Mr. Feinberg had a difficult task ahead. The impact to
the Gulf's local economy, as well as the environment, was very
real and there are certainly many moving pieces involved in
evaluating real damage to victims filing claims.
To date, nearly one million claims have been filed by over
500,000 claimants, while roughly 95 percent of all the claims
have been processed. Processed means rejected, accepted or
turned back to the claimant for more information. Processed
does not mean paid.
Of the over half a million claimants that have filed claims
with the Gulf Coast Claims Facility, just a little over 200,000
have been paid, or around 39 percent. Quite frankly, I have
heard from many of my colleagues on both sides of the aisle
from the Gulf states that the number is simply unacceptable to
the people whose livelihood was disrupted by this disaster.
During the aftermath of the Deepwater Horizon, we
constantly heard from President Obama that BP would be held
fully responsible for the damages in the Gulf, yet that does
not appear to be the case with the claims filed with the
Compensation Fund. Under the terms of the agreement agreed to
and announced at the White House, BP appears to have no
responsibility further than simply writing a check.
When President Obama announced the creation of the
Compensation Fund, he accepted BP's $20 billion, held a press
conference and exempted the company of responsibility to make
certain Gulf families and small businesses whole. In announcing
this Fund, the President specifically heralded that it was an
independent body accountable to no one, the sole responsibility
of Mr. Feinberg.
However, the Congress has an obligation to ensure that this
Fund is operating properly and fairly so that the people of the
Gulf are made whole for the harm caused to them and that the
economy of the Gulf is to get back up and running again. I want
to note it is not absolutely clear if the Fund is actually
under the jurisdiction of this or any other Congressional
Committee, and I as Chairman appreciate the willingness of Mr.
Feinberg to come and to sit before this Committee today.
Today there is a large hole in proper oversight and
accountability to ensure legitimate claims are getting the
attention they deserve and that the process of administering
payments is conducted in a timely manner. There is an
appropriate effort in Congress to direct an open, transparent
audit of the Fund, and I certainly hope and expect that the
Fund will comply. And it can be expected that the Committee
will continue to appropriately conduct oversight into the
process, payments and operation of the Fund in order to ensure
that there is a transparent and fair pay system.
So this hearing then is an opportunity to peer into that
process that, for the most part, has flown under the radar of
proper public oversight. We are pleased to have Mr. Feinberg,
as I stated earlier, as our witness, and I look forward to
hearing his comments and discovering if there is anything
Congress can do to help make his job easier and get deserving,
legitimate claimants their due compensation.
And with that I yield to the distinguished Ranking Member,
Mr. Markey.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Chairman,
Committee on Natural Resources
Nearly a year and a half ago, President Obama called BP to the
White House for a meeting that resulted in the President personally
announcing an agreement to establish the $20 billion Presidential--BP
Compensation Fund. At the time the President assured those affected by
the Deepwater Horizon disaster and oil spill that legitimate damages
would be paid ``quickly, fairly, and transparently.''
When President Obama announced the appointment of Mr. Ken Feinberg
as Administrator of the Compensation Fund, there was no doubt Mr.
Feinberg had a difficult task ahead. The impact to the Gulf's local
economy, as well as the environment, was very real extensive and there
are certainly many moving pieces involved in evaluating legitimate
damage to victims filing claims.
To date, nearly one million claims have been filed by over 500,000
claimants and while roughly 95 percent of all claims have been
processed--which means rejected, accepted, or turned back to the
claimant for more information--processed does not mean paid.
Of the over half a million claimants that have filed claims with
the Gulf Coast Claims Facility, just a little over 200,000 have been
paid--or almost 39 percent. Quite frankly, I've heard from many of my
colleagues, on both sides of the aisle, from Gulf states that this
number is simply unacceptable to the people whose livelihoods were
disrupted by this disaster.
During the aftermath of the Deepwater Horizon, we constantly heard
from President Obama that BP would be held `fully responsible' for the
damages in the Gulf. Yet, that is not the case with the claims filed
with the Compensation Fund. Under the terms of the agreement agreed to
and announced at the White House, BP appears to have no responsibility
further than writing a check. When President Obama announced creation
of the Compensation Fund, he accepted BP's $20 billion, held a press
conference, and exempted the company of responsibility to make certain
Gulf families and small business were made whole.
In announcing this Fund, the President specifically heralded that
it was to be an independent body, accountable to no one--the sole
responsibility of Mr. Feinberg. However, the Congress has an obligation
to ensure that this fund is operating properly and fairly so that the
people of the Gulf are made whole for the harm caused to them and that
the economy of the Gulf is back up and running.
It's not absolutely clear if the Fund is actually under the
jurisdiction of this or any Congressional Committee and as Chairman I
appreciate the willingness of Mr. Feinberg to come and sit before the
Committee today.
Today there is a large hole in proper oversight and accountability
to ensure legitimate claims are getting the attention they deserve and
that the process of administering payments is conducted in a timely
manner. There is an appropriate effort in Congress to direct an open
and transparent audit of the fund and I certainly hope and expect that
the Fund will comply. And it can be expected that the Committee will
continue to appropriately conduct oversight into the process, payments
and operations of the Fund in order to ensure that there is a
transparent and fair payment system.
This hearing is an opportunity to peer into a process that, for the
most part, has flown under the radar of proper public oversight. We are
pleased to have Mr. Feinberg as our witness and I look forward to
hearing his comments and discovering if there is anything Congress can
do to help make his job easier and get deserving, legitimate claimants
their due compensation.
______
STATEMENT OF HON. EDWARD MARKEY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MASSACHUSETTS
Mr. Markey. Thank you, Mr. Chairman, very much. The focus
of today's hearing is to examine the Compensation Fund set up
for the residents of the Gulf Coast who were harmed by the BP
spill. However we address that question, I think it would be
instructive to consider what doesn't work when it comes to
compensating people affected by an oil spill.
The 1989 Exxon Valdez ran aground in Prince William Sound
off of Alaska. The ruptured single hull tanker belched up to
750,000 barrels of oil into the frigid waters, killing wildlife
and harming the fishing industry. For the citizens of Alaska
who lived near the spill, the event itself was just the first
part of an ongoing nightmare. Commercial fishing businesses
shuttered. Recreation and tourism dollars were lost.
Exxon meanwhile immediately entered into a position of
aggressive litigation rather than financial mitigation for the
people affected. Exxon fought the initial $5 billion judgment
by Alaska's courts for years, all the way to the United States
Supreme Court. In 2008, nearly two decades after the spill, the
Supreme Court finally held Exxon accountable for about $500
million in punitive damages to the victims and an additional
$500 million of interest on those damages.
The litigation went on for so long that nearly 20 percent
of the 32,000 victims seeking compensation had passed away
before the final ruling against Exxon. And to top it all off,
the first credit default swap ever created stemmed out of the
Exxon Valdez spill. JPMorgan Chase bankers created the now
infamous financial mechanism to hedge their own liability after
staking nearly $5 billion in credit to Exxon to credit the
company's potential payouts. Subsequent credit default swaps
went on to play a critical role in igniting the financial
crisis of 2008.
Now let us take a look at the BP Compensation Fund. Within
two months of the start of the spill, President Obama secured a
commitment from BP to set aside $20 billion to begin
immediately compensating the American people and businesses
affected by the spill. Ken Feinberg, who managed the victim
funds following the September 11, 2001, attacks and the
Virginia Tech shootings, was asked to take charge of the Fund,
and he was given complete independence to run it.
By late August of last year, Mr. Feinberg and his team were
accepting claims and soon paying for lost wages and other
economic impacts. Through this Fund, people were compensated in
timeframes closer to days rather than decades. The Exxon Valdez
led to the invention of the credit default swaps, but with the
BP Compensation Fund the only question is how quickly could Mr.
Feinberg find a way to deal with these issues.
Unfortunately, there were some who said that this Fund
accounted to Chicago-style shakedown politics, but at a pivotal
time in our nation's history when an oil rig sank to the bottom
of the ocean and oil washed up on our shores, this Fund kept
families and businesses afloat. More than 200,000 residents and
businesses have been paid roughly $5.5 billion so far this
year. Thousands of new claims are still coming in every week as
people see their neighbors being made whole.
I have been quite critical of BP for many things associated
with this spill, but here I believe the company did the right
thing. And I really would like to thank the work done by Ken
Feinberg. I think it is a model for how tragedies basically
bring out the best in people, and, Mr. Feinberg, you
demonstrated that as you did in creating a climate that brought
out the best of the people in the Gulf of Mexico in trying to
resolve these issues as well.
And finally, I would like to thank the Chairman for
scheduling the additional day of testimony that I and my fellow
Democratic Members on the Committee requested on the BP spill
and the government's Joint Investigative Team Report. The
Minority has requested that the Committee invite the CEOs of
the companies involved in the Deepwater Horizon disaster--BP,
Halliburton, Transocean and Cameron.
It is imperative that we receive testimony from the top
executives at these companies as this Committee evaluates the
findings and recommendations in the government's report, and I
thank you for working with us, Mr. Chairman.
[The prepared statement of Mr. Markey follows:]
Statement of The Honorable Edward J. Markey, Ranking Member,
Committee on Natural Resources
The focus of today's hearing is to examine the compensation fund
set up for the residents of the Gulf Coast who were harmed by the BP
spill. However, before we address that question, I think it would be
instructive to consider what doesn't work when it comes to compensating
people affected by an oil spill.
In 1989, the Exxon Valdez ran aground in Prince William Sound off
of Alaska. The ruptured, single-hull tanker belched up to 750,000
barrels of oil into the frigid waters, killing wildlife and harming the
fishing industry.
For the citizens of Alaska who lived near the spill, the event
itself was just the first part of an ongoing nightmare. Commercial
fishing businesses shuttered. Recreation and tourism dollars were lost.
Exxon, meanwhile, immediately entered into a position of aggressive
litigation, rather than financial mitigation for the people affected.
Exxon fought the initial $5 billion judgment by Alaska's courts for
years all the way to the United States Supreme Court. In 2008--nearly
two decades after the spill--the Supreme Court finally held Exxon
accountable for about $500 million in punitive damages to the victims
and an additional $500 million of interest on those damages. The
litigation went on for so long that nearly twenty percent of the 32,000
victims seeking compensation had passed away before that final ruling
against Exxon.
And to top it all off, the first credit default swap ever created
stemmed out of the Exxon Valdez spill. JP Morgan Chase bankers created
the now-infamous financial mechanism to hedge their own liability after
staking nearly $5 billion in credit to Exxon to cover the company's
potential payouts. Subsequent credit default swaps went on to play a
critical role in igniting the financial crisis of 2008.
Now, let's take a look at the BP compensation fund.
Within two months of the start of the spill, President Obama
secured a commitment from BP to set aside $20 billion to begin
immediately compensating the American people and businesses affected by
the spill.
Ken Feinberg, who managed the victim funds following the 9-11
attacks and the Virginia Tech shootings, was asked to take charge of
the fund. He was given complete independence to run it.
By late August of last year, Mr. Feinberg and his team were
accepting claims, and soon paying for lost wages and other economic
impacts.
Through this fund, people were compensated in timeframes closer to
days rather than decades.
The Exxon Valdez led to the invention of the credit default swap.
But it is Ken Feinberg who should be given due credit for the work he
has done with compensating the victims of the BP spill.
After all, there were some who said last year that the creation of
this fund amounted to ``Chicago-style shakedown politics.''
But at a pivotal time in our nation's history, when an oil rig sank
to the bottom of the ocean, and oil washed up on our shores, this fund
kept families and businesses afloat.
More than 200,000 residents and businesses have been paid roughly
$5.5 billion dollars thus far. Thousands of new claims are still coming
in every week as people see their neighbors being made whole. I have
been quite critical of BP for many things associated with this spill,
but here I believe the company did the right thing.
Finally, I'd like to thank the Chairman for promptly scheduling the
additional day of testimony that I and my fellow Democratic Members on
the committee requested on the BP spill and the government's Joint
Investigative Team report. The Minority has requested that the
Committee invite the CEOs of the companies involved in the Deepwater
Horizon disaster--BP, Halliburton, Transocean and Cameron. It is
imperative that we receive testimony from the top executives at these
companies as this Committee evaluates the findings and recommendations
in the government's report. I look forward to working with you, Mr.
Chairman, to ensure that this Committee can hear this important
testimony from these witnesses.
And with that, I yield back.
______
Mr. Hastings. I thank the gentleman for his opening
statement.
We have only one witness today. We have Mr. Ken Feinberg
here. Mr. Feinberg, you are the Administrator of the Gulf Coast
Claims Facility. As both of us noted, you have a very difficult
task, and we look forward to your testimony.
You have been here before, and you know all of them work
about the same way. Your full statement will appear in the
record, but if you could hold your oral arguments to five
minutes because I know you want to get out of here no later
than noon. We will probably have votes before then. But the
green light means you are doing fine. The yellow light means
that you have one minute. The red light means that the five
minutes are up.
Mr. Feinberg, you are recognized for five minutes.
STATEMENT OF KENNETH R. FEINBERG,
GULF COAST CLAIMS FACILITY ADMINISTRATOR
Mr. Feinberg. Mr. Chairman, thank you, and I thank the
Ranking Minority Member. I very much appreciate the invitation.
It took me about two seconds to agree to appear. I think it is
important that these issues be explored by the Congress and by
this Committee. So it is about my sixth visit to the House and
the Senate, and I am glad to be here to talk about the Fund.
Let me give a few statistics, which I think are very, very
telling. In the 14 months that we have administered this Fund,
we have received just about one million claims from 50 states
and 38 foreign countries. Build it, and they will come. There
are some very creative claims.
We have processed 95 percent. You are correct, Mr.
Chairman. Not paid, but we have processed. We are current. We
have processed 95 percent of the claims. It takes the initial
contact to the claimant about 10 days to two weeks in almost
all cases. We have distributed over $5.5 billion--if you
include outstanding offers we are waiting to hear from
claimants, it is closer to $6 billion--in just over one year.
We have paid over 200,000 people, and we have honored 380,000
claims from all over the Gulf of Mexico.
As evidence of the success of this program, we receive
still every week over 2,000 claims per week still rolling in to
the Gulf Coast Claims Facility. This on average demonstrates I
think there is a lot of support in the Gulf by residents who
see that the program is working and are filing claims.
In the first three months, and this is important, we paid
over $2.5 billion in interim emergency claims, no release
required, no waiver of any rights, a gift--a gift where the
claimant received compensation and in return could sue, could
come back to the Fund again and again. This was in the first
three months during the critical emergency period.
Since then we have paid another $3 billion to claimants in
the form of quick payments, interim payments, final payments.
We give the claimant a choice. One hundred and thirty thousand
people have chosen a quick payment, 63,000 people a final
payment, 40,000 an interim payment with no obligation. They can
keep coming back as long as they can document their damage.
Any praise about this program or any criticism about this
program really should be directed at me and me alone. The
Administration has largely taken a complete hands-off attitude,
as the Ranking Member points out. BP has in no way interfered
with my processing of these claims. I am out there on a limb,
and if it works thank you, and if it fails I bear the brunt of
that criticism.
The claims not only in terms of volume, but in terms of
complexity, are apparent I think to anybody who examines the
program. Now, why don't we pay every claim? There is an absence
of documentation with many claims. Never mind no tax returns.
Not much of anything. We receive thousands of claims, Mr.
Chairman, with no proof; just a request to be paid.
Sometimes claims come in from Massachusetts or Minnesota or
Sweden where there is simply no eligibility. I don't care what
people attach. They are simply so far removed from the spill
that the claim is too tangential.
We cannot pay by agreement with not me; agreement between
the Administration and BP. We can't pay government claims. I
have no jurisdiction over government claims. Unfortunately, I
can't pay moratorium claims. Now, this is unfortunate. We have
1,600 moratorium claims. I have to send them to a special
moratorium fund in New Orleans set up by BP. I have nothing to
do with that, and it is unfortunate, but I can't pay those
claims.
In terms of transparency, 1,500 people unhappy with my
decisions either as to eligibility or damage have gone to the
United States Coast Guard under the Oil Pollution Control Act
and asked the Coast Guard to review my claim and make an
independent determination. In every single case--every one--the
Coast Guard has agreed with my determination, so I think we are
doing something right.
In conclusion, the program is not perfect. Congressman
Bonner is here, my most constructive, admired critic, and
Congressman Bonner knows better than most the program is not
perfect. We are doing our best.
My final point, and I am done. I want to reiterate what
Congressman Markey said. There has never been a program like
the Gulf Coast Claims Facility. I know in my experience of no
example. President Bush did get the 9/11 Victim Compensation
Fund enacted, to his credit, but that was public taxpayer
money. This is the only program I know of in history where an
Administration succeeded in convincing a corporation to admit
wrongdoing and put up $20 billion.
It isn't perfect, but I think overall we are doing our job,
we are delivering on the President's promise, and I am proud to
be here today.
[The prepared statement of Mr. Feinberg follows:]
Statement of Kenneth R. Feinberg, Administrator,
Gulf Coast Claims Facility
Mr. Chairman:
I thank this Committee for the opportunity to testify concerning
the design, implementation and administration of the Gulf Coast Claims
Facility (``GCCF''), with a mandate to compensate all eligible claims
arising out of the oil discharges from the Deepwater Horizon spill on
April 20, 2010. I have been asked by both the Administration and BP to
administer the GCCF, which evaluates, processes and decides any and all
claims from private individuals and businesses impacted by the spill.
Since its inception on August 23, 2010, the GCCF has received
approximately one million claims from individuals and businesses
located not only in the five state Gulf Region, but from all 50 states
and 38 foreign countries.
I note, for example, receipt of 303 claims from the State of
Washington; 166 of these were determined to be eligible and were paid a
total of $2,704,388. And, the GCCF has received 328 claims from the
ranking minority member's State of Massachusetts; 51 of these claims
were determined to be eligible and were paid a total of $723,103.
The GCCF has processed 95 percent of all claims received, an
extraordinary accomplishment considering the volume and complexity of
the claims. As of October 21, 2011, we have paid approximately $5.5
billion (with an additional $400 million in outstanding offers) to some
213,068 claimants, honoring approximately 379,611 claims.
Even though the oil spill occurred some 18 months ago, the GCCF
continues to receive on average about 2,270 new claims each week,
convincing statistical evidence that the GCCF is accomplishing its
mission in providing efficient, fair and generous compensation to the
victims of the environmental disaster in the Gulf. Whatever
constructive criticism may be directed at the GCCF, the current filing
rate is proof positive that we are doing something right. Individuals
and businesses victimized by the spill clearly are not hesitating in
filing claims in unprecedented numbers with the GCCF.
The GCCF remains in place to process any remaining claims that may
be submitted until August 22, 2013. This was a wise decision; there is
still plenty of time for claimants to submit a claim to the GCCF.
As you know, a $20 billion escrow fund was established by BP to pay
all eligible claims that are submitted to the GCCF. And BP has agreed
to supplement this escrow fund as needed to assure full and fair
compensation to all individuals and businesses that are found to be
eligible for payment. The entire cost of the GCCF is being borne by BP,
without any cost to the taxpayers or the citizens of the Gulf Region.
During the initial three-month Emergency Advance Payment phase of
the GCCF--from August 23, 2010 until November 23, 2010--approximately
$2.58 billion was paid to some 170,000 eligible individuals and
businesses to cover up to six months of documented damage. These
interim payments were made without any requirement that the claimant
waive any right to litigate or return to the GCCF for additional
compensation. Since the end of the emergency phase of the Program, the
GCCF has paid additional claims totaling almost $3 billion to eligible
claimants.
All claimants are provided a voluntary choice concerning the nature
of the payments: a Final Payment for all remaining past, present and
future documented damage; an Interim Payment for past quarterly
documented damage; or a Quick Payment requiring no further
documentation concerning damage for those claimants who received a
prior payment from the GCCF. Those individual claimants opting for a
Final or Quick Payment cannot return to the GCCF for additional
compensation and must sign a release waiving their right to litigate
against BP and any other defendant companies allegedly involved in the
oil spill. Those selecting the Interim Payment option are not required
to sign any release, and may return to the GCCF for subsequent payments
for ongoing additional documented damage attributable to the spill.
As of October 21, 2011, 127,313 claimants have opted for the Quick
Payment option, 63,133 have preferred the Final Payment option and
29,742 have opted for an Interim Payment. The choice is entirely up to
the individual claimant; the GCCF does not prefer one option over
another. The volume of claimants choosing each of these three payment
options is sound evidence that all three options are readily available
depending upon the unique circumstances confronting each individual
claimant.
All claim determinations are made by the GCCF without any
interference from either the Administration, BP or any other interested
parties. My work is monitored by the Department of Justice and BP, but,
again, there has been absolutely no interference with the discretion of
the GCCF in the processing of individual claims and making individual
determinations of eligibility and damage.
Any praise or criticism concerning the administration of the GCCF
should be directed to me and me alone.
To meet the onslaught of claims, the GCCF initially established 35
regional claims offices throughout the Gulf Region to handle claims and
assist claimants. (The GCCF has employed as many as 3,200 individuals
in performing the various functions of the GCCF.) Fifteen full-time
site offices (and an additional four offices with once-weekly or by
appointment hours) currently remain in place as in person claim volume
gradually diminishes, particularly from certain regional offices.
Claimants may file claims in a number of ways including in person by
visiting a site office, by U.S. mail, by fax and electronically through
the GCCF website. During the past eight weeks, only 13.5% of all claims
filed with the GCCF were submitted through local claims offices; the
remainder were filed either electronically or by mail.
I am confident that the GCCF's local presence throughout the Gulf
Region is more than sufficient to handle all claims inquiries by local
citizens visiting GCCF offices.
The GCCF has received an incredibly diverse and complex number of
claims from both individuals and businesses: death and physical injury
claims; lost income and lost profit claims; subsistence claims; real
and personal property damage claims; and removal and cleanup cost
claims. We have received claims not only from fishermen, shrimpers,
oyster harvesters, hotels, restaurants, real estate agents and
developers and retail businesses, but also from builders, contractors,
developers, dentists, veterinarians, chiropractors, and restaurants and
businesses located thousands of miles from the site of the spill. All
are being processed. As already indicated, the GCCF is generally
current when it comes to notifying claimants about the status of their
claim: the calculated amount to be paid and why; reasons why the claim
is denied; or reasons why the claim may yet be eligible for payment but
lacks the minimum documentation necessary for the GCCF to pay the
claim. If a claim is deemed deficient, the claimant is invited to work
with the GCCF in supplementing the individual file in order to make the
claim payable.
Claims may be denied for a variety of reasons: no documentation of
damage or no evidence that the alleged damage is linked to the oil
spill. (The GCCF recently completed a mass mailing to all denied
claimants notifying these claimants of the opportunity to re-file a
claim with the GCCF if they now have the necessary documentation to
support the damages asserted.) In addition, since its inception in
August of 2010, the GCCF has lacked jurisdiction to process damage
claims alleged by local governmental entities; such claims must be
submitted to BP itself for evaluation and payment. Unfortunately, the
GCCF also lacks the necessary authority to process and pay any and all
individual and business claims arising out of the federal government's
moratorium pertaining to certain oil rig drilling in the Gulf of
Mexico. BP has established a separate $100 million fund in New Orleans
to process eligible moratorium claims. I direct all moratorium
claimants (currently approximately 1,600 claimants) to that Fund for
consideration of their claims. The GCCF is in no way involved with that
Fund.
Pursuant to the Federal Oil Pollution Control Act, the decisions of
the GCCF are accountable to the United States Coast Guard and a
Liability Trust Fund. Any claimant dissatisfied with GCCF decisions
pertaining to eligibility or the calculation of damages has the
statutory right to ask the Coast Guard to conduct an independent review
of the GCCF's decision. To date, the Coast Guard has received 1,486
requests for such an independent review and has completed the review of
1,359 of these requests; in every single instance the Coast Guard has
agreed with the ultimate decision rendered by the GCCF. Based upon
claims volume, the number of claims that continue to be filed with the
GCCF from thousands of individuals and businesses, the amount of funds
being distributed by the GCCF, and the independent opinions rendered by
the United States Coast Guard ratifying GCCF decisions, it is clear to
me that the GCCF is succeeding in its mission.
The Program is not perfect and I welcome constructive criticism
from the distinguished Members of this Committee. With claims volume at
approximately one million submitted claims, there may be a certain
inconsistency in the treatment of similarly situated claimants who
offer similar proof of damage; when we review and discover such
inconsistencies, we fix the problem by supplementing the payments.
Much of the criticism directed at the GCCF concerns allegations
that the procedures used by the GCCF to determine both eligibility and
compensation are enveloped in mystery, leading to inconsistency and a
perception that the process is too often arbitrary and capricious. The
GCCF has taken the following steps designed to deal with this
criticism:
a. We have retained the services of seven local professional
organizations, including lawyers and claims processing experts in each
impacted Gulf state, to assist claimants in responding to individual
inquiries about their respective claims and the reasons underlying GCCF
eligibility and calculation determinations. Individuals from six of
these local firms remain in place throughout the Gulf Region. Claimants
may at any time, or by appointment, visit a site office and meet with
one of our local liaisons. Claimants now have various options for
contacting a GCCF representative for assistance with filing a new claim
or providing information on the status of an existing claim. One of the
most important improvements in the process is that each claimant is
provided the name and telephone number of specific claims'
representatives included in each and every determination, deficiency
and denial letter sent to all claimants. Claimants may call the toll-
free GCCF helpline or email questions to our information email box and
receive a written response; claimants may log onto the secure website
and receive the status of their claims as well as copies of any letters
and payment information that were sent by the GCCF concerning that
claim. In addition, we have enhanced the information regarding notices
and other important information on the GCCF website in order to alert
claimants about issues regarding the claims process. I believe these
steps go a long way in alleviating much of the frustration and anger of
claimants who previously could not get answers to their claims
questions.
b. The GCCF has also become much more open and transparent in
providing a wealth of information (available in English, Spanish,
Vietnamese and Khmer) on its website. Among other things, the GCCF
website currently provides Important Notices and Information, a lengthy
set of Frequently Asked Questions, posted copies of the GCCF Protocol
for Interim and Final Claims, a copy of the Final Rules Governing
Payment Options, Eligibility and Substantiation Criteria; a Summary of
Options for Filing Claims, the Final Payment Methodology, specific
information regarding supporting documentation requirements, a list of
Claims Site Offices, information regarding Free Legal Assistance and
information on how to report fraud. All claimants have the opportunity
to file claims electronically and can access information relating to
their claims, including copies of all letters sent to them by the GCCF,
the status of their claims, determination letters and payment offer
explanations. We are also providing more detailed information in all
correspondence with claimants. This has also improved the process,
providing claimants with a sense that they are not simply part of an
``assembly line'' that does not take into account the individual
characteristics of their claim.
We have also agreed with the Department of Justice that an
independent audit should be made of the GCCF, focusing on procedures,
practices and data, in order to determine just how efficient,
consistent and successful the GCCF has been in analyzing claims and
compensating eligible claimants. I am confident that the audit will be
both truly ``independent'' and focused. I look forward to this audit. I
am confident it will validate the work of the GCCF and its dedicated
personnel.
I also think it important to emphasize the unprecedented nature of
the GCCF, and the role it has assumed. As an Adjunct Professor of Law,
having taught Mass Torts at New York University School of Law, Columbia
University Law School, the University of Pennsylvania Law School and
Georgetown University Law Center, I know of no other mass disaster in
which any Administration has worked with a private company in
establishing a multi-billion dollar private fund to pay all eligible
victims. The GCCF is unique. It will not easily be replicated in other
contexts.
When I was asked by the Bush Administration and Attorney General
John Ashcroft to design and administer the September 11th Victim
Compensation Fund enacted by Congress, I knew that all compensation
paid to the victims of the 9/11 attacks would consist entirely of
public funds. The GCCF, however, is funded entirely by BP without any
contribution from the government or other private entities. During the
33-month history of the 9/11 Fund, I processed a total of just over
7,500 submitted claims, paying about $7 billion in public taxpayer
funds to approximately 5,300 families and physically injured victims.
In administering the GCCF, I have often received over 7,500 submitted
claims in just one week (!) and, as already indicated, have already
authorized payment of $5.5 billion in just the first year of the GCCF's
existence.
Again, Mr. Chairman, I very much appreciate the opportunity to
testify before this distinguished Committee and look forward to
answering any questions that Members may have pertaining to the design,
implementation and administration of the GCCF. I wish to assure you and
the Members of this Committee personally of my ongoing efforts to make
the GCCF process work so as to benefit those individuals and businesses
most in need. I believe that the GCCF is achieving its objective. I
will continue to work with you and others to make sure that the GCCF is
as efficient, effective and fair as possible.
I am also attaching for the Committee's consideration two documents
that summarize important statistics pertaining to GCCF submissions,
processing and payment of claims. I would be pleased and honored to
answer any questions from you and any other Members of this
distinguished Committee.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Response to questions submitted for the record by Kenneth R. Feinberg,
Administrator, Gulf Coast Claims Facility
QUESTIONS FROM REPRESENTATIVE LAMBORN (CO-05)
Q. 01: There have been many complaints by claimants that their
supporting paperwork has been lost by GCCF or that claims have
been unfairly denied or the processing has been unreasonably
delayed. Paragraph 63 of the FAQs on the GCCF website states as
follows:
``63. What if my claim is missing any documents needed to prove my
Interim Payment Claim?
If you fail to submit the required documents to prove your losses
or injuries, you will not be paid for them in an Interim Payment. The
GCCF will not send any deficiency notices to you to notify you of any
documents missing from your file. Instead, your losses will be
determined solely on the basis of the documents you have submitted.''
(Emphasis in original).
a.) How is a claimant supposed to know that a `required
document' is missing from his claim if the GCCF policy is to
refuse to notify the claimant of the deficiency?
b.) Doesn't Paragraph 63 violate Section 15 Claimant Bill of
Rights, Paragraph 134 which states: '' If the GCCF needs
additional information in order to decide your claim, the GCCF
will notify you in a timely manner of the request for
additional information'' and otherwise run counter to your goal
to ``maximize compensation'' as you stated at the hearing?
A. 01: The assertion that the GCCF has lost ``supporting
paperwork'' submitted by claimants is overblown and exaggerated. With
over one million claims having been filed with the GCCF, there may be
some isolated instances of lost paperwork. Even in such cases, this
most likely occurred during the months of June, July, August and
September 2010, when multiple data transfers occurred during the
transition from the BP claims process to the GCCF. As a general rule,
there is not an ongoing problem of lost ``supporting paperwork.''
a) Deficiency letters sent to claimants by the GCCF beginning
February 2011 do inform all claimants as to any documentation
that might be missing in order to afford the claimant an
opportunity to submit such additional documentation.
b) Let me clarify the GCCF policy. If the GCCF needs
additional information to determine eligibility for an interim
payment, the claimant will receive a deficiency letter. In
regard to any missing financial data, the GCCF identifies such
missing data in the Attachments to the Determination Letters
and calculates the offer on the information provided.
Q. 02: During your opening remarks, you were emphatic in stating that
compensation awarded to victims of the BP oil spill under the
Emergency Advance Payment Program was ``a gift..a gift'' from
BP. How can you possibly characterize these compensatory
payments to those who suffered so greatly from the oil spill as
``a gift'' both as a matter law and policy?
A. 02: The Emergency Advance Payment Program constitutes a ``gift''
only in the sense that it does not impose on any claimant the
obligation to relinquish any right to sue or return to the GCCF for
additional compensation. It carries with it no obligation whatsoever.
Only if a claimant returns to the GCCF for a Quick Payment or a Final
Payment, must the claimant agree not to sue or return to the GCCF for
additional compensation.
Q. 03: Claimants who elect to receive a final payment from the GCCF
are required to sign a release and covenant not to sue not only
BP companies, but also approximately 100 other companies that
may also be liable to the claimants for their injuries and
damages. These companies have not contributed to the BP
Settlement Fund, nor have they been found to be ``responsible
parties'' under the Oil Pollution Act (OPA) like BP has. Why
should claimants forego any claims they may have against these
other companies which have not given any consideration to the
claimants for agreeing to release them from liability; what is
the legal basis for you requiring them to do so; and did BP or
the White House approve this release form?
A. 03: A GCCF Final Payment does require that the claimant release
not only BP, but all other codefendant companies, from suit. First, the
claimant's Final Payment is in full satisfaction of all damages, not
just damages attributable to BP. The purpose of the Final Payment
Program is to make the claimant ``whole'' when it comes to alleged
damage. Second, there is no point in providing BP a partial release, if
other companies can be sued only to then cross claim against BP seeking
additional compensation. Since the claimant has received 100% of his/
her damage in compensation from the GCCF, a full release is required.
Neither BP nor the White House had any final authority in approving or
rejecting the release form.
Q. 04: During the hearing, you stated that your goal is to ``maximize
compensation'' to the victims of the oil spill. If that is so,
why are claimants required to forego either initiating new or
continuing their current litigation against BP and the other
companies under federal and state law for compensatory and
punitive damages if they elect to receive a final payment from
the GCCF? After all, any award by a court greater than the
amount you determined the claimant should receive would be
reduced or offset by the amount of your award, and thus, a
claimant would be in a position to ``maximize'' the
compensation.
A. 04: See my answer in 3 above. Since the claimant has received
100% of the compensation he/she is entitled, there is no reason to
continue to permit litigation to recover additional amounts. Also,
there is no obligation whatsoever that a claimant be required to accept
a Final Payment. Interim Payments, like Emergency Advance Payments, are
an alternative, requiring no release and permit the claimant to return
to the GCCF for additional compensation. Finally, any claimant who is
dissatisfied with an offer from the GCCF may reject that offer, submit
their claim to the United States Coast Guard or elect to sue. The
choice is up to the claimant.
Q. 05: In response to questions from several State Attorneys General
regarding your independence from BP, you posted on the GCCF
website a letter dated December 28, 2010 from Professor Stephen
Gillers from NYU Law School that you requested, which concludes
on page 8 that you are not BP's lawyer ``nor are you its
agent.''
a.) If you are not an agent of BP as Professor Gillers
concludes, how does that square with the opening paragraph of
the GCCF Release and Covenant Not to Sue form that the ``GCCF
and its Claims Administrator, Kenneth R. Feinberg, are acting
for and on behalf of BP Exploration & Production, Inc. in
fulfilling BP's statutory obligations as a ``responsible
party'' under the OPA.'' (Emphasis added)?
A. 05: a) The language referenced in your question refers to the
obligation of the GCCF to stand in the shoes of BP when it comes to the
legal procedures required by the Federal Oil Pollution Control Act.
Under that Act, claimants must first come to the GCCF before seeking
independent review of their claims from either the United States Coast
Guard Liability Trust Fund or the courts. Professor Giller's reference
makes clear that BP has no control or input into my independent
decision making when it comes to individual claims. The federal court
overseeing the OPA litigation against BP has confirmed this.
Q. 06: Considering the $20 billion size of the GCCF, the public
notoriety of the BP spill, and the unprecedented nature of the
fund, can you explain why your law firm's website Feinberg
Rozen fails to mention your work on the GCCF but mentions other
projects and cases that you and your firm handled as mediator?
Do you have any idea why GCG similarly does not mention its
work as a claims processor for the BP fund in its press
releases or listing of other cases that it has worked on?
A. 06: The website of Feinberg Rozen, LLP will be made current by
referencing--with pride--its work in designing, implementing and
administering the GCCF.
Q. 07: Mr. Feinberg, I understand that you met with a group of
clergymen within the Gulf Coast Region at the Windsor Court
hotel over 8 months ago. Members of this group say that you
have met, admirably, with its leadership over 15 times within
the past year; telling them several times that you would pay
the claims within a certain time. Can you provide an update on
what the group describes as ``underserved claims''?
A. 07: The GCCF has paid a few of the claims submitted by claimants
working with ``a group of clergymen within the Gulf Coast Region.''
But, thousands of other claims cannot be paid at this time until and
unless they are accompanied by the minimal proof necessary to prove the
claim. The GCCF continues to work with representatives of this group in
an effort to secure this minimal proof.
Q. 08: The GCCF website has a menu bar that includes a link for
``Appeals Process.'' That link informs claimants that they can
appeal any interim or final payment, but only if the claim
exceeds $250,000.
i. How many and what percentage of all claims that have been
filed exceed $250,000, how many have been appealed under this
``Appeal Process'' to a judicial panel, and what were the
results.
ii. During the hearing and in your testimony you stated that
1,486 payment determinations were appealed to the Coast Guard
under the Oil Pollution Act, and that every one that has been
reviewed were upheld. However, the ``Appeals Process'' link
does not provide claimants with information on how to submit
such appeals. Will you modify your website to make it clear how
claimants, regardless of the amount of their claim, can appeal
your determinations to the Coast Guard? Does the Coast Guard
review the claims de novo or do they defer to the GCCF's
determinations?
A. 08: i) The ``Appeals Process'' referenced in your question is
not required by federal law and was included in the protocol of the
Gulf Coast Claims Facility as an additional option for claimants and BP
to consider. Federal law (OPA) already provides an option for another
type of appeal of the GCCF decision by providing dissatisfied claimants
with the opportunity to submit their claims to the United States Coast
Guard and approximately 1,700 claimants have exercised that right. The
GCCF's public reports reflect numbers of claims paid in ranges of
amounts of payment determinations. To date 1,089 claimants were paid
$250,000 or more constituting 0.19% of all claimants who submitted
claims to the GCCF. The amount requested by claimants is not a
meaningful statistic since the GCCF has received claimant requests for
$246 billion, $20 billion and more than one claim for $10 billion.
Only 27 claimants have requested access to the ``Appeals Process.''
Of the 27 claims that have been appealed by claimants, all but six have
been resolved. As to the 1,640 claimants who have sought independent
review from the Coast Guard, after review the Coast Guard has agreed in
every single case with the GCCF's determinations.
ii) The Appeals Process link on the GCCF website that you reference
explains how claimants can file an appeal of a final determination with
the GCCF. In addition, the Frequently Asked Questions on the website as
well as every letter sent to a claimant explains that if a claimant
disagrees with the GCCF's decision on an Interim Payment or Final
Payment claim, the claimant has the right to submit the claim to the
National Pollution Funds Center (``NPFC'') or alternatively to a court.
The GCCF website as well as all letters to claimants provides claimants
with the address of the NPFC as well as the NPFC website for further
information regarding the procedure for filing a claim with the NPFC.
The Coast Guard reviews the claims de novo.
Q. 09: Attached is also a letter with questions submitted to the
Committee on Natural Resources.
November 1, 2011
Mr. Feinberg,
Our claim # with the GCCF is/was 1185881. We would like a
definitive answer as to why the GCCF has denied our claim stating that
there was not a connection between our losses and the BP oil spill.
This company was founded in 1986 and incorporated in 1995. All we
manufacture pertains to salt water fishing and to be more specific,
blue water saltwater fishing. To be clear, blue water is the area off
shore that is not normally stained from tidal currents. All of the
products we manufacture are specifically for the blue water fisherman.
We are a manufacturer. We are not a wholesale or retail store. Our
business is linked 100% to the Gulf of Mexico and the fishing tackle
shops and the fishermen therein. We cannot remotely comprehend that the
GCCF has stated that there is no connection between this company's
financial losses and the BP oil spill. Nothing could be further from
the truth.
Every coastwise fishing tackle store in the Gulf of Mexico sells
our Patented ``Bandit Buoy, our chum baskets, our chums or our Patented
``Quick Change'' lead. To make matters even worse, The GCCF has settled
claims with many of the tackle shops that carry our products. How can
they say that our losses are not connected when they have settled with
the very people that sell our products?
This business is seasonal and temperamental at best with all the
fluctuations in weather, fuel prices and fishing regulations. It is
imperative that we make our sales in due season. In 2010 that due
season was taken from us.
Our first question to Mr. Feinberg is: How can you state that there
is no connection to our losses and the BP oil spill when all that we do
and have done for over 20 years is directly and emphatically tied to
the Gulf of Mexico? Secondly, question is: Have you even looked at
anything pertaining to this company? Finally, Can you tell the
committee just exactly what the business function of the American
Bandit Corp. is? (claim # 1185881).
During these already hard times B.P. and the GCCF has driven a nail
straight into the heart of this company.
John T. Sims
American Bandit Inc.
PO Box 251
Bainbridge, GA 39818
229-248-1010
http://www.americanbandit.com/
A. 09: American Bandit Inc.--Claim # 1185881
This claimant--from Bainbridge, Georgia--requests ``a definitive
answer as to why the GCCF has denied our claim stating that there was
not a connection between our losses and the BP Oil Spill.'' It also
inquires as to whether I have ``looked at anything pertaining to this
Company and whether I know ``exactly what the business function of the
American Bandit Corp. is?'' As required by the Final Rules Governing
Payment Options, Eligibility and Substantiation Criteria and Final
Payment Methodology dated February 18, 2011: Section IV.3.c states the
following:
``The GCCF has received claims from claimants residing outside
of the Gulf States, claims from businesses located many miles
from the Oil Spill, and claims from businesses that do not
appear directly dependent on Gulf resources such as dentists,
veterinarians, and chiropractors. Many of these claims comprise
business activities that are more dependent on general economic
conditions than on tourism or seafood harvesting on the Gulf
Coast. In these cases (numbering in the thousands), the most
exacting type of proof demonstrating an identifiable link
between the asserted damage and the Oil Spill will be required.
Claimants in this category may receive compensation by
establishing loss, by passing the financial test that analyzes
relative financial performance in the immediate pre-Oil Spill
and post-Oil Spill periods, and by providing evidence that
establishes the link between losses and the Oil Spill. For
example, the claimant might provide documentation of cancelled
orders for goods or services sold to a Gulf business;
consistent sales in the past two years or more to a Gulf
business that failed to recur due to the Oil Spill; bad debt
written off and associated with failure to pay by a Gulf
business; failure of a contractual arrangement involving a Gulf
business that results in demonstrable lost sales or income;
higher expenses or cost of goods due to having to obtain them
from another vendor other than the traditional Gulf business; a
specific termination of employment or reduction in wages that
an employer confirms was as a result of the Oil Spill, etc.
Examples of the type of evidence that may link a claimant's
loss to the Oil Spill are described in Attachment A. Providing
general financial information about losses sustained in 2010
after the Oil Spill will not be sufficient documentation for
claimants in this category. Instead, proof will be required
specifically linking the sustained loss to the Oil Spill.''
This claimant was asked to provide the GCCF with the necessary
documentation demonstrating his customer base was primarily in the Gulf
area by providing a list of his dealers/customers in the Gulf. The
claimant did not provide the necessary documentation and consequently
the claim was denied. On October 28, 2011 we sent the claimant a
follow-up letter to the denial (a letter the GCCF sends to all
claimants who were denied payment of an interim or final claim)
reminding the claimant that if it disagreed with the denial decision it
could re-file its claim and provide the necessary documentation to
allow the GCCF to evaluate and determine the claim to be eligible.
Questions submitted on behalf of Gulf Coast constituents by
Representative Jo Bonner (AL-01)
I appreciate the willingness of Chairman Hastings and the Committee
to allow these questions to be inserted in the official hearing record.
Additionally, I appreciate Mr. Feinberg's willingness to answer them in
what I hope will be an honest and straight forward manner. These
narratives and questions come from constituents along the Gulf Coast
who have directly experienced the failings of the GCCF, and get at many
of the systemic problems that have existed since its inception. In the
past, Mr. Feinberg has attempted to deflect efforts to address these
problems, and instead has tried to focus on the specifics of an
individual case saying, ``Get me that information and I'll look into it
personally.''
In this case, Mr. Feinberg, I would ask instead that you read and
absorb what follows, and formulate concrete and truthful answers to the
questions posed. The people of the Gulf Coast deserve nothing less.
Q. 10: The facts surrounding this situation are really not that
complex, but the response and lack of resolution that this
situation illustrates clearly demonstrate problems with the
operations of the GCCF at all levels. The questions raised by
my experience are many and profound when taken in the light of
the mandate to the GCCF, the protocol established by the GCCF,
and the public impression that Mr. Feinberg continues to
communicate on a regular basis about the effective and
efficient job the GCCF is doing.
The story begins with my ownership of three separate businesses
that were impacted by the Oil Spill. One is an RV Park located
on Mobile Bay and the other two are rental condominiums at the
beach. All three businesses are appropriately licensed and are
owned by separate LLCs. All three businesses suffered
significant losses from the oil spill, have appropriate
documentation that was submitted to the GCCF, and all were paid
compensation during the emergency payment time frame with BP
and with GCCF. Although the emergency payment process was slow,
ineffective, and inefficient, the results did finally deliver
payment of initial emergency compensation for a portion of my
losses for all three businesses by December 2010. In early
January 2011, following the protocol established by the GCCF, I
filed for final payments for all three businesses. Since that
time, my experience has been horrendous, and despite the
efforts of myself, Congressman Bonner's office, and Greg Hawley
(GCCF), no resolution has been provided by the GCCF. Questions
about my claims started to be raised by me in May 2011, and
have escalated from the ineffective local GCCF office to your
office. I have made over 10 phone calls to the GCCF or its
supposed representatives and have sent emails numbering over 12
from June 2011 to October 2011. It is my understanding that the
highest levels within the GCCF are aware of my claims, and
despite agreeing with the solution to my claims, the GCCF has
elected to take no action as of today. Based on my experience
with the GCCF, and the comparable experiences of many along the
Gulf Coast, do you still believe your claims process is
effective and efficient?
A. 10: Yes, I do believe that the GCCF claims process is effective
and efficient. With over 1 million claims received in just 16 months,
and payment of $5.9 billion to over 219,000 claimants, and offers
outstanding to claimants in the amount of $364,191,573 we are doing
something right. There may be some mistakes made when it comes to
individual claims, inevitable in light of claims volume. I cannot speak
to the facts of the individual claims submitted in this question
without knowing first the name of the claimant and the claim number.
But I believe there is a ready explanation for the issues posed in this
question.
Q. 11: My question concerns disparity in your claims process. Why is
an individual condo owner offered a Final Payment offer of
$25,000 as one business, while we own three condos in the same
complex, suffered three times the monetary loss, are required
to have three separate business licenses, and are offered a
Final Payment offer of $25,000 because we ``filed under one
social security number''? This process is flawed and makes no
sense. The Quick Pay and the Final Payment are the same, minus
the reams of paperwork you required to be filed for a full
``Final Payment Review.'' We were told by the GCCF in Gulf
Shores, AL, to file all of our condo units under one social
security number. I would like an explanation regarding the
justification for how three individual condo owners can be
offered $25,000 each for their loss, while we, who own three
condos, are offered the same compensation.
A. 11: There is no deliberate disparity in the claims process. A
business claim is distinguished from an individual claim based on a
decision of the claimant to treat the businesses as one or as three
separate entities. Generally it is dependent upon the tax structure of
the entity determines whether the claimant is a business, which files a
Schedule C and deducts the expenses of the business. The quick pay and
the final payment are not the same, require different proof, and are
calculated differently. Three individual condo owners have established
three different businesses while this claimant has decided to own three
condos under one business and tax filing entity. We follow the decision
of the owner.
Q. 12: The main question we have is how can one person be paid a claim
for a loss and two others with the exact same loss be denied? I
would like to give you a little background as to why we feel
certain we should be paid by the GCCF. My wife and I, my son,
and my daughter and son-in-law all own rental homes at the
exact same address. We all have the exact same business renting
homes and we all suffered the exact same type of loss. My son
and I were turned down for Interim Payments and for a Final
Payment by the GCCF; however, my daughter and son-in-law were
approved and did indeed receive an Interim Payment and a Final
Payment from GCCF.
We do not see how GCCF/BP can approve one person for a claim and
deny two others, doing the exact same business at the exact
same location. Can you explain this lack of consistency?
A. 12: Similarly situated individuals are treated differently based
upon their documented submissions and the arguments they make about
eligibility. If we make a mistake in treating similar claimants, we
will acknowledge the error and true up the claims. I cannot speak to
the facts of the individual claims submitted in this question without
knowing first the name of the claimants and the claim numbers. But
apparent inconsistency may have a ready explanation tied to the nature
of the proof.
Q. 13: My wife and I own 2 beachfront rental properties on Dauphin
Island, AL. The homes are nearly identical in size, location,
etc. and have been professionally-managed rental properties for
quite a few years. We submitted identical applications to the
GCCF on the first day it opened, August 23, 2010. Each claim
had the appropriate documentation, including rental history,
rental bookings, and rental cancellations, 1099s from previous
years, and our income tax returns. Of these two identical
claims, one was paid in full, without difficulty or question;
the other one, again, nearly identical in all respects, has
never been paid. You have been asked to address this
discrepancy/failure by my wife and me at numerous public
meetings, most recently on February 15, 2011, in Bayou La
Batre, AL. You were also asked by a Mobile County Commissioner
to meet with us about this. You told us that Jim Walker in your
office would ``look into it.'' We have left messages for Mr.
Walker, but he has never returned our call.
I am still waiting for someone in your organization to ``square
up'' my claim. Despite your public statements to me that you
will ``personally look into this,'' we have yet to hear from
you. We have been waiting since February 15, 2011. If two
identical claims are handled in such completely opposite ways,
what does this say about your organizational and procedural
consistency and your organization's ability to process claims
generally?
A. 13: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. It may be a mistake or there may be a
ready explanation which simply does not sit well with the claimant.
Q. 14: I first filed a claim with BP then with the GCCF and have
received compensation during the emergency claim process that was
established for my losses. This claim was for a beach rental home that
I own individually. Subsequently, I submitted a final claim request on
1/6/2011 for final losses including my rental home losses and income
losses that I suffered. On 3/22/2011, I was contacted by the GCCF and
asked to submit additional documents which I completed at that time. No
action occurred on my claim. I was contacted on 9/23/2011 again
requesting further documentation. This request was specifically for my
2010 tax return and my 2011 rental experience. I once again submitted
these documents and have not received any further communication from
the GCCF. Why was my claim not paid in the time frame advertised on the
GCCF website? If the claim was processed and paid by the standards the
GCCF established, there would not have been a need for an additional
request for information. Why did my claim not get processed per the
GCCF protocol? It is now 11 months since my claim was initiated and
almost a year and half since the disaster. Why has the GCCF not
performed as they were mandated to provide relief to those affected by
the disaster in a timely manner? Why is the information regarding my
claim not accurate and up to date on the GCCF website?
A. 14: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. The way this claimant describes the
situation, the GCCF has clearly erred. But in my experience over the
past year there is usually a ready explanation for the apparent
discrepancy and delay.
Q. 15: Our Chamber of Commerce has lost sponsorship and advertising
investments due to the economic disaster caused by the oil
spill along the Alabama Gulf Coast. Our organization holds an
annual fund-raising campaign and our claim reflected the amount
of funds we were down from the previous year. We have received
three letters of denial because we were not considered
eligible. Our chamber does not have the resources (manpower or
funds for CPA's) to pursue the claim. We continue to work
extremely hard to recover from the financial loss by cutting
back personnel which places additional demands and stress on an
already overworked staff. My question is--Where does a not-for-
profit (501 C6) business development and advocacy organization
turn for help?
A. 15: A not for profit can seek compensation from BP itself, not
the GCCF. Indeed, BP has just recently provided grants to various non-
profits such as Catholic charities and United Way to assist in oil
spill recovery efforts. In addition, BP has provided millions of
dollars in grants throughout the Gulf region to help bring tourism back
to the Gulf.
Q. 16: I was told to submit my job search and other, spill-related,
minor out-of-pocket expenses. Your staff at the time told me,
``No receipts please, just itemize them.'' They overlooked
these payments on the first and second interim payments.
Yesterday, I was told, ``We now need all the receipts.'' I have
lost my home and many of my smaller records are lost. I am on
the verge of bankruptcy and living with a friend now because I
could not pay the rent since my second quarter interim payment
was 4 months overdue. Why have you and your staff lied about
weekly changes to your methodologies? Do you believe the GCCF
has operated in a consistent and open manner regarding its
methodologies and procedures?
A. 16: Yes, I do believe the GCCF has operated in a consistent and
transparent manner regarding its methodologies and procedures. I cannot
speak to the facts of the individual claims submitted in this question
without knowing first the name of the claimants and the claim numbers.
Q. 17: Your current protocols state that within 90 days of a valid
claim being filed for interim payment the interim payment will
be made. How many interim claims do you currently have under
review beyond the 90-day payment timeframe? What does the
claimant do if GCCF does not meet the 90-day payment schedule
established by GCCF?
A. 17: It is a rare case that the GCCF has not responded within 90
days to an interim claim request. Most interim claims are processed
within a few weeks. A processed claim is a claim that results in a
payment, a request for additional information, a denial or a
calculation of no loss. However, if a claim has been found deficient,
the GCCF will seek additional documentation or other proof from the
claimant before denying a claim. This final decision may be delayed
beyond 90 days if, in fact, the claim remains deficient and we await
additional proof from the claimant.
Q. 18: If the GCCF has completed its due diligence and fully evaluated
a claim for an emergency advance payment, how long will it take
GCCF to process and pay his interim payment after it has been
filed?
A. 18: Payments for emergency advance payments have been made to
169,208 claimants by the GCCF. The EAP program ended last November 23,
2010. However, a pending claim for ``interim payment'' will be treated
as an interim claim; payment usually occurs within two weeks after it
has been processed and found eligible with appropriate documentation.
The issue is not when the claim is ``filed'' but, rather, when it is
deemed ready for payment or denial.
Q. 19: Why did it take the direct intervention of the United States
Attorney General to get you to agree to an independent audit of
the GCCF?
A. 19: On December 21, 2011, the Department of Justice selected the
independent auditing firm of BDO to perform an independent evaluation
of the GCCF.
Q. 20: What compensation is available to property owners that lost
their rental properties to foreclosure because they could not
rent them during the oil contamination and clean-up periods?
A. 20: The GCCF will pay compensation to property owners who can
demonstrate realized losses from the sale of a property by providing
documentation of pre and post spill contracts. The GCCF reviews all
received claims and will review any and all documents regarding the
circumstances of a foreclosure. We will review these on a case by case
basis.
Q. 21: Why does the GCCF arbitrarily disqualify entire industries from
participation in compensation from the GCCF? My business and
many other professional businesses have been denied payment
from the GCCF based on nothing other than an arbitrary
designation of ineligibility due to our area of business.
Medical, dental, financial services, insurance services,
accounting services, and legal services have all been denied.
In Gulf Shores, all businesses were impacted from the oil spill
including my business. I submitted claims for emergency as well
as final payments and was denied with no explanation. The
documents that I submitted included all financial support for
my loss and all tax returns. I even applied the financial test
referred to in Appendix C of the GCCF final payment protocol
that confirmed that my business qualified for reimbursement of
losses and was eligible. Despite these documents, multiple
meetings with the GCCF and its representatives including Mr.
Feinberg, and passing the financial eligibility test referenced
in Appendix C, I have been denied compensation from the GCCF.
Why?
A. 21: The GCCF does not arbitrarily disqualify any claimant from
GCCF compensation. But the critical issue remains--can the claimant
demonstrate damage due to the oil spill? There are many industries and
businesses that would never be able to demonstrate such a causal link
in the courtroom; nevertheless, the GCCF has paid numerous such claims
in situations where the industry or profession can provide such a link.
Q. 22: How do you measure claims ``processed'' and what does this term
mean? In the GCCF process, what does the term ``under review''
mean? What is the total number of claims that have not been
paid, and how do you account for the high number? How many
claims have been awarded quick payment and how many final
payment? Why are there so few payments (other than quick pay)?
Why have there been so many refused payments? I have heard that
there have been a lot of fraudulent claims. If this is true,
how many of these fraudulent claims have been turned over for
prosecution and how do these numbers relate back to the total
number of claims not paid? Why have your claims left to process
numbers risen from around 10,000 at the end of July to now over
17,000? How many claims has the GCCF paid in full (at the full
requested amount)?
A. 22: ``Processed'' means that the claim has been filed, has been
reviewed by the GCCF and is now ready for payment or, alternatively,
has either been denied as ineligible or deemed deficient as lacking the
necessary documentation to support the claim. When a claim is being
considered it is ``under review.'' To date some 13,000 claims have not
yet been processed; those that have not been paid have been determined
to be either ineligible for lack of a link to the spill or lack of
minimal proof to corroborate the requested damage. The GCCF has issued
129,453 quick payments and 63,585 final payments. Quick payments are
preferred by some claimants either because they have already been
sufficiently compensated through the Emergency Payment Program or the
claimant can no longer provide minimal proof for further payments. The
GCCF cannot pay claims that lack the bare minimum of proof required.
There have been approximately 17,000 claims that were determined to be
potentially fraudulent; after careful review internally by the GCCF
investigative team, we have forwarded approximately 3,500 of these to
the Department of Justice for further investigation and, where
appropriate, formal prosecution. Although the number of claims to be
processed remains steady, this is directly attributable to the
advantages of filing with the GCCF. None of these claims currently in
the queue in recent weeks have been delayed or slowed in processing.
They will be processed within the 90 day period, probably sooner.
Finally, the GCCF does not report how many claims are paid at the full
requested amount (the requested amount is often meaningless; see my
response to Question 8 above).
Q. 23: Deducting the small amount of claims that GCCF questions that
may be fraudulent, what is the total amount of money claimants
have requested for their interim payments to date? What was the
total amount of money requested for emergency advance payments?
What was the total amount of money actually paid to those
claimants? What is the total amount of money to date GCCF has
paid those claimants? Subtracting all payments made to
claimants that have signed releases and those you think might
be fraudulent, how much would the GCCF have to pay out if you
were to pay in-full the balance of the claimants that have not
been paid or signed releases?
A. 23: The GCCF does not report what claimants request, either in
interim, full or emergency payment submissions. To date, the GCCF has
paid $2,583,962, 010 in emergency payments; $1,293 735,000 in quick
payments; $ 450,838,713 in interim payments; and $1,538,634,927 in
final payments. The GCCF currently has $385,362,000 outstanding in
final payment offers.
Q. 24: At what point in this debacle was it determined that if a
claimant filed an Interim Claim they could not file a Full
Review Final Claim? Where on the website or in the
documentation is this explained? In addition, on several
occasions representatives at your call center have stated that
if we did not want to continue receiving Interim Claims, we
could file a Full Review Final Claim. Whether this is or is not
the case, representatives are misinforming claimants, which is
inevitably affecting their decisions regarding the claims
process.
A. 24: A claimant may file both an interim claim and a final claim.
Thousands have done so. The information can be found on the GCCF's
website: www.gulfcoastclaimsfacility.com
Q. 25: I was recently told by the GCCF that you cannot submit another
claim until the Determination Letter offer expires. Nowhere in
any documentation is this listed as being the case. Was the
representative who stated this lying?
A. 25: A claimant can reject a GCCF determination letter and then
submit another claim. The claimant, not the GCCF, controls this
decision.
Q. 26: How many claims have been paid to individuals who were not
working at the time of the oil spill?
A. 26: The GCCF does not track how many individuals who received
GCCF payments were unemployed at the time of the oil spill.
Q. 27: I am a major claimant and have been as frustrated as everyone
else in their process. You have stated previously that if a
large claimant wishes to meet with the accountant that is
handling his claim, he can request a meeting and the accountant
will be glad to meet with the claimant and review his claim and
explain to him how his claim will be paid according to your
current protocols. Once a request has been made, how long will
it take for the claimant to have this meeting with your
accountants or auditor?
A. 27: ``Everyone else'' has not been frustrated by the GCCF
process. Once a claimant meets with GCCF accountants for tailored
consideration of the claim, the claim will be paid depending upon how
long it takes the claimant and the accountant to review the claim and
provide the necessary information. I cannot speak to the facts of the
individual claims submitted in this question without knowing first the
name of the claimants and the claim numbers.
Q. 28: When GCCF has hired an expert to visit a claimant's site and
review his operation and provides a report to GCCF, why does
GCCF refuse to supply a copy of that report to the claimant? Do
you have a procedure for a claimant to obtain a copy of an
expert report that was made of his business? If so, please
describe that procedure.
A. 28: A claimant is always entitled to examine any part of his/her
own claimant file unless, of course, the report pertains to evidence of
fraud and is part of an ongoing criminal investigation. In such cases,
the investigative report is sealed unless it is forwarded to the
Department of Justice. In all other situations, the claimant has
complete access to the file.
Q. 29: After receiving a report and evaluation of the claimant's
business by a GCCF expert and the GCCF paying an emergency
advance payment, why does the GCCF not pay the claimant's
interim payment within the GCCF 90 day protocol?
A. 29: The GCCF does pay interim payments within the GCCF 90 day
protocol period unless, of course, the claim is deemed ineligible or
deficient after initial ``processing.'' There are other reasons for
possible delays in payment, including potential fraud, inability to
verify tax identification numbers, etc., but, as a general rule, it is
rare for a claimant not to hear from the GCCF within the 90 day period.
Q. 30: As of November 1, 2011, how much money has been placed in your
GCCF escrow account? How much of that money has been paid out
for cleanup costs or to companies other than for lost wages for
individuals and lost profit and income for businesses? How much
accessible cash is left in the GCCF escrow account to pay lost
wages for individuals and lost profit and income for business
claimants as of November 1, 2011?
A. 30: The question asks the status of GCCF payments as of November
1, 2011. Included on the GCCF's website is the most current statistical
information in response to the various questions regarding GCCF
payments. As of January 18, 2011, $5,925,749,856 has been paid to
claimants. The bulk of this amount, approximately $5.6 billion, has
been paid for lost earnings or profits. The remainder has been paid to
claimants for removal and clean-up costs and other related claims.
Payments to government entities are also paid by BP from the escrow
account. According to the latest BP public report, BP has paid out a
total of $7,843,227,405 ($5,925,749,856 of that amount paid to business
and individual claimants by the GCCF).
Q. 31: When are the responsible parties scheduled to place additional
cash in your GCCF escrow account? How much do you anticipate
will be deposited in your GCCF escrow account within the next 6
months and within the next year?
A. 31: Pursuant to the escrow agreement, BP is responsible for
paying $5 billion per year into the escrow account. BP has also agreed
to honor any financial obligations imposed by GCCF claims
determinations over and above the $5 billion.
Q. 32: Do you have enough money in your GCCF escrow account to pay all
outstanding claims from individuals for loss of earnings and
businesses for lost earnings and profit if you paid them what
they have requested? If the answer is no, how much money are
you short?
A. 32: Yes, there are ample funds in the GCCF escrow account to pay
any and all eligible claims. But, of course, there could not possibly
be enough funds in the escrow account to pay claimants for ``what they
have requested.'' (See my response to Question No. 8.) It makes little
sense to focus on claimant amounts that are ``requested'' when such
amounts are often all out of proportion to damages actually suffered as
a result of the oil spill.
Q. 33: Has the GCCF paid a claim in the amount of $10 million without
any documentation and at the request of BP?
A. 33: No. Last fall, the GCCF did pay $10 million with
documentation and at the request of BP.
Q. 34: Mr. Feinberg stated after claimant comments that every business
has ``unique'' elements of damage; however, GCCF methodology
does not allow small businesses without attorneys and under
$250,000.00 in claims any ``unique'' opportunity to prove their
claims.
A. 34: Untrue. The GCCF Methodology permits small businesses (and
all other claimants) to prove their individual claims based upon unique
individual, often idiosyncratic, elements of damage. A large majority
of business claimants engage in direct communications with the GCCF
accounting staff during the course of review and evaluation of their
claims. Any individual claimant is informed of the opportunity to ask
for a tailored re-review of the claim to offer additional information
unique to that claim.
Q. 35: We were told in the beginning by both BP claim adjusters and
GCCF claim adjusters that utilizing 4 years of revenue would not only
be more accurate but would ensure a quick payment turn-around. Further
research into forensic accounting methods support the four years of
data comparisons, discarding the highest and lowest years. If this is
true, why does GCCF methodology utilize 2009 revenue as the primary
source of projected revenue? In the case of our ``unique''
circumstances, our 2009 revenue was below normal because of eminent
domain deadlines given to us from FDOT to relocate our business. Our
attention to sales revenue had to be temporarily sacrificed in order to
meet those deadlines, yet the GCCF continues to utilize projections
based on 2009 revenue. What is the GCCF methodology regarding the use
of revenue over a broader period than just 2009? Has the GCCF
considered allowing claimants to use revenue from 2011 to justify their
claim?
A. 35: The GCCF Methodology permits evaluation and analysis based
upon other than 2009 revenue. Generally 2008, 2009 and pre-spill 2010
earnings and revenue are reviewed and evaluated. Depending upon the
information available and provided by a claimant a ``broader period
than just 2009'' is evaluated when it will benefit the claimant. The
GCCF will also consider revenue from 2011 to justify a claim. I cannot
speak to the facts of the individual claims submitted in this question
without knowing first the name of the claimants and the claim numbers.
Q. 36: GCCF methodology does not allow for ``unique'' elements of
small business income and expenses that are primarily fixed in
reality. There is no labor to cut. We have no large sums of
cash flows to support recent investments of expansion
equipment, land and buildings. Small businesses operate
differently than large publicly traded companies who have
investors contributing to cash flow or who have large service
areas. Our service areas are all local. Therefore, when
utilizing a forensic approach in determining loss of income,
percent damages should be calculated by using average gross
profits added to the percent damage in gross revenue. The only
opportunity that I will have to prove this reality is with a
judge and jury because Mr. Feinberg is refusing to abide by his
own stated words that every business has ``unique'' elements of
damage.
A. 36: This statement fails to ask a question. I would reiterate
that ``every business has 'unique' elements of damage.''
Q. 37: Failed start up of expansion within old or new businesses is
not being given any considerations as damage--at least this is
true for our claim. We invested about $100,000.00 dollars in
new equipment to expand our business. With zero help from our
banking industry, we had no choice but to finance the start-up
with cash flow from profits from the existing business
operations. Our sales revenue for the first 4 months of 2010
was sufficient to support the start-up of this expansion
equipment beginning in the summer of 2010. However, the
economic damage of the spill created greatly reduced revenue,
an inability to confidently project future revenue and
insufficient cash flows, we could not start-up the expansion.
This created a situation where we lost the client who was to
operate the expansion and pay us a lease for the land,
buildings and equipment recently purchased. Now we have no
choice but to try and sell the equipment at a 65% loss. Why is
the GCCF not allowing any consideration for these damages? Is
there anyone at the GCCF that actually understands how
businesses operate?
A. 37: The GCCF will allow consideration of any and all damage
models advanced by individuals and businesses. The GCCF accountants are
skilled in all areas of accounting including the expertise required in
responding to claims submitted by startup companies or companies that
were prepared to expand at the time of the oil spill. We will consider
damages in these contexts.
Q. 38: I rent a condo in Panama City, Florida, where I work. I sell
mobile home/manufactured housing. Our business was drastically affected
by the oil spill for the simple reason that our customers were affected
by the oil spill. Many customers and/or potential customers lost
income, which affected their ability to purchase a home. The continued
loss of income has affected their credit rating which in turn
eliminates many from qualifying for a loan. When I and others in my
line of work filed claims with the GCCF, we were told we had to apply
to a special fund set up thru the real estate association of the state.
When we contacted the real estate association we were told that the
fund was only for licensed real estate agents. Mobile Home salespeople
in Florida or Alabama are not real estate agents and as such we are not
required to hold a real estate license. Even after sending the GCCF a
letter from the real estate commission with the explanation why we were
not eligible to file claims with them, we still received a denial from
the GCCF stating that we were not eligible to file with the GCCF
because we were real estate agents. It is also my understanding that
salespeople who sell time share condos were also similarly
misclassified. Can you explain this discrepancy and what actions GCCF
is taking to rectify this misclassification?
A. 38: Real estate agents and condo rental owners are all eligible
to file a claim with the GCCF. Initially, all real estate agents were
directed to special real estate funds that were established in each
state to pay claims as deemed appropriate by the administrators of
these local funds. However, at the conclusion of the emergency payment
program, on November 23, 2010, the GCCF decided to invite all real
estate agents, condo rental owners, and any other individual or
business with a valid, eligible claim to file with the GCCF. These
claims are evaluated under the same eligibility criteria as all other
claims for lost earnings and profits. I cannot speak to the facts of
the individual claims submitted in this question without knowing first
the name of the claimants and the claim numbers.
Q. 39: My husband and I are musicians along the Gulf Coast. We lived
in Orange Beach at the time of the oil spill and now reside in
Loxley, Alabama. We suffered a major loss in income after the
oil spill due to the loss in tourism in our area. We provided
the Gulf Coast Claims Facility all information that was asked,
including profit/loss statements, gig dates, venues that hired
us, etc. We provided income information from previous years
proving a clear drop in income after the oil spill. We
personally know many other musicians and restaurant workers who
were paid by GCCF for their losses. We, on the other hand, were
denied.
We received a letter stating that GCCF could not see a correlation
between our losses and the oil spill. This is ridiculous! There
is absolutely a correlation. What in the world do we have to do
to show a correlation? We make our living by playing music. We
have no other jobs. It is what we do, and we are grounded in
this area due to our home and family....it is not an option to
move, nor would we want to or feel that we should have to. We
want answers. We feel that you are holding onto money that
should be given to people who were directly and negatively
affected by the spill, including us. As far as the phone number
to call on the GCCF website for questions regarding our claim,
it is nothing but a run around. They could not tell me anymore
about the status of my claim than I could find out for myself
on the GCCF website. Even after speaking to a manager, no one
knew anything.
This is an injustice to the people of the Gulf Coast. It is wrong
and cannot be dismissed. We will not forget and will never give
up in the fight for justice--it is imperative that you do what
is right. We are not asking for anything more than what our
actual loss was compared to other years. We were expecting a
big summer in 2010 and instead we were barely able to feed
ourselves.
A. 39: This statement fails to ask a question. I cannot speak to
the facts of the individual claims submitted in this question without
knowing first the name of the claimants and the claim numbers. However,
if this claimant believes that she has proof demonstrating a link
between her economic damage and the oil spill, she should present it to
the GCCF and we will evaluate the claim.
Q. 40: The last Saturday of March 2011, I received a call from an
accountant that was from the GCCF and was told that the amount I was to
receive was $600,000.00 plus for the interim payment and $400,000.00
plus for the final payment. Then, suddenly, I was offered a ``Quick
Payment,'' though I did not submit one. I was told by a GCCF
representative that the Quick Payment form was faxed in by me, though I
sent it in later. After that, my interim payment stopped just as
quickly as the Quick Payment form was received. Twice since April 5,
2011, this Quick Payment claim was looked at and denied.
Now some ninety days later, there is still no interim or final
payment and my question is why? According to Mr. Feinberg, the
shrimpers are now getting more money. Well, I sold the shrimp that
these shrimpers caught--shouldn't I get be treated the same as these
shrimpers? As least most, if not all of them, are back to shrimping,
while I am sitting here having to live with a friend while awaiting my
payment. Is the GCCF delaying my interim and final payment claim in the
hopes that I will settle for much less than what I am owed through a
Quick Payment?
A. 40: This statement fails to ask a question. I cannot speak to
the facts of the individual claims submitted in this question without
knowing first the name of the claimants and the claim numbers. The GCCF
does not delay Interim or Final payment requests in order to encourage
the Quick payment option.
Q. 41: I have a pending claim before the GCCF, and I can tell you from
personal experience GCCF's processing delays (deliberate or
ineffective effort, it matters not) lead to desperation
settlements by claimants, driving down BP's ultimate cost. GCCF
never compensates for their delay which has wrecked many
businesses' long-standing vendor relationships and individuals'
credit. It will be a long time before our region can recover
from these economic damages.
A. 41: This statement fails to ask a question. The GCCF strives to
make any and all payments that are documented within 90 days. I cannot
speak to the facts of the individual claims submitted in this question
without knowing first the name of the claimants and the claim numbers.
Q. 42: I would like to take this opportunity to again ask why you use
mixed-math methodology to lessen the claim amounts and to
question why you stall claims for months on end to make sure
claimants will accept any amount you offer so they can feed
their children for a few days. I know your people are very
competent and are following a well-orchestrated plan to save BP
billions of dollars, which is why you are worth $1.25 million a
month to them.
The Deepwater Horizon oil spill was a disaster to the Gulf Coast
states, but the Feinberg plan to make the people who lost their
livelihoods ``whole'' has been catastrophic to hundreds of
thousands of families in these states. They are not claim
numbers to us. To us they are families--husbands, wives,
children, mothers and fathers, and friends. The oil spill took
their income, but you took their hope, their homes and
properties. Some lost their families; all of us have lost our
ability to start over because of your tactics to ensure we
could never recover. You have declared each family worth a
lifetime value of five thousand dollars, and each business that
employed many families worth twenty five thousand dollars. My
question to you is this, sir--How can you sleep at night,
knowing that it is you, your methodology, your stalling
tactics, your drive and tenacity that has brought millions of
Americans to destitution?
My claim has been sitting in re-review since July 2011. In June you
gave me a meager 1/3 payment for the first quarter interim
claim. Ten days later I got a letter from you with no check but
with a very low take it or leave it final claim offer. Then you
posted 2 interim claim re-reviews on my GCCF web page and have
now added my third quarter interim claim to the list as under
review. Not a single word from GCCF since July. Incompetence?
Five months to re-review is pathetically slow even for experts,
or is it just your usual stall tactic to force me to take a
pathetic offer and sign away any hope of recovering from the
catastrophe that you initiated and orchestrated after the oil
spill?
So many of us could have recovered if we had been able to keep our
equipment, insurance, advertising, etc. I am only one of the 16
men that lost everything due to the GCCF's incompetent handling
of the claims of a growing company that lost its customer base
because of the oil spill.
Is your contract with BP fixed or incentivized? Do you make more
money when you save BP money?
A. 42: I disagree with the substance and tone of the question. The
GCCF has distributed about $6 billion to well over 219,000 individuals
and businesses in the Gulf in just the past fifteen months. There are
no ``stalling tactics'' being imposed by the GCCF. If claims are
delayed, there are legitimate reasons pertaining to eligibility and
proof. My contract with BP is fixed. It does not depend at all on the
number of claims paid or not paid. My compensation is in no way tied to
claims rate or dollars distributed. I cannot speak to the facts of the
individual claims submitted in this question without knowing first the
name of the claimants and the claim numbers.
Q.43: I own a start-up that has been struggling to get back on track.
We received a $45,000 emergency payment which helped at the
time but was not enough to become whole after so much time and
effort. The problem has been the final offer. I spent over 5
years preparing to begin my company which I planned to expand
across the southeast. We are a unique operation specializing in
being the personal buyer for law firms, attorneys, physicians
and business professionals in addition to serving the states
farmers markets and as a wholesaler focused strictly on Fresh
Gulf Shrimp and seafood.
I didn't just decide to start selling shrimp on the back of my
truck, and I have extensive proof of our intent and affidavits
for wholesale contracts as well as proof of the business model
before and after the spill. We now operate out of a BP service
station thru a sister company selling fresh Gulf shrimp cooked
and uncooked in addition to their regular menu. We have a video
of BP employees eating our seafood well after the spill when we
tried to overcome the stigma to being building our business but
the time just wasn't right as people were still afraid of the
Gulf seafood.
Two BP employees were on video at my business making jokes about
the oil spill while eating our product and it was very
insensitive to our customers. We have struggled and tried since
the spill to get this all going and will continue until we
finally succeed even if it takes another decade. We may be a
start-up, but we have built a solid following even with the
negative reviews of the Gulf seafood. However, the recent media
is starting to become like the Alaska spill and people are real
concerned for the safety of Gulf seafood which may be worse now
than in the past.
The problem has been the amount offered and the length of time it
has taken to get a response. We finally got an offer far below
the value of 1 single contract we had, and they have taken so
long that I must take the offer or go completely out of
business. I am frustrated we have to take an offer below what
we wanted but if we don't I will have to just give up. If there
are any options, could you please let us know as we do not want
to sign a release as I feel we have been intentionally delayed
so they could hope we got so desperate we would have to take
their offer? When you do audits please look us up and hopefully
this will all get overturned and we can claim the amount we
should have received.
A. 43: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. But, the GCCF does offer Interim
payments to any claimant who does not want to sign a release and would
rather return to the GCCF for additional compensation until any future
Gulf Region uncertainty is resolved. There is no reason for any
claimant to sign a release if he/she would rather wait and accept
Interim payments on a quarterly basis.
Q. 44: Do you believe GCCF's procedures and methodologies force
claimants to accept low final payment offers out of
desperation?
A. 44: No. GCCF procedures and methodologies do not compel
claimants to accept low final payment offers out of desperation
Q. 45: The charge has often been levied that the GCCF hierarchy is
oblivious to the culture and history of the Gulf Coast--it's
people, history and industry--and is therefore incapable of
adequately servicing their claims. How do you respond to that
charge? Why did you not establish the GCCF headquarters on the
Gulf Coast?
A. 45: I have made every effort to return again and again to the
Gulf Coast--to local communities, town, and Parishes--to better
understand Gulf Coast culture and the attitudes and values of Gulf
Coast residents. I have participated in 37 Town Hall meetings
throughout the Gulf region. In addition, the GCCF has retained a
substantial number of local lawyers, claims administrators,
accountants, and other citizens of the Gulf region to help claimants by
staffing local claims offices. I do agree that there is a history and
culture unique to the Gulf; but the GCCF has undertaken major strides
to better understand the region and its citizens.
Q. 46: Can you describe your process for hiring and training auditors
at GCCF locations? What are the minimum criteria required to
perform that job? With how many outside auditing firms has the
GCCF contracted, and where are they located?
A. 46: The GCCF has staffed local claims offices with claims
adjusters who assist with the receipt and initial review of submitted
claims. We have subcontracted with the Worley Company--a respected
claims adjustment company in Louisiana to help with the claims intake
process. Individuals employed by Worley and PricewaterhouseCoopers,
have the necessary background and expertise to evaluate claims and
calculate damages.
Q. 47: What is the process for adopting a methodology to calculate
losses in the seafood industry? How is the process initiated
and by whom?
A. 47: The GCCF only adopts a methodology to calculate losses in
the seafood industry after it first hears from claimants in the Gulf,
evaluates and analyzes all available seafood data and statistics, hires
experts from a variety of related fields--biology, marine,
environmental and economic--and thereafter develops methodologies
designed with eligibility and minimal proof requirements in mind. I am
responsible for initiating the process and overseeing the formulation
of all methodologies. It is a detailed, carefully crafted process,
designed to result in credible, convincing methodologies which are more
generous than existing law when it comes to eligibility, amount of
compensation and minimal proof requirements.
Q. 48: Are specific goals set with quantifiable metrics? For example,
are methodologies evaluated on the basis of their anticipated
ability to support the industry, are they evaluated on the
basis of their anticipated ability to settle claims, or are
they evaluated on the basis of their anticipated cost? If one
or more of these (and other metrics) are considered and
measured, how are they ranked in evaluating the methodology?
A. 48: The specific goals in developing our GCCF methodologies
include: maximizing compensation to all eligible claimants with minimal
(but necessary) proof requirements. The methodologies are specific to
each individual claimant; they are not developed to subsidize a
particular industry, to promote aggregate settlement of claims or with
administrative costs in mind. All GCCF methodologies are individual
specific, aimed at compensating all eligible claimants based on their
own individual submissions and assumptions.
Q. 49: Who makes the final decision on a new methodology? Are
representatives of BP involved in the evaluation and decision-
making process?
A. 49: As the Administrator of the GCCF, I bear final
responsibility for approving any GCCF methodology. Both BP (as
signatory to the Trust Agreement establishing the GCCF) and the
Department of Justice monitor the development of these methodologies
and are invited to comment; but they have no authority over the
ultimate decision making process. I also welcome input from other
interested Gulf region associations--seafood associations, tourism
boards, real estate associations, etc.--in order to develop and
implement methodologies that are credible, generous and fair.
Q. 50: What research is conducted and by whom? Is research conducted
in the field? What are the qualifications of the individuals
conducting this research, including industry-specific prior
experience? Is input solicited from GCCF adjusters and
accountants in the field? What level of testing is conducted on
a methodology with actual claimant data before its adoption?
A. 50: Extensive research is done by experts retained by the GCCF
to determine appropriate methodologies. Research is conducted in the
field by interviewing and consulting with individuals and industry
representatives. GCCF experts also examine all available reports,
statistics, data and other information. The individual experts are
highly qualified. Input is also solicited by GCCF evaluators and
accountants in the field. The GCCF reaches out to actual claimants to
take into account their opinions concerning proposed methodologies.
Q. 51: When did the GCCF first become aware that the brown (spring)
shrimp season was problematic in the Gulf of Mexico? What were
the problems with the brown shrimp season?
A. 51: The GCCF continues to promote ongoing discussions with
individuals and businesses involved in the shrimping industry. The
scarcity of brown shrimp, the perception that such shrimp are not
healthy to eat, and the impact of shrimp imports on the domestic
shrimping industry are well known to the GCCF; representatives of the
shrimping industry have discussed these problems with the GCCF for the
past year.
Q. 52: When did the GCCF first become aware that the white shrimp
season was problematic in the Gulf of Mexico? What were the
problems with the white shrimp season?
A. 52: See my answer to question 42 above. The same answer pertains
to the white shrimp season.
Q. 53: When did the GCCF begin formulating a new methodology to
compensate the shrimping industry for anticipated future
losses? How long is it anticipated that it will take to
formulate, test and implement a new methodology to compensate
the shrimping industry for anticipated future losses?
A. 53: The GCCF began formulating a shrimp methodology immediately
following the end of the Emergency Payment program in November of 2010.
The 2X factor for future payments was designed at the time with the
shrimping industry in mind, based upon all of the expert information
received up to that point. We will announce a new methodology to
compensate the shrimping industry for anticipated future losses. A 4X
factor, rather than a 2X factor, will be used in compensating
commercial shrimpers and processors as well as commercial crabbers and
crab processors for damage through 2015 (the same as the oyster
industry). This new shrimp methodology is being in place.
Q. 54: When did the GCCF become aware that 2011 losses in the
shrimping industry may exceed those losses in 2010, thus
rendering the methodology for calculating anticipated future
losses ineffective and obsolete? How did the GCCF become aware
of this? What are the channels of communication, beginning in
the field offices and ending with Ken Feinberg, for this
information to be transmitted?
A. 54: The new shrimp methodology to be put in place concerns
itself not so much with 2011 damage versus 2010 damage, as much as the
problem of ``future risk,'' the concern that the shrimping industry may
not return to normal as originally hoped for at the end of 2013;
instead, based on all the expert input we have received, the risk is
sufficiently problematic so as to extend our ``futures factor'' from 2X
to 4X, or from 2013 to 2015. The GCCF has continuously monitored events
in the Gulf, engaging in ongoing discussions with shrimpers and other
industry representatives. This information has been communicated
directly to me as Administrator of the GCCF. The GCCF is responding to
these concerns with a new, more generous shrimp methodology.
Q. 55: Why was my claim denied for lost real estate value? I live in
Gulf Shores only 25 yards from the Gulf of Mexico. My back yard
is the beach that BP polluted. My properly values have been
permanently damaged from the spill. A purchaser of any of my
Gulf properties will discount them due to the fact that a huge
oil spill has happened in the past and will now more likely
happen again in the future. You have paid the County and City
for lost property tax revenues; does this not indicate that you
in fact agree that property values have declined?
A. 55: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. However, the GCCF will not pay claims
for lost property value in those cases in which the claimant continues
to maintain ownership of the property. The property is a valuable asset
which continues to be owned by the claimant. The GCCF will pay for
``sunk costs'' associated with maintenance of the property if such sunk
costs constitute damage related to the oil spill. In regard to claims
for County and City lost property tax revenues, those claims are not
under the authority of the GCCF but are handled separately by BP.
Q. 56: Why was my claim denied for damaged property? I had a renter
that walked outside of our beach house and got tar on their
feet and tracked it into the house. This happened before the
deep clean of the sand, and oil remained on the beach for a
very long time. If someone steps into a spill at the grocery
store and it causes them damage, the grocery store is required
to pay for that damage. Why is property damage directly
attributable to the oil spill not similarly treated by the
GCCF?
A. 56: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. But property damage directly
attributable to the oil spill is compensable and will be paid by the
GCCF. The GCCF has paid such claims.
Q. 57: Why was my claim denied for the cost of my fishing license and
the fish I catch to eat, as I was not able to use my fishing
license and I was not able to keep any fish to eat?
A. 57: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. However, subsistence claims involving
fishing are compensable by the GCCF. But the claim must be documented;
the claimant must demonstrate that, because of the closing of fishing
grounds due to the oil spill, the claimant was unable to fish and live
off the fish caught. Commercial fisherman and claimants who rely on
fishing to provide the minimum necessities of life and survival are
potentially eligible subsistence claimants. FAQ Nos. 108 through 111
posted on the GCCF website provides more information as to how the GCCF
handles subsistence claims.
Q. 58: I owned a restaurant in Mobile that specialized in seafood and
steaks. When the oil spill happened and seafood became sparse,
I made a claim through the GCCF. I chose to do month to month
claims, trying to be honest, not knowing what my business would
do from one month to the next. I followed all of the rules. As
the situation turned out, I should have just picked a figure
out of the air for a six-month loss. I made monthly claims with
actual losses compared to the previous two years income. My
April claim was paid in full, which was a pleasant surprise.
This is when the bottom fell out. I had three months of claims that
they considered all at once and the figure GCCF paid was
nowhere near what I claimed: it was about $34,000.00 short. I
called asking for an explanation as to how they came up with
the figure and no one could explain it to me. The following
month I submitted my claim, and that payment was about
$21,000.00 short, and again, no one could explain how they
arrived at the figure they paid me. Then the last claim I
submitted was denied completely, which of course no one could
explain. I have now closed my restaurant, because I could not
overcome the losses I suffered. I was so disgusted with the
whole process that I settled for the final claim, just to be
done with them, which I now regret deeply. Mr. Feinberg has
stated that people accepted the final settlement because they
couldn't prove their losses any further. That statement
couldn't be further from the truth. I understand there will be
an independent audit of the GCCF. My question is whether we
have any recourse on these situations? I am curious: what, if
any, recourse I might have after an audit examines the GCCF and
determines there were significant shortcomings in their
processing of claims. I am still deeply in debt to vendors,
etc., and have lost my business.
A. 58: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. Any claimant dissatisfied with his or
her offer from the GCCF may seek an independent review of GCCF
determinations by the United States Coast Guard or may submit a claim
in court. I would note that such review by the Coast Guard has been
sought by over 1,650 claimants during the past fifteen months; in every
single instance, the United States Coast Guard--after conducting an
independent review of GCCF determinations--has ultimately agreed with
the GCCF.
Q. 59: My deckhand invested $89 into making his living on my charter
boat and makes between $35k to $45k a year. All he has invested is a
pair of flip flops and a fillet knife. He was offered $25,000 to settle
because the GCCF considered him a business and he itemized his taxes.
My deckhand has no risk in this business. I have $220,000 invested
along with monthly expenses in a Hatteras boat along with 9 years of
blood, sweat and labor and I was offered the same $25,000 to settle.
This is fundamentally wrong, as I have assumed all the investment and
all of the risks involved. Why all businesses are categorized this way?
Why is there no formula for settlement based on who assumes the risks
associated with the business?
Unlike the oyster men that operate in 6 to 8 feet of water, who can
quickly see the damage to a bed of oysters, we offshore fishermen
operate in waters that are up to 6,000 feet deep, and there is
significant uncertainty for our future. What recourse do we have if the
fish stocks collapse in the next 4 or 5 years, long after the GCCF and
BP have pulled up their stakes and left? Should charter and commercial
fishermen be offered a settlement that takes into consideration the
uncertainty of the long-term health of the fishery?
A. 59: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. However, in deciding whether a claim
is submitted by an ``individual'' or a ``business'' the GCCF looks to
the tax returns of the claimant and categorizes claims based upon such
prior classification. In other words, the GCCF relies upon the
claimants own decision as to how his/her livelihood should be
classified. ``Risks'' associated with the business are factored into
our damage calculations. Finally, no claimant is required to accept a
Final Payment designed to make a ``reasonable'' estimate of how long it
will take for the Gulf to return to normal; over 33,700 individuals and
businesses have preferred an Interim Payment so they can continue to
return to the GCCF for additional compensation until the claimant is
more comfortable with predicting the future. By agreement, the GCCF
remains in place to process claims until August 2013; thereafter,
charter and commercial fisherman, as well as other claimants, can
litigate in court if they believe they have a valid claim and have not
accepted a Final Payment from the GCCF.
Q. 60: In my Full Review Final Claim documentation, I identified clear
discrepancies with the amounts that were calculated by someone
at the GCCF. Considering the Calculation Methodology
explanations of the amounts offered by GCCF are provided in an
approximately one inch by four inch area, it is clear why many
wonder where the numbers are coming from. The yearly
methodology area is slightly wider in size but still lacks the
detail expected in this process. Furthermore, the LOI
percentage is explained nowhere in the documentation. For
businesses that have expenses whether they operate or not, LOI
percentage is not cut and dry. Where are the spreadsheets and
numbers similar to what we were asked to provide? I have
provided numerous spreadsheets, tax forms, and other requested
documentation for my claim and still nothing.
Being one of the few that has not excessively hounded the GCCF with
questions, I feel that as I am trying to find a final
resolution with this matter, it is time to demand a more
expeditious response. It has been a year and a half since the
Deepwater Horizon incident, and claims still are taking an
excessive amount of time to process. Representatives in your
call center give vague and scripted answers. This is not
progress, this is a shame.
A. 60: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. The GCCF maintains files on each
claimant who submits a claim. Accountant spreadsheets and work product
are part of the file maintained by the GCCF. I urge this claimant to
contact me personally to discuss the merits of the claim.
Q. 61: In early June 2011, I submitted a final claim providing or
having already provided all documents we were requested to provide
along with our analysis of the data and the amount of the claim. After
three months I started to query GCCF about the status of the claim. I
was told that all claims should be processed within 90 days. But all
they could tell me is that it ``was being processed.'' They told me
nothing in addition to what I could find for myself on the GCCF
website. They could provide no estimate of when your processing would
be finished.
I continued to query GCCF over the next month and still was
provided no case status update. After my claim submission surpassed 4
months, I finally called Feinberg's ``office'' at 1-800-916-4893 and
still was provided no information on the claim. This may have triggered
something as some time later I was contacted by ``Will'' at the GCCF
who said he was processing the claim. At that time he came up with a
new list of documents required (more than 4 months after the initial
claim submission) including P&L's that were previously provided. One
item he requested was tax returns for 2010. Your website says that tax
returns for 2010 are required only for ``claimants seeking compensation
for lost earnings for any period after June 30, 2011.'' I informed
``Will'' that we were not making a claim for 2011 and asked ``Will''
where on the GCCF website was this required. He would only say that he
needed the additional information to process the claim. Are your claims
adjusters fully aware of the published protocols you have established
for reviewing claims? Why is additional information requested four
months after the initial submission? Why is information requested to be
resubmitted after it has already been submitted?
A. 61: Our claims evaluators are fully aware of all published
protocols and rules for reviewing claims. I cannot speak to the facts
of the individual claims submitted in this question without knowing
first the name of the claimants and the claim numbers. I can only
surmise that additional information was requested four months after the
initial submission in connection with new information brought to the
attention of the GCCF by the claimant. Information need not be
resubmitted if it has already been submitted to the GCCF.
Q. 62: Are your claims offices understaffed? If not, why are claims
determinations taking in excess of six months in many cases?
Why does documentation previously supplied go missing and need
to be resubmitted? How many offices have you closed in the last
four months? How many of your offices now operate only during
limited hours? Why does the GCCF office in Key West, Florida,
remain open while offices in Bayou La Batre, Dauphin Island and
Foley are now closed and the offices in Mobile and Orange Beach
set to close on November 15th?
A. 62: GCCF claims offices are not understaffed. In fact, because
of the diminishing number of claims being submitted in recent months to
the GCCF, I have concluded that it is now appropriate to close certain
claims offices in the Gulf or reduce certain hours of operation. Claims
determinations may take ``in excess of six months'' if claims are
initially deemed deficient or ineligible, and additional documentation
is requested from the claimant. In such cases, delay is attributable to
the claimants' inability to submit such additional documentation in a
timely manner. Documentation that is submitted does not ``go missing''
and does not ``need to be resubmitted.'' The GCCF operates six full
time offices and 9 offices that are open once a week and by
appointment. There is no claims office open today in Key West, Florida.
The other offices referenced in this question have been closed or are
subject to reduced hours because of diminishing claims volume.
Q. 63: The downsizing and closing of several regional offices is a
major concern. Many of these offices support claimants that
have limited resources and are still incurring documented
losses. To be forced to travel additional distance only further
exacerbates their already dire situation. Please respond.
A. 63: The downsizing and closing of several regional claims
offices is due to just one fact--diminishing claims volume. Over 77% of
all claims filed (excluding quick pay claims which must be submitted in
paper format) have been filed electronically through the GCCF website.
Only a handful of new claims are now being filed as a result of
claimants making ``live visits'' to certain local claims offices.
Claims traffic simply cannot justify maintaining these offices on a
full-time basis. There are a total of 15 claim site offices that remain
open (6 with full time hours Monday through Friday and 9 open once
weekly and by appointment).
Q. 64: Why are the best personnel (licensed insurance adjusters) who
work in the regional offices, many of whom have ``draft
authority'' granted by various insurance carriers, not allowed
to process the claims? Does the GCCF adequately utilize the
expertise of licensed insurance adjusters in it claims review
process?
A. 64: I made a considered judgment at the outset of the GCCF
claims process that local GCCF personnel residing in the claims offices
not be afforded authority to process claims i.e., determine eligibility
and the calculation of damages. In a program as vast as the GCCF--with
over 1 million claims received to date--it would be a huge error for
local personnel to be afforded check cutting authority. This would
inevitably result in inconsistencies and disparate treatment of similar
claimants. Nothing can undercut the credibility of the GCCF more than
inconsistency and allegations of bias and unfairness. Accordingly, only
a centralized system and authority, receiving claims from various
claims office and deciding them on a consistent basis, makes sense.
Fortunately, the GCCF has utilized the expertise of licensed insurance
adjusters in local claims offices in reviewing claims.
Q. 65: What are the responsibilities of the GCCF's Attorney-Liaisons?
What qualifications were evaluated in choosing the GCCF's
Attorney-Liaisons? What were the results of those evaluations?
Why was a State Director appointed for the states of Alabama and
Mississippi, and not for Louisiana and Florida? What
qualifications were evaluated in choosing the State Director
for the states of Alabama and Mississippi? What were the
results of that evaluation? What are the qualifications of
State Director for the states of Alabama and Mississippi with
respect to his liaison responsibilities?
What metrics have been used to evaluate the performance of the
GCCF's Attorney Liaisons and the State Director for the states
of Alabama and Mississippi with respect to their liaison
responsibilities?
From whom has input been sought with respect to the efficacy of the
GCCF's Attorney Liaisons and the State Director for the states
of Alabama and Mississippi? What are the results of those
performance evaluations?
A. 65: The GCCF's attorney-liaisons provide local, face-to-face
assistance to all claimants requesting a ``live meeting'' with GCCF
personnel. These local liaisons are residents of Gulf region
communities and deal with issues raised by claimants e.g. eligibility,
calculation of damages, status of a claim submitted to the GCCF, etc.
The liaisons also work with local elected officials in responding to
various issues posed by such officials. I chose the liaisons based on
their familiarity with local residents and their understanding of how
local claimants will respond to the GCCF. I received recommendations
from various individuals, local trade organizations and elected
officials concerning who might act as local liaisons. From these
recommendations, I chose the local liaisons. These local liaisons have
the same responsibilities, and were evaluated in the same manner, in
Alabama, Mississippi, Louisiana and Florida. They have been assigned to
each state. Their performance is evaluated by senior GCCF personnel on
a regular basis, based upon their credibility and work in assisting
local claimants.
Q. 66: Does the GCCF solicit direct input from GCCF evaluators, or do
you rely on determination from upper level managers who have
not worked a claim during the entire process?
A. 66: The GCCF solicits direct input from GCCF evaluators in the
field, as well as input from upper level managers.
Q. 67: Who is Camille Biros and what is her role in the GCCF
hierarchy? Please provide her curriculum vitae for the record.
What are her qualifications to review and issue determinations
on claims? Does the GCCF process require her signature on all
claims before they are approved? Does it require her approval
on claims above a certain threshold? If so, what is that
amount? What happens to claims pending her review if she is on
vacation or otherwise indisposed? Since August 24, 2010, how
many times has she been to the Gulf Coast to meet with
claimants, or otherwise? Has she been anywhere on the Gulf
Coast outside of New Orleans? If so, where and when?
A. 67: Ms. Camille Biros is a member of the senior team at Feinberg
Rozen. She has worked with me since 1979 assisting me in the design
administration and implementation of claims review programs including
the: September 11th Victim Compensation Fund, November 2001 through
June 2004 and the Katrina Gulf Coast ADR Program, December 2005--
Present.
The GCCF process does not require her signature or any other
individual's signature on claims before they are approved. Depending
upon the complexity of the claim--including the amount--I, along with
various other senior staff working for the GCCF, may review individual
claims. The claims process does not depend on the day-to-day
availability of anyone at my law firm.
Q. 68: How do you respond to frustration expressed by many in
statements like the following, ``I wish this was like the old
BP days, when we could come into the office and sit down and
get a check or even straight answers?''
A. 68: I recognize such frustration. Claimants from the Gulf Coast
region are innocent victims of an unprecedented environmental tragedy.
So their frustration is understandable. But the GCCF has worked more
efficiently, effectively and fairly than the former BP claims process.
About $6 billion has been distributed to about 250,000 individuals in
less than 18 months.
Q. 69: Why does the GCCF send claimants generic deficiency letters
absent specifics regarding what additional information is
required?
A. 69: The GCCF does not ``send claimants' generic deficiency
letters...'' Instead, the GCCF sends correspondence to individual
claimants which include specific information regarding the reasons for
the deficiency determination and the specific documentation required to
cure the deficiency.
Q. 70: I am a charter fisherman and presented complete tax returns,
general ledger, bank statements, all required licenses,
appointment logs and clearly showed the cancellations in 2010,
the receipt of Vessels of Opportunity (VOO) income and a
personal loan to support my charter fishing business. I had
zero charter income in 2010 but was calculated improperly as
having no loss, as VOO income and personal loans are to be
excluded from business income. Eventually, I had to sell my
boat. I have requested a re-review of my claim and, to date,
have not received any payment at all. Do you think I have been
fairly treated by the GCCF, Mr. Feinberg?
A. 70: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. If what is stated in this question is
true and verifiable, the claimant has not been ``fairly treated.'' But
I would need to authorize a review of the file before agreeing with the
claimant.
Q. 71: Given the events since the BP Oil Spill on 20 April 2010, and
putting yourself in my position throughout the following events
since the Oil Spill, what would you do in my current position,
and what would you say to someone like yourself who repeatedly
says that the GCCF claims process has been successful?
I will summarize the events over the past 18 months considering
that I have provided hundreds of pages of detailed documentation
regarding these events to the GCCF, U.S. Congressman Jo Bonner, U.S.
Senator Jeff Sessions, U.S. Associate Attorney General Perrelli,
Alabama Attorney General Luther Strange and other interested parties.
Again, please put yourself in my shoes.
In late 2007 you commenced business planning for a unique
construction company. The niche will be in building homes aimed at the
high end market for second and third vacation homes and affluent
retirees.
You commence business operations in March 2008 with yourself and 2
independent contractors. Considering the state of the economy and the
housing market in general, you decide to keep all business operations
as safe and simple as possible. You fund the start-up costs by taking a
private mortgage on your personal property, which is used to tool up
with the specialty tools and equipment required specific to the unique
construction. You choose to operate on a strict time plus expense
basis, billed weekly, collected weekly, and the employees paid weekly.
You decide that most of the future business expansion will have to
be funded from cash flows of the business, an essential requirement
following the financial meltdown and lack of funding availability. You
consciously decide that you will market your business through word of
mouth and referral. The unique building methodology of your projects
generates a lot of buzz about your company, with sales leads generated
from your ongoing projects.
Throughout 2008 you work on the business processes and procedures.
You refine your workforce and end 2008 with 3 independent contractors.
The business continues to grow substantially throughout 2009, and from
April 2009 through November 2009, you increase your workforce from 3 to
13 men. You are one of the few construction companies in the area
actually increasing their workforce and growing their business. 2009
gross revenues for the business grow by 185.9% compared to 2008 gross
revenues. You have invested in equipment, equipment trailers,
construction site trailers, tools and equipment required to support the
work load and keep 13 men productive.
Your most challenging problem is the logistics of having enough
trained men in the unique construction techniques and tools and
equipment to keep growing the business. As your project numbers
increase, so does your marketing exposure. You have to schedule the
project starts and manage your resources (men and equipment)
accordingly. In February 2010, you increase your workforce from 13 to
15 men in preparation for scheduled project starts commencing in May
2010.
By April 2010 the business has grown considerably:
1. From 3 to 15 men during the recession and housing crash.
2. Your Jan-April 2010 revenues grew by 262.79% from the same
period in 2009.
3. You went from no equipment or tools in 2008 to 6 trailers,
a fork lift, tractor, generators, saws and many required high
end specialty tools.
4. You are finishing a $875,000 custom home and scheduled to
start a $735,000 home on May 4, 2010, with three more custom
homes scheduled to start throughout the summer of 2010.
5. Your core leadership is fully trained and ready to lead and
supervise projects, along with men interviewed and ready for
hire.
6. All of your projects have been earned by referrals
generated from prior projects and with new projects starting
during the summer to provide the marketing tools for the
upcoming 2011 year.
7. Your clients have been from outside the Gulf Coast (states
such as California, Hawaii, Washington, and New York) and
discovered you during their summer vacation to the area in 2008
and 2009. They chose to build a home on the Gulf Coast for the
high quality of life and abundant natural resources along the
Gulf of Mexico.
Then on 20 April 2010, the Deepwater Horizon exploded. Your world,
business and market changed overnight.
The project scheduled to start on May 4, 2010, was delayed and then
cancelled outright by the client, causing a 100% loss of 8 to 10 months
work for you and your men. You're forced to immediately let 12 men go
with the intention of bringing them back on when the next project was
scheduled to start in June 2010. Sadly, by the end of May 2010, this
project is also cancelled by the clients due to the oil spill in the
Gulf of Mexico. By the end of June 2010 the remaining 2 custom home
projects have also been cancelled citing the oil spill as the one and
only reason.
In early July 2010, you are down to 2 men working ``at cost''
finishing an existing custom home project, and as a result of the
catastrophic loss of work, income and financial stability, you are
unable to obtain the required performance bonding for a large project
and forced to pull your otherwise winning bid from consideration. With
this blow, you take the advice of your county commissioner and submit a
claim with BP claims for lost profit suffered as a result of the
Deepwater Horizon Incident.
As a result of the BP oil spill your business has lost over a
year's worth of scheduled work. Each cancelled project also included a
loss of 4 to 6 months worth of planning, engineering and sales time
leading up to the project start date. The four projects combined
totaled an estimated value of $2 million, plus the loss of the panel
job at $1.1 million by itself.
Your claim for lost profits sits with BP claims until the GCCF
takes over the claims process on August 24, 2010. In addition to your
business claim, you are aware that 13 of your 15 former employees have
also submitted claims to either BP Claims or the GCCF.
On August 24, 2010, one of my men is approved and issued a check
from the GCCF for his 6 month Advance Emergency Payment, representing
54.72% of his requested $31,800. He earned $30.00 per hour from the
company, or $62,400 per year working 40 hours per week. On September
13, 2010, he receives a second check from the GCCF bringing his total
compensation up to 82% of his 6 month request. The GCCF states with
this check that the GCCF was making adjustments to compensation to more
accurately reflect his projected losses.
On September 21, 2010, the GCCF denies your Business Claim for Lost
Profits, telling U.S. Congressman Jo Bonner's Office, ``The claim was
ineligible because claimant is a building contractor.''
Congressman Bonner asks the GCCF what that has to do with anything
and why the employees claim was eligible but the employer's was not.
Then-Governor Riley asks the GCCF the same thing, and the Press
Register runs a front page article on September 25, 2010, asking the
same question.
On September 27, 2010, the GCCF reevaluates and approves your
business claim and issues you a check for 100% of the requested 6 month
advance emergency payment of $157,100. You were advised by a GCCF
Claims adjuster to only include lost profit from labor on projects that
had a start date between May 2010 and the time of submittal to the GCCF
on August 2010, and you are told that you will file for all actual
losses at a later date. During the next few weeks the GCCF reevaluates
and approves your remaining men's claims, some of which had previously
been denied by the GCCF for the same reason as yours.
At the end of September 2010, you are required to let your last 2
men go due to lack of work. You are unable to convince your clients to
reconsider their projects. You have also lost the entire summer tourist
sales opportunity as a result of the oil spill. The niche market is
gone. You are unable to convince prospective clients to take the risk
and build. You continue reaching out to every contact you have, such as
architects, designers, builders, inspectors, manufacturers, realtors
and others to no avail. Everyone is going to wait until they feel
confident in the condition of the Gulf of Mexico. If they cannot feel
comfortable about the waters, they refuse to risk their money on a
project.
On January 20, 2011, you submit your Interim Payment Claim request
in full, with all substantiating documentation to the GCCF for losses
suffered as a result of the oil spill from May 2010 to December 2010.
On January 29, 2011, the GCCF acknowledges receipt with a generic
letter stating in part, ``If you have not already done so, you must
submit documents reflecting your gross earnings as an individual
claimant or your total revenues and expenses as a business claimant
from 1 May 2010, through 31 December 2010, or documents proving that
you did not receive income or earn revenue for any part of that
period.'' You verified with the GCCF that you had provided all the
required and requested documentation after receipt of the letter and
confirmed that the exact same letter was sent to ALL claimants who
submitted an Interim or Full Review Claim with the GCCF. You are told
you lack nothing and that you have provided more than enough
documentation.
It has been almost 9 months since the first cancelled project when
you had to let 12 men go. You had been out of work for 5 months prior
to receiving the Advanced Emergency Payment. You still have no work
and, worse yet, no prospects or current projects to use as sales tools
for the upcoming visitor season. You are optimistic that with a timely
and adequate Interim Payment, and IF the visitors come back for the
summer season, you may have a chance at constructing an alternate sales
tool such as a small model home in time for the tourist season in order
to have a project under construction in the market in order to restart
the business. Then you wait for the 90 day review period.
Towards the end of February 2011, you start receiving frantic calls
from your former men saying they received letters of no loss from the
GCCF with final offers for the Quick Payment amount of $5,000. Your
attempts to contact the GCCF and assist the men are fruitless until you
request the assistance of your federal representatives and after a
front page article in the Press Register.
You spend the next 7 months meeting with the GCCF and your former
employees attempting to help them through the Claims Process. The GCCF
uses sneaky and underhanded accounting practices to minimize the
compensation to the men such as using their 1099 amounts from their
partial 2009 annual earnings as the projected 2010 annual earnings
amount. You hired 10 men during 2009. These 10 men had been out of work
prior to being hired by you between April and November 2009. In most of
the men's cases, their 1099s reflected less than half of a full year's
earnings. You had provided all of the men with income statements
detailed to the week as earnings history. The GCCF chose to ignore the
income statements for the Interim and Full Review calculations. Then
the GCCF applied an adopted ``Seasonality'' rule to apportion the men's
``projected'' earnings for the post oil spill period from May 2010
through December 2010, with the full knowledge that the men were not
seasonal tourist workers who earned their money during the summer
months at the beach, but instead, were 40 hour per week construction
workers.
The GCCF would also take the actual earnings of the men from 2010
and apply the ``Seasonality'' rules to apportion the actual earnings to
May through December 2010, regardless of the fact that the GCCF knew
when the men earned the revenues according to the provided Income
Statement. The GCCF Seasonality Rules apportion 80.43% of the annual
earnings to the loss period May through December and 19.57% to January
through April. Reality and accuracy are irrelevant to the GCCF
``experts.'' The GCCF decided that everyone's earnings are based on the
``Seasonality'' rules that they conjured from thin air.
As an example: One of your men earned $30.00 per hour worked with
an average of 40 hours or more per week. From January--April 2010, he
earned $15,511 from the company according to his income statement. He
earned $18,298.50 for the entire year of 2010, pre and post oil spill
periods. The GCCF ``experts'' applied the seasonality rules to his
actual total 2010 earnings reflected on his 2010 1099 statement of
$18,298.50, and apportioned 80.43% of the total annual amount to the
period from May-December 2010, or $14,717.48, and declared that he
earned this amount post oil spill, and then the GCCF deducted this
fictitious amount from their projected post oil spill earnings. The
GCCF experts were fully aware that he ``actually'' earned only
$2,787.50 from May--December 2010, a difference of $11,929.98. With
``convenient accounting'' trickery such as this the GCCF was trimming
claimant's compensation from the top (projected earnings) and from the
bottom (actual earnings). And the GCCF experts are very, very good at
covering up the tricky accounting so that most people know they are
being scammed but cannot identify exactly how they are being scammed.
You continue trying to get the GCCF to correct their mistakes, but
before the first meetings can be arranged, three of your men sign the
release not to sue and accept the Quick Payment amount. They simply
could not wait any longer; they had been out of work for over 9 months;
they were losing their cars and homes and had to make the decision in
order to feed their family now, not later. Five of the remaining men
who called for assistance fought as long as they could but eventually
settled for the re-review offer for the Business Quick Payment amount
of $25,000. The men were all independent contractors and as such should
have been classified as businesses from the start but were not. The
GCCF refuses to re-re-review the men's claims.
The GCCF says it does not matter if the GCCF made mistakes: they
will not perform another review simply because their policy is to only
re-review once. The GCCF tells the men that they can submit another
quarterly Interim Claim if they are not ``satisfied'' with the current
final offer and wait another 90 plus days for a new determination or
they can file a suit in court. Take it or leave it. Unlike the lawyers
at the GCCF, they did not have ANY current income--BP had taken that
away, as well as all of their savings. They had to decide right now how
they were going to feed their family this month, and the GCCF was fully
aware of the plight that had resulted as a result of the oil spill.
That knowledge was only used as a tool to leverage my men's decisions.
They decided to feed their families by accepting the inadequate offer
from the GCCF and not because they felt justly compensated for damages
suffered as a result of the oil spill.
On April 4, 2011, you submit your first quarter 2011 Interim
Payment Claim Request in full and completely documented to the GCCF.
You are still waiting for the GCCF to process your 2010 Interim Claim
submitted on 20 Jan 2011, and you are told by the GCCF that ``larger
claims take longer because there are fewer adjusters qualified to
review them.'' So you wait.
As the 90 day window elapses, your first claim is still under
review. You have verified weekly through your GCCF liaison that your
claim is complete and not deficient in any documentation and that the
GCCF does not need any further documentation. You are unable to get any
further answers from the GCCF. U.S. Senator Jeff Sessions' office
performs a congressional inquiry into the status of your claim with the
GCCF. The GCCF responds with false information stating that the GCCF
had sent you a Deficiency Notice on January 29, 2011, when they had
not. The ``Deficiency Letter'' referred to is in fact the generic
letter sent to all claimants who submitted an Interim or Final Review
Payment Claim. You immediately have a meeting with your GCCF liaison
who confirms that the letter reference is in fact the same generic
letter sent to all claimants and that you have never been issued a
Deficiency Letter or been deficient in documentation. So you wait.
In early June 2011, a reporter with the Press Register calls you
for an update on how your business is doing. He is surprised to learn
that you are still waiting for your first Determination to be issued by
the GCCF after almost 6 months under review. The reporter inquires with
Mr. Feinberg who tells him ``off the record'' that the GCCF had sent
you a Deficiency Letter. And that you had responded to the letter by
submitting a new Claim on April 4, 2011, thus concluding that the GCCF
had ``responded'' to your claim within the 90 day time frame and that
the real cause for the delay was, in fact, yours.
You immediately act to correct the false information with the
reporter, the GCCF and the representatives who are working on your
claim (Senator Sessions, Congressman Bonner and the Alabama Attorney
General). The GCCF responds to Senator Sessions' inquiry by saying that
your claim has now been assigned to a specific Accountant Review Team
and that when it was pulled for Evaluation, it would be evaluated in
its entirety with both claims being processed.
On June 28, 2011, the GCCF issues a Determination Letter on your
2010 Interim Claim. The methodology chosen by the GCCF to calculate
your projected earnings from May--December 2010 is the average of your
business revenues from the pre-oil spill period from January--April
2010 and is using this amount as your projected revenues for each month
from May to December 2010 even though your business history of earnings
shows that January--April is the slowest time of the year for your
business and even though your growth from 2009 over the same period is
over 262%.
Not only does the GCCF low-ball the earnings projections, they
cancel your 2011 1st Quarter Interim Claim by saying that you did not
provide any Financial Documentation when you submitted the Claim, which
is also a lie.
You fight back and request a re-review. You meet with the GCCF
accountants on July 22, 2011. The accountants admit that they failed to
factor the steady growth of the business. They finish their
calculations and submit the claim to Mr. Feinberg's office on August 4,
2011, for final approval.
The claim sits in Mr. Feinberg's office until September 7, 2011,
after he has implemented new eligibility rules on August 16, 2011. The
GCCF revises the projections and chooses to use the business revenue
amount from December 2009 as the monthly earnings projection for your
business. They still fail to factor any growth rate from the business
history and determine that the business would have earned $62,000 per
month from May through December 2010, but none after that period,
determining your business had no losses as a result of the oil spill
from January 2011 forward.
You call foul, but the GCCF says they will not re-re-review the
claim, even though the mistakes and delays were 100% caused by them
because they had already re-reviewed the claim once already. They give
you the offer to take their final payment of $159,000, sue in court, or
appeal to the Coast Guard. Take it or leave it.
So, in my position, what would you do? Your business has been
destroyed by the oil spill and the unjustified delays imposed by the
GCCF. You are out of work; in fact you have now been out of work for
over a year. Your projects were cancelled over 16 months ago. And you
have borrowed from every friend and family member you can in order to
feed your family. Your home is entering foreclosure. Your truck has
been defaulted on. And you have less than two week's worth of groceries
in the house to feed your family with, much less the pay utility bills
and health insurance.
You want to keep fighting for what was taken from you, your
business, your family and you're men. But you have no other way to
provide for your family now. What would you do Mr. Feinberg?
I signed your release and accepted your criminal offer. Not because
I felt sufficiently compensated for my losses, but because I must
provide for my family's shelter, food and basic needs now. I fully
believe you intended to put me and many others in this position. I
accepted your offer. But I can assure you I will not stop the fight for
justice.
A. 71: I cannot speak to the facts of the individual claims
submitted in this question without knowing first the name of the
claimants and the claim numbers. However, if the claimant would
personally contact me in Washington, DC with the name of the claim and
the claim number I will review the claim. The claimant has gone to
great lengths in this question detailing his/her frustration with the
GCCF claims process. The claimant is entitled to a detailed personal
response from me as Administrator of the GCCF. Although the claim he
references has apparently been the subject of much public discussion in
the press, I need authorization from the claimant before I can publicly
respond to his inquiry. After I review the claim, I will be in a better
position to answer the claimant's inquiry: ``What would you do, Mr.
Feinberg?'' I disagree with the argument that the GCCF has made a
``criminal offer'' to the claimant and also disagree that the GCCF
tries to ``low-ball the earnings projections.'' Nor does the GCCF use
``sneaky and underhanded accounting practices to minimize the
compensation'' of claimants. Nevertheless, I am prepared to review the
claim giving rise to this question.
QUESTIONS SUBMITTED FOR THE RECORD BY REP. STEVE SCALISE (LA-01)
For the purposes of these questions, ``traffic'' refers to the
count of individuals utilizing a claims office that the GCCF considers
in determining whether or not an office should remain open full time,
part time, by appointment, or closed. Regarding GCCF claims offices:
Q. 72: Are there daily traffic reports submitted from each claims
office?
i. If so, please provide daily traffic reports for claims offices
in Louisiana, sorted by each office, for the past three (3)
months.
A. 72: Yes, there are daily traffic reports submitted from each
claims office. I attach these reports for claims offices in Louisiana
for the past three months. (See Attachment A)
Q. 73: What do these daily traffic reports contain?
A. 73: These daily traffic reports contain information pertaining
to the number of claimant visits.
Q. 74: What determines who GCCF considers as traffic for a claims
office?
A. 74: ``Traffic'' is defined as the number of claimants visiting
the GCCF Site offices. Daily statistics are kept for each office and
careful consideration was given to these numbers as well as
consideration of the proximity of alternative Site Offices. The GCCF
took steps to maintain office hours once each week and by appointment
at 9 Site Offices initially slated for closure.
Q. 75: What are the criteria for an individual to be considered
``traffic'' for an office? Example: are individuals who come
into the claims office who only file a new claim the only
reported traffic for that office?
i. Are individuals who are seeking clarification regarding GCCF
claims documents, letters, offers, etc., considered traffic?
ii. Are individuals who place a phone call to claims offices
considered traffic?
iii. Are individuals who come into a claims office but do not open a
new claim considered traffic?
iv. Are multiple individuals who come in together regarding one
claim considered ``one'' individual for traffic purposes?
A. 75: Individual criteria considered as ``traffic'' include claims
filings and the nature of the request.
i. The GCCF tracks visits by Claimants visiting the site
offices. Claimants are those individuals who either are
visiting the site to file a new claim or visiting the site to
``check the status of their claim.''
ii. No
iii. Individuals whose visit to the site is unrelated to the
filing of a claim or to checking the status of a claim are not
tracked
iv. Friends and relatives who accompany claimants are not
tracked
Q. 76: What are all of the criteria that GCCF uses to determine
appropriateness of an office's current operations status (open/
closed/part-time/by appointment/etc.) and what is taken into
consideration when a determination is made affecting the
operations status of an office?
A. 76: The two criteria used to determine the appropriateness of a
claim's office current operations status are: volume (the frequency of
claimant visits to a claims office for the purpose of filing a claim or
requesting information concerning the status of a claim); and
convenience (is there another claims office conveniently located to a
claims office that has been closed or downsized). There are a total of
15 GCCF Gulf area offices that are operational today--six are open 5
days a week and 9 are open once a week and by appointment.
Q. 77: Are there established thresholds of traffic that determine
whether or not an office's operations status?
i. If so, what are these thresholds?
A. 77: There are not fixed ``established thresholds of traffic''
that determine whether or not a claims office should remain open, be
downsized or closed. Again, this depends upon not only claims volume,
but also factors of convenience concerning the availability of other
claims offices in the vicinity.
Q. 78: Is there a central GCCF computer system/server?
i. If so does the GCCF monitor individual claims offices use of the
GCCF claims system? In other words, is the GCCF determining how
often the claims offices are utilizing claims offices'
computers/servers/etc?
A. 78: The GCCF reviews each region and considers location, volume
of traffic and availability and distances of alternative site offices
in making all decisions to close a site office. We have instituted a
once weekly and by appointment process for 9 of the offices that do not
now offer Monday-Friday daily hours
Q. 79: Is it the GCCF's goal to eliminate in-person visits to claims
offices in favor of an online process?
A. 79: No, it is not a goal of the GCCF ``to eliminate in-person
visits to claims offices in favor of an online process.'' The GCCF
welcomes both in-person visits and online filings. It does not prefer
one over the other.
Q. 80: Has the GCCF received complaints about the online claims
process?
i. If so, what is the GCCF doing to resolve these complaints?
A. 80: The GCCF has not received many complaints ``about the online
claims process,'' especially during the past nine months following the
Emergency Payment period. In fact, 77% of all claims have been received
electronically via the GCCF website. (This percentage excludes the
Quickpay Claim forms since those must be submitted in paper form.)
Complaints received by the GCCF basically relate to questions
concerning payment and the need for a direct GCCF contact
representative. During the Interim and Final phase of the GCCF program,
the GCCF has instituted a more direct line of communication by hiring
local liaisons and by providing each claimant with a specific name and
contact telephone number within each determination and deficiency
letter.
Q. 81: What is the total number of unsettled claims filed with each
Louisiana claims office, current or closed?
A. 81: The total number of unsettled claims filed with each
Louisiana claims office'' is as follows (Note: I interpret
``unsettled'' to mean claims that are currently being processed,
including claims deemed ``deficient''; claims that have been paid or
denied are assumed to be ``settled.''): As of January 18, 2012:
Total Interim/Final Claims filed from the State of Louisiana:
126,589
Total Interim/Final Claims Paid: 64,746
Total Claims requiring additional information: 11,457
Total Claims with ``0'' Loss: 3,319
Total Claims Denied: 43,969
Total Claims Not yet processed: 3,152
QUESTIONS SUBMITTED FOR THE RECORD BY REP. STEVEN PALAZZO (MS-04)
Q. 82: Some Mississippi charter boat operations and commercial
fisherman received up to 4 times their annual income as shown
on their taxes as an emergency payment during 2010 while others
was less than one years' annual income. What is being done
going forward to reconcile the difference for those receiving
the lesser payment
A. 82: If the GCCF has erred in providing compensation to eligible
claimants with documented losses due to the Oil Spill, we will correct
the error and provide supplemental compensation to the claimant. But,
it is usually unnecessary ``to reconcile the difference for those
[claimants] receiving the lesser payment''; this is because the
``difference'' is most likely attributable to varying degrees of
documentation and other forms of proof.
Q. 83: The LOI (Loss of Income) percentage for the majority of the
Mississippi charter operations is set at 35.05% while some
boats have received an LOI of up to 66.14%. Since all the
charter boats in Mississippi are nearly identical in their
operations; how can this be?
A. 83: The LOI may vary from claimant to claimant based upon the
individual documentation submitted by each claimant. The GCCF relies
upon the proof submitted by each claimant in determining the individual
LOI percentage.
Q. 84: Many Mississippi charter boat operations have attempted to
present documentation supporting an increased LOI percentage
but have been denied even though their numbers are very similar
to those of other vessels whose LOI has been increased. What is
the process used to calculate LOI, what defines fixed and
variable expenses, and how was this calculation derived?
A. 84: The process used to calculate LOI is as follows:
A claimant's LOI is routinely calculated based on pre-spill (e.g.,
2009) financial information provided by the claimant, such as tax
returns or Profit and Loss statements. Based on the expense description
and the analysis of the information provided by the claimant, the GCCF
determines whether the expense continued (typically fixed expenses such
as rent, insurance, salaries) or was discontinued (typically variable
expenses such as cost of goods sold, commissions, direct/hourly
payroll) during the loss period. LOI is calculated as the sum of the
claimant's Net Income and continuing expenses, expressed as a
percentage of historical gross revenues.
The LOI percentage calculates how much of the businesses' lost
revenue represents ``out-of-pocket'' loss to the claimant. For example,
if the sale of a widget is lost (thus never happened), the cost to the
business for the purchase or manufacture of that widget (i.e., cost of
goods sold) is never incurred. In this example, the cost of goods sold
would be considered discontinued or saved and excluded from the LOI
percentage. Conversely, the claimant continues to incur rent expense
whether it loses a widget sale or not, therefore this expense would be
considered continuing and included in the LOI percentage.
Q. 85: Given your belief that the GCCF has been successful, do you
think that the GCCF could do a better job than BP itself in
settling claims with government jurisdictions?
A. 85: I believe that the GCCF could be effective and efficient in
resolving claims submitted by government jurisdictions. I am not
prepared to opine on whether the GCCF could do better than BP in this
regard. But, in any event, the issue is moot; the GCCF simply has no
authority to process government claims.
Q. 86: American Shrimp Processors Association members of Mississippi
report that few, if any, have been reimbursed for 2011 losses
by your interim claims process. Can you give me an update for
complete handling of these interim claims?
A. 86: The GCCF continues to review claims for shrimp harvesters
and processors for 2010 and 2011 losses.
The amounts paid to Mississippi Shrimper Claimants to date are
shown below:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
QUESTIONS FOR THE RECORD FROM MISSISSIPPI ATORNEY GENERAL JIM HOOD
(and attachments)
STATE OF MISSISSIPPI
JIM HOOD
ATTORNEY GENERAL
October 31, 2011
The Honorable Doc Hastings, Chair
The Honorable Edward J. Markey, Ranking Member
Committee on Natural Resources
United State House of Representatives
United States Capitol
1324 and 1329 Longworth House Office Building
Washington, DC 20001
Dear Chairman Hastings, Ranking Member Markey and Members of the
Committee:
Pursuant to your request during the October 27, 2011, Hearing of
the Natural Resources Committee, I am submitting additional questions
to be directed to Kenneth Feinberg for your consideration and use. Of
particular concern to me is that Mr. Feinberg, acting on BP's behalf,
has established a claims process that fundamentally violates the
express provisions of the Oil Pollution Act of 1990 (``OPA''),
particularly as that Act was amended in 1996. In addition, by closing
offices and preventing claimants' access to in-person claims
assistance, Mr. Feinberg and BP are thwarting the ability of claimants
to satisfy the requirement to first file claims with the responsible
party (the OPA ``presentment requirement'').
OPA requires those that have suffered damages resulting from an oil
spill to first present their claims to the responsible party for
payment. The responsible party has ninety days to deny or pay the
claim. If the claim is not fully paid to the satisfaction of the
claimant within that time, the claimant is free to initiate litigation
or to file a claim with the Coast Guard's Oil Spill Liability Trust
Fund. Claimants cannot pursue claims in court or with the Coast Guard
without first satisfying this presentment requirement.
Not long after OPA's enactment in 1990, it became apparent that the
OPA-mandated claims process--with its emphasis on settlement without
litigation--could be mis-used to exploit the economic duress of oil
spill victims. Specifically, a responsible party could obtain releases
from legitimate liability, especially future damages, in exchange for
inadequate compensation. For this reason, Congress amended OPA in 1996.
The potential for abuse of the originally enacted OPA-mandated
claims process was exposed in 1996, after an oil spill from a tanker
off the coast of Rhode Island. In testimony before the Senate
Environment and Public Works Committee, Bob Smith, President of the
Rhode Island Lobstermen's Association, outlined a litany of abuses
employed in the claims process by the responsible party's guarantor.
The mistreatment of claimants included: demands for releases in
exchange for inadequate consideration; denials of legitimate claims
based on allegations of ``inadequate documentation;'' and refusal by
the responsible party or its agents to compensate claimants for the
costs of assessing damages. As a result of these abuses, Congress
amended OPA in 1996 to provide claimants with protections against the
potential for abuse by responsible parties through the claims process.
Perhaps more revealing in explaining the congressional intent and
effect of the 1996 OPA amendments is the testimony of the insurance
industry officials who opposed the amendments. The June 4, 1996,
testimony of Richard H. Hobbie, III, President, Water Quality Insurance
Syndicate, of the American Institute of Marine Underwriters, to the
United States Senate Committee on Environment and Public Works,
explained in vivid detail the basis for industry opposition to the 1996
amendments to OPA. Mr. Hobbie stated that the overhaul of OPA claims
provisions--particularly the requirement of interim, partial claim
payments under any OPA damage category and the prohibition against
final settlements--would make claims handling ``unwieldy,'' would make
``virtually every claims payment interim,'' and would prohibit insurers
from being able to settle claims and ``close the books on a spill.''
Despite these objections from the insurance industry, Congress
proceeded to shift the emphasis of OPA from settlement of claims to
full compensation of victims' damages for as long as those damages
continued to be incurred into the future.
Attached for your consideration are copies of the 1996 OPA
amendments, and the referenced contemporaneous testimony. I believe
this record demonstrates that the problems and complaints expressed by
claimants today can be directly traced to the abject failure of BP and
its agents, Mr. Feinberg and the Gulf Coast Claims Facility (``GCCF''),
to conform the claims process to OPA mandates, as amended in 1996. The
most damaging of these OPA violations is their disregard for the
prohibition against use of an overly broad release of future claims in
exchange for less than full compensation for losses incurred.
Although this ongoing infringement of existing law has been raised
by my Office, as well as other interested parties, in the BP oil spill
multidistrict litigation (``MDL'') pending in Louisiana federal
district court, no action has been taken by that court to date. As a
consequence, Mr. Feinberg has been permitted to continue to extract
releases of future damage claims from claimants in exchange for
payments from the GCCF which may be wholly inadequate to fully
compensate these individuals and businesses. Further, it is suspected
that interim claim payments are being denied, delayed, or offered at
less than true value, in an effort to compel financially desperate
claimants into giving BP and other responsible parties a release of
present and future damages to which they are entitled under OPA and
other applicable laws. However, Mr. Feinberg has refused to provide
access to the information needed to determine if this is in fact
occurring, including his failure to comply with a subpoena issued to
him by my Office under the Mississippi Consumer Protection Act.
In addition, Mr. Feinberg and BP are thwarting the ability of
claimants in the Gulf to file claims in person by systematically
closing claims offices. One of the three Mississippi claims offices has
been closed and a second one is scheduled to close before the end of
the year. Mr. Feinberg should not be permitted to unilaterally close
these offices when damages continue to be incurred and claims continue
to be filed. Early closure of these offices will impair the ability of
the most needy Gulf residents harmed by this spill from filing claims
to satisfy OPA's ``presentment'' requirement, and appears calculated to
limit BP's liability for damage claims in court. BP has already
repeatedly raised the alleged failure of litigants to satisfy the
presentment requirement as ground to dismiss many of the suits now
pending in the Louisiana MDL.
As the Committee noted last week, damages from the Deepwater
Horizon oil spill and its aftermath will continue to be felt for years
if not decades. The full measure of environmental and health effects
from this spill and the exposure to these toxins is unknown, and the
people of the Gulf should not have to gamble on their futures now by
waiving their right to compensation for prospective damages. The law
prohibits conditioning payments upon the release of future claims, and
this practice by the GCCF should be exposed and halted. It is
imperative that BP not be permitted to extinguish the legal rights of
those harmed by this spill through the use of the GCCF's unlawful
release.
Accordingly, the questions I would request the Committee submit to
Mr. Feinberg are:
1. Doesn't the requirement of a release of future claims in
exchange for payments from the GCCF violate the 1996 amendments
to OPA? And, if not, why not?
2. Why are GCCF claims offices being closed when claims
continue to be filed? Provide this Committee the data on how
many claims have been and are being filed daily, weekly, and
monthly at all claims offices--including those already closed.
Your continued attention and support to the people and businesses
of the Gulf Region are greatly appreciated. Further, your assistance in
exposing and curing the violations of existing federal law by the GCCF
claims process would aid the recovery of this region tremendously. Only
by making the claims process fairer, faster, more transparent, and in
full compliance with OPA can the Gulf Region and its people fully
recover from this man-made disaster. Please contact me if I can provide
any additional information to the Committee on this matter.
Sincerely yours,
Jim Hood
Attorney General
______
The 1996 amendments to OPA, provide in relevant part as follows:
TITLE II--IMPROVEMENT OF RESPONSES TO OIL SPILLS
SEC. 201. ACCESS TO TIMELY SHORT-TERM FINANCIAL ASSISTANCE FOR PERSONS
INJURED BY OIL SPILLS.
(a) DAMAGES FOR LOSS OF PROFITS OR IMPAIRMENT OF EARNING
CAPACITY.--Section 1002(b)(2)(E) of the Oil Pollution Act of 1990 (33
U.S.C. 2702(b)(2)(E)) is amended by striking the period at the end and
inserting the following: ``, in part or in full. Payment or settlement
of a claim for interim, short-term damages representing less than the
full amount of damages to which the claimant ultimately may be entitled
under this subparagraph shall not preclude recovery by the claimant for
damages not reflected in the paid or settled partial claim.''.
(b) CLAIMS PROCEDURE.--Section 1013(d) of the Oil Pollution Act of
1990 (33 U.S.C. 2713(d)) is amended by inserting after ``unavailable''
the following: ``including a claim for interim, short-term damages
representing less than the full amount of damages to which the claimant
ultimately may be entitled,''.
(c) ADVERTISEMENT.--Section 1014(b) of the Oil Pollution Act of
1990 (33 U.S.C. 2714(b)) is amended--
(1) by striking ``If a responsible party'' and inserting the
following:
``(1) IN GENERAL.--If a responsible party''; and
(2) by adding at the end the following:
``(2) CLAIM FOR INTERIM DAMAGES.--An advertisement under
paragraph (1) shall state that a claimant may present a claim for
interim, short-term damages representing less than the full amount of
damages to which the claimant ultimately may be entitled and payment of
such a claim shall not preclude recovery for damages not reflected in
the paid or settled partial claim.''.
(d) SUBROGATION.--Section 1015(a) of the Oil Pollution Act of 1990
(33 U.S.C. 2715(a)) is amended--
(1) by redesignating subsection (b) as subsection 6(c); and
(2) by inserting after subsection (a) the following:
``(b) INTERIM DAMAGES.--
``(1) IN GENERAL.--If a responsible party, a
guarantor, or the Fund has made payment to a claimant
for interim, short-term damages representing less than
the full amount of damages to which the claimant
ultimately may be entitled, subrogation under
subsection (a) shall apply only with respect to the
portion of the claim reflected in the paid interim
claim.
``(2) FINAL DAMAGES.--Payment of such a claim shall
not foreclose claimant's right to recovery of all
damages to which a claimant otherwise is entitled under
this title or any other law.''.
______
ProQuest Congressional
Copyright 1996 Federal Information Systems Corporation Federal News
Service
MARCH 27, 1996, WEDNESDAY
SECTION: IN THE NEWS
LENGTH: 5623 words
HEADLINE: PREPARED TESTIMONY OF BOB SMITH,PRESIDENT,RILA BEFORE THE
SENATE ENVIRONMENT AND PUBLIC WORKS COMMITTEE RE: THE RHODE ISLAND OIL
SPILL AND IMPLEMENTATION OF THE OPA 90
BODY:
Mr. Chairman and Members of the Committee: Good morning. The Rhode
Island Lobstermen's Association thanks you conducting this hearing,
inviting us to testify, and for demonstrating your concern over how
small businesses and individuals are faring after the devastating oil
spill off Point Judith, Rhode Island, on January 19, 1996.Today's
testimony is presented by Bob Smith, who has been a lobsterman in and
around Point Judith for 49years and is privileged to be President of
the Rhode Island Lobstermen's Association(RILA), and by Barry M.
Hartman, with the law firm of Kirkpatrick & Lockhart in Washington, and
Counsel to RILA. Our association and over 100 businesses damaged by the
spill have retained Mr. Hartman and his firm to make sure that our
rights are protected and that we are properly compensated for our
losses. Mr. Hartman served as Acting Assistant Attorney General for the
Environment and Natural Resources Division at the United States
Department of Justice during the Bush Administration, and is
experienced in the legal consequences of oil spills, having prosecuted
the Exxon Valdez case, and having participated in enforcement efforts
in a number of other spills. He also was the Justice Department's
representative in connection with the development of the Oil Pollution
Act, which President Bush signed in 1990.Senator Chafee, you in
particular have been quite helpful to us. and we know the personal
anguish you must be going through after this spill, which occurred not
only in our places of business, but in both of our back yards. For
years you have been a champion for the environment. We know how
important this issue is to you. You have spent a great deal of time at
the site of the spill and we just want to take this opportunity to
personally thank you for your countless hours of attention to this
tragic and important issue. You certainly have been a good friend to
Rhode Island's fishermen. And now, in your position as Chairman of the
Committee on Environment and Public Works, we are confident you will
again take the lead in breaking through the bureaucracy of the Federal
Government to see that Rhode Island's fishermen are compensated for
their losses as guaranteed under the law. RILA believes that it is both
necessary and appropriate that the Committee not only consider, but
propose, certain changes in the Oil Pollution Act, so that issues that
exist today with respect to the damage compensation system, are not
repeated the next time there is an oil spill. The problems we are
outlining have been discovered through actual experience, and might not
have been anticipated when this law was considered. By convening this
hearing, you demonstrate your commitment that we all learn from our
experience. Our concerns may be summarized as follows. We are pleased
that OPA exists, however:
(1) it is being used by the barge owner's insurer to pay off claims
at minimal rates and to effectively discourage claimants from seeking
legitimate, long-term claims for damages;
(2) the barge owner's insurer, under the guise of OPA, is demanding
inappropriate releases from claimants, does not explain what is being
demanded, and instead waves a few dollars in front of people to force
them to agree to limitations on their rights;
(3) claimants are not being allowed meaningful participation in the
Natural Resource Damage Assessment process even though it could
directly affect their rights; and
(4) it appears that the barge owner's insurer and the Coast Guard
are setting up road blocks that prevent claimants from obtaining full
recovery for their losses. Our testimony today will describe our
Association, discuss how we have fared since the spill, and outline
some of the problems and suggestions for improvement of OPA. The Rhode
Island Lobstermen's Association (RILA) is a nonprofit association of
people who are engaged primarily in the business of fishing for
lobsters. We have almost 100 members, and our businesses represents a
large portion of the lobstering industry off Point Judith, Rhode
Island. Through the association, we have put together a group of over
100 businesses that are jointly developing their damage claims. These
are not only lobster boat owners, but on-shore processing facilities,
and other businesses that are part of the fishing industry in the Port
of Galilee. As you know, Point Judith is the third largest fishing port
on the East Coast. Until January 19, 1996, we were proud to say that
our lobsters are world renowned for their quality o in fact--we think
they were the best quality lobsters caught in this country. In fact the
fishing industry has contributed greatly to the local and statewide
economy. Millions of dollars have been pumped back into the economy by
way of direct and indirect business resulting from the successful
harvesting of Rhode Island's pristine seafood beds. Many lobstermen
have been fishing in this area for years. In Bob Smith's case, his
father started over a half century ago, and he has continued in his
father's wake. Lobstermen are mostly small businesses--each owns a boat
or two and each hires a couple of crewmen to help. They love what we
do. They are independent, self-sufficient and our own bosses. They are
successful because of their willingness to put in an honest day's hard
work. On January 19, 1996 the unthinkable happened--a barge spilled
over 800,000 gallons of home heating oil after running aground off of
Moonstone Beach.
The place where Bob Smith has been catching lobsters was directly
under the barge and the spill. We say this was unthinkable, since no
one expected it to happen at all. But here is what made it even more
shocking. We are sure you remember the World Prodigy spill of 1989, in
Narragansett Bay, which is just a few miles from Point Judith. None of
us thought this could ever happen again, at least not in our
neighborhood. But it did. It's sort of like witnessing a horrible
accident. Most of us never see one. But to be witness to two just
outside our window is simply not something anyone expects. We are not
here today to talk about whose fault this was, or how efficient and
effective the response to the spill was, although quite frankly, the
response teams basically shut out local efforts to help the cleanup.
Our interest is simple: we want to get back to work, and we want to
make sure we are compensated for the losses that we have suffered, are
suffering, and sadly, are likely to suffer in the future because of
this spill. The immediate impacts of this spill were incredible. Bob
Smith walked on the beach where it happened, and saw literally hundreds
of thousands of dead lobsters. Most were small--2, 3, or 4 years old.
They were everywhere. At one point in a three square-foot area, he
counted 730 dead lobsters. Some observers say that there were over a
million lobsters killed. As a result of the spill, a 250 square-mile
area has been closed off to fishing and lobstering since January
19.That included the entire area leading into the Port of Galilee,
where many seafood processors are located. A map illustrating the
closed-off area is provided as Attachment A to this testimony. Not only
could we not catch lobsters in a prime area, but most shellfish catches
upon which many on-shore facilities rely could not be brought into
Point Judith to be sold. The buyers, processors, wholesalers and others
were shut down because they use the waters that were closed down to
supply feed tanks used to hold the lobsters. And the businesses that
serve the industry--divers, electricians, plumbers, restaurants,
operators, suppliers, and repairmen, were in turn shut down. In short,
Point Judith, which is usually a hub of business activity, was turned
into a ghost town. Fortunately, fishing areas are gradually being
reopened. Fin fishing is now allowed in all areas. The shoreside
facilities may again use the water of Point Judith Pond to handle the
delivered catches. A very limited amount of lobster fishing is allowed
off of Newport. But the main area off Point Judith remains closed.
Please understand, we are not necessarily criticizing the decision to
keep the area closed. We, like everyone, want to make sure that when it
is opened, the lobsters are safe for eating. Sooner or later we expect
lobster fishing to be permitted again. But what about long term
effects? The hundreds of thousands of lobsters that were washed up dead
on the beach were young--1, 2, 3,and 4 years old. We are not permitted
to catch lobsters until they reach their legal size, which occurs
around age 7. That means these million or more dead lobsters will not
be available to be caught in1999, 2000, and 200 1, or 2002.In addition,
many of the dead lobsters were or would have been egg bearing. It could
be eight to ten years from the time a lobster bears eggs until those
eggs hatch and grow to the legal size permitted to be caught. So there
are more years in the future when we will be impacted. Further, the
death of younger female lobsters, which will never reproduce, will
reduce populations generally, which is very likely to impact lobstering
in the future. And, that's where the real economic impact will be felt
by future generations of Rhode Islanders. Unfortunately, we still do
not know just how severe the damage has been because of the immense
devastation of the egg bearing lobsters. And we can't just go somewhere
else to fish, for a couple of reasons. First, in this area, most of the
legal size population of lobsters are caught every year. The pie is
only so big and now it is smaller. That is true even outside the closed
area. So to move elsewhere would not eliminate our losses, it would
just spread them around. Second, many of us can't just go somewhere
else. Fishing indifferent and deeper waters requires different boats,
additional and more expensive equipment, is much costlier in terms of
fuel and insurance, and involves more significant risks. Many
lobstermen can't afford it, or don't want to put themselves at greater
personal risk, even if it might mean a greater price for our catch. We
are just plain shut down, with no alternatives. As you consider this
issue, remember that there are three very distinct types of harms that
we are suffering:
(1) actual damage to our property caused by the spill; (2) actual
losses we suffer because we cannot engage in our livelihood today; and
(3) losses we are likely to suffer in the future because of the long
term impact that this spill is likely to have on the lobster
population. All three types of damages are supposed to be fully
compensated under OPA. Unfortunately, problems exist with compensation
for all three. Now to the question at hand: is the Oil Pollution Act
helping us get compensated for our losses? Yes and no. On the one hand,
it might be better than what would be the case if there were no law. On
the other, there are problems--serious problems--that you need to know
about. Some you may be able to address. Others may be unavoidable
because of the attitude that the barge owner and its insurer take. In
some respects the law could result in damaged parties getting less than
what they would be entitled to if they simply went to court. The
Insurer Has Been Making Unreasonable Demands as a Condition of Making
Interim Payments First, it must be understood that just because the law
creates liability for the responsible party, it does not necessarily
follow that Eklof Marine or its insurer is willing to accept that
responsibility. Here is the attitude that the insurer has, as reflected
in a statement apparently made by one of its adjusters: ``They charge
you for every little dinky lobster and the fish that could have eaten
them.''The Providence Sunday Journal, March 24, 1996.With due respect,
anyone who knows about the lobster industry knows that every so-called
``dinky'' lobster that we are allowed to catch puts food on our tables.
To trivialize our claims in this way demonstrates the insensitivity of
the insurer or our plight. The insurer's insensitive attitude is also
shown by how it has treated claims. When this first happened, and
claims started being filed, the insurer tried to use the claims payment
process to minimize what it had to pay not only now, but in the future.
For example, one person who allowed his boat to be used in the clean up
was required to sign a release of all claims he might ever have as a
result of the spill. A copy of that release is attached to this
testimony as Attachment B. Others were required to sign releases that
contained technical legal language limiting their rights, but which was
not explained to them at all. The claims adjuster's answer? ``We're not
your lawyer.'' A copy of this language that is being forced on us is
provided as Attachment C. In other instances, the claims examiners may
have actually suggested to claimants that they are on our side. Nothing
could be farther from the truth. Their duty is to the insurer, to pay
only what they think they absolutely must pay. To suggest to claimants
that they are on the claimant's side is incorrect, and failing to make
their positions clear to people having no experience in this process is
disingenuous at best.
Regarding actual damages suffered by us, consider the following.
Many of our members lost equipment such as lobster pots, because they
were in the area where the spill occurred, and for weeks we could not
remove them. The insurer is willing to pay something for these, and
that something is generally the insurer's depreciated value of the pot,
not its really value--or cost--to us. For example, assume a pot is 5
years old, and according to the insurer it has a life of 8 to 10 years.
A new pot costs $40.00 to $55.00. The insurer offers $15.00 per pot.
That means if a lobsterman lost 500 pots, he gets$7,500 to cover an
actual replacement cost to him of $20,000.In the real world, lobstermen
not only cannot afford to replace pots every 5 years, but using their
own skill and time, often repair pots that have no ``useful life'' so
that they last well beyond ten years. The insurer apparently gives no
value for this skill and time. We can't repair pots that are lost in
the ocean because we aren't permitted to recover them, since the area
is closed. Now the insurer will probably say that we didn't have new
pots in the first place, so giving us new pots now puts us in a
``better'' position that we were in before the spill. To that we say
the following: Which is fair? Making an injured party pay to put
himself in the actual position he was in before he was injured, or
making the responsible party pay a little more so that the injured
party is in the actual position he was in before the injury occurred?
In addition to not being fully compensated for actual losses, the
insurer's efforts to make interim payments for lost income,1/creates a
more serious problem. Most of the claimants in our group have been
completely out of work since January 19, 1996. The insurer has offered
to pay some lost profits based on a calculation it developed. But to
take this money, we must sign a release that could jeopardize our
future claims. What's more, a provision of OPA could result in our
being denied the right to recover for future losses, even if are lease
tries to preserve those rights. Specifically, section 1015 of OPA
provides: Any person, including the Fund, who pays compensation
pursuant to this chapter to any claimant for removal costs or damages
shall be subrogated to all rights, claims and causes of action that the
claimant has under any other law. 33 U.S.C. 2715. For example, if I as
a claimant accept an interim payment from the insurer under this law,
this provision could be construed to require that I give the insurer
all my rights to claim damages under any other law, even if I was not
yet compensated for all my losses. That could mean that once I accept
money from the insurer, I might lose my rights under state law to sue
the insurer if I am unhappy with the payment I received under OPA, even
though OPA would otherwise protect my ability to pursue such a claim.
We don't think this section was intended to create a mandatory
subrogation of rights by virtue of the words ``shall be subrogated.''We
don't think this section was intended to require subrogation of all
rights under all other laws except OPA, regardless of whether
compensation was paid for the loss of that right.
We think it was intended to make sure that only rights to claims
that have been compensated are subrogated to whoever pays. That is
fair, and that makes sense. But the language of the statute is less
than artfully drafted. That leaves our members with three choices.
First, we can take an interim payment without any protection from this
section of the law, and hope that the insurer, who says ``trust me,
that is not what the section means,'' keeps its word and does not try
to bar a future claim. And we have to hope that the Coast Guard, which
administers the OPA Trust Fund when the insurer stops paying, agrees to
do the same. Second, we can delay filing claims for interim payments
now, and instead wait until we know whether long term claims exist, and
file all claims at one time. The problem is, many lobstermen cannot
afford to wait. Third, we can insist on written assurances from the
Coast Guard and the insurer that they would never assert this
subrogation provision as a defense to an uncompensated claim. We chose
the third route, but getting those written assurances was not easy. The
Coast Guard, after a number of meetings, Recently agreed in writing
that it would not raise the subrogation as a defense except as to
rights for which compensation is actually paid (Attachment D). The
insurer says it will agree to language that recognizes that this
section is not a bar to a future uncompensated claim.-2/To prevent this
from happening in the future, Congress should simply add a phrase to
section 1015 of the law, so that the section reads as follows: Any
person, including the Fund, who pays compensation pursuant to this
chapter to any claimant for removal costs or damages shall be
subrogated to all rights, claims and causes of action that the claimant
has under any other law, with respect to which compensation has been
paid 3/Access to Information in File Claims In times like these, the
federal government needs to partner with the RILA and help rebuild what
was destroyed. We are talking about hundreds of Rhode Island families
being dramatically affected not over just the past two months, but well
into the future. Lobstermen and their families are not looking for
handouts. We are look for what is provided to us under the law of this
country. We are reaching out to our government to work with us and not
shy away from a very traumatic event. As the Committee knows,
thankfully there have been only three major spills since OPA was
enacted--one in Tampa Bay, one in San Juan, and the one in Rhode
Island. Because of where the North Cape spill occurred, it is likely to
have the most devastating impact on natural resources and the economic
well being of the area. As we understand it, although many small claims
were processed immediately in Tampa Bay and San Juan, there were, and
may still be, delays in determining claims for lost profits and
impairment of income. To help our members understand what is expected
when these claims are filed, and what kind of documentation is needed--
particularly for impairment of income claims--we wanted to review past
claims under OPA. Of course, the insurer does not make these available
at all.
Our counsel filed a Freedom of Information Act request with the
Coast Guard to review their claims files. Again, the purpose was to
have a full understanding of exactly what type of information is
provided, and what will be accepted as sufficient. The Coast Guard,
citing privacy concerns of claimants in other spills, has effectively
denied our request, except for producing a single claim that it chose
as ``representative.'' It gave us only its final decision, and declined
to provide any of the foot thick stack of information that apparently
led up to its decision, again claiming that to do so would be too
burdensome for it, since it would have to redact confidential
information. We did not seek any confidential information. It also told
us that if we wanted this information, we would have to pay thousands
of dollars, and wait several months while it reviewed the information.
Apparently there is not a single claims file anywhere that it would not
take months and thousands of our dollars to screen and provide to us.
Again, we are not seeking any private or confidential information, just
data that will give us insight into how the Coast Guard evaluates these
claims, and how it reacts to information provided it.4/Withholding
important information from claimants benefits the Coast Guard, and the
insurer, and again undermines the ability of claimants to obtain a full
recovery. So the Coast Guard won't give us important information
without us paying for it, and no doubt will suggest that if we do pay
it to give us this information, that payment will not be considered by
it to be ``reasonable costs incurred by the claimant in assessing the
damages,'' within the meaning of its regulations. The result: the Trust
Fund--administered by the Coast Guard--is faced with lower claims. To
our knowledge, no claimant has ever recovered lost future profits or
impairment of income under OPA, even though section 1002(2)(E) of OPA
clearly authorizes such recoveries. Withholding this information from
claimants will only serve to perpetuate that denial, except for those
claimants willing to hire--and pay for experts to fight for them.
Participating in the Natural Resource Damage Assessment Process in
January of this year, just weeks before the spill, final regulations
governing Natural Resource Damage Assessments (NRDA) were promulgated.
See 61 Fed. Reg. 4 (Friday, January 5, 1996)(to be codified at 15
C.F.R. 990). They were to become effective on February 5, 1996, after
the spill occurred. It is our understanding that the Federal Government
contends that these regulations will govern NRDA process arising from
this spill. Under OPA, the public is given the opportunity to comment
on plans developed for NRDA process. Under the regulations, a similar
opportunity for consultation exists. Our concern is a practical one. If
there is a long term adverse impact on the lobster population, it could
translate directly into an economic impact on the lobster industry. The
natural resource damage assessment process will inevitably include
studies that should demonstrate the extent of that impact. The
methodology used for these studies will significantly influence the
results, and it is crucially important that sound science be used. The
long-term impact of this spill could mean the loss of scores of jobs
and millions of dollars to the local and statewide economy. Job loss in
this area could be permanent and that would be devastating to Rhode
Island. We have retained an expert, and have requested the opportunity
to participate in the development of the plans that will form the
foundation for the NRDA process. Both the federal and state trustees
have made this request too. So far we have not been permitted to
participate in this process (it is claimed that the process has not yet
started), but everyone is ``thinking'' about it. We have contacted some
of the scientists at the University of Rhode Island who are supposed to
conduct surveys, but so far none of these surveys have been shared with
us. The point is, while the law currently calls for notice and
opportunity to comment on NRDA plans, and the regulations do so as
well, that opportunity must come at a meaningful time--before the plans
are selected. In fact, to be meaningful, we should be permitted to
attend all the meetings that are held about that planning process, to
provide input and insights that might not otherwise be appreciated or
known. Quite frankly, we think we are being stonewalled by the trustees
who do not want to be ``burdened'' with claimants' concerns. The
trustees have many interests that will or could influence the NRDA
planning process. Interest is sound science. We want to make sure that
the paramount Taking the federal trustees' word for it, ``Trust us,
we're the government,'' is not something that our members are
comfortable doing, particularly when the Federal Trust Fund pays if
lost income claims based on the NRDA process are filed. It would be
expensive, unfair, unnecessary, and perhaps impossible to expect our
members to conduct their own surveys and planning when a perfect
opportunity exists for them to be involved in this process. We hope the
Committee will not let this slip by. The Coast Guard is Creating Road
Blocks to Claimants' Ability to be Fully Compensated by Trying to Deny
Them Costs Necessary to Prove Their Claim You have asked us to comment
on how certain policy issues relating to compensation for losses are
addressed under OPA. One such issue is whether OPA should give everyone
the ability to recover the costs of proving a claim for damages so that
they are made whole. Unfortunately, the Coast Guard seems to think that
everyone except the claimants should recover these costs. This makes no
sense. OPA does not prohibit the payment of the claimant's costs of
determining damages. The state and federal government can recover these
costs, including attorneys' fees. The responsible party gets them
because its insurers' pays. And as explained below, the only way
claimants can be assured that they at least have a fighting chance to
be fully compensated, is if they hire competent experts to help them
prepare and pursue their claim. Yet the Coast Guard and insurer
apparently do not want to pay these costs. We believe the law clearly
does not prohibit, and indeed permits, the payment of claimants' costs
and fees needed to prove their claim for claimants. However, the Coast
Guard in its regulations may be arbitrarily and illegally trying to
exclude these costs and fees from the kinds of damages that a claimant
may recover in connection with preparing a claim.5/In order to avoid
the fight that we are likely to have, OPA should be amended, or the
Coast Guard regulations corrected to address this inequity.
The fact is, if those sections of the Act authorizing claims for
impairment of income and lost profits are to have any real meaning,
that claimants must be permitted, and, indeed, encouraged, to get
expert help to ensure that they receive what they are entitled to by
law. They are entitled to be and on a level playing field with the
insurer and the Coast Guard, both of which have boatloads of lawyers
and experts. And the responsible party's insurer, or the Trust Fund,
should pay for it. There are several reasons why these costs should be
covered as damages. First, claims for lost future income require some
consideration of long term effects on the lobster population. No single
lobsterman can afford to undertake such studies, and the insurer knows
it. But without that backup, claims for lost income would be difficult
to prove. Instead, the claimants must band together, and counsel and
experts helps this happen. The government has attorneys and other
experts develop its claims for natural resource damages, and those
costs are paid by the insurer. Why shouldn't a small business person
have the same benefit for its claims? Second, proving lost profits, and
particularly proving impairment of future income, can be complicated.
By way of example, we reviewed one lost profit claim processed by the
Coast Guard in another spill. The Coast Guard tells us that there is
over a foot of documentation to support a claim for about $40,000. If
this section of the law is to have any meaning, a claimant must be
encouraged to hire competent experts to help him navigate through this
morass and properly prepare a claim. Third, while the law suggests that
claims are to be processed within 90 days by the insurer, and within
6months by the Coast Guard, that time period can be delayed
indefinitely by insurance and Coast Guard lawyers who will say that the
time period does not run until the claim is fully documented. We think
that is exactly what has happened in other spills. Claimants need help
to fight such abuses. Finally, claimants must be advised of how this
law works, so they do not unwittingly waive their rights. Few know that
if you file a suit in court, you cannot pursue a claim with the Fund.
More importantly, it was through counsel that our members were able to
get written confirmation that they won't be waiving our rights if they
accept interim payments. Until we hired counsel, no one advised us of
the consequences of these releases. While promises were made, no one
would put it in writing. Notwithstanding the policy reasons supporting
the payment of claimants' costs of proving his damages, and the fact
that law does not prohibit it, the Coast Guard regulations governing
the claims process try to severely limit recovery of such costs. The
regulations provide: (e)ach claim must include at least the following,
as applicable:. . .(8) The reasonable costs incurred by the claimant in
assessing the damages claimed. This includes the reasonable costs of
estimating the damages claimed, but not attorney's fees or other
administrative costs associated with preparation of the claim.33 C.F.R.
136.105(e).-6/There is no explanation for allowing one kind of cost,
but not another, and no justification either, except the desire to
discourage use of experts to document a claim. It is ironic that the
Coast Guard? It is particularly disconcerting that these regulations
are so vague
Of course if and when an injured party seeks to challenge these
regulations, the Coast Guard will no doubt say that such challenges are
barred by section 1017 of OPA, which states that regulations must be
challenged within 90 days of promulgation. Of course, until a spill
occurs, no claimant would have a reason to challenge the regulations.
appears to take this position that its own costs and attorneys' fees
are recoverable, as are those of every other state and federal agency
``damaged'' as a result of the spill. See 61 Fed. Reg. 4 (Friday,
January 5, 1996) (to be codified at 15 C.F.R.990).7-/And the
responsible party's costs are paid for by the insurer. Without
qualified experts studying the long-term effects of a spill, any claim
might well be reduced below its true value. Not surprisingly, insurers
who want to limit their payouts for claims in order to preserve their
profits, and the Coast Guard, which wants to preserve the Trust Fund
for future claims, have no problem with this. In sum, while we believe
law and policy clearly support the payment of costs needed to prove a
claim, and the insurer and Coast Guard have the ability to make such
payments, we frankly expect both it and the Coast Guard to fight us as
part of their broader strategy to limit claims in general. In summary,
we offer the following observations about the OPA claims process.
(1) OPA is being used by insurer to pay off claims at minimal rates
and to effectively discourage claimants from seeking legitimate long
term claims for damages.
(2) The insurer, under the guise of OPA, is demanding inappropriate
releases from claimants, does not explain what is being demanded, and
instead waves a few dollars in front of people to force them to agree
to limitations on their rights.
(3) Claimants are not being allowed meaningful participation in the
Natural Resource Damage Assessment process. (4) It appears that the
barge owner's insurer and the Coast Guard are setting up road blocks
that prevent claimants from obtaining full recovery for their losses.
We appreciate and thank you for the opportunity to testify before the
Committee, and stand ready to answer any questions that you might have.
1/For example, lost profits from January 19 through today. 2/See
Attachment E. Curiously, the insurer seems to have agreed to this
language, but claims it does not understand it. 3/Other related and
proposed changes are included as Attachment4/There are a variety of
theories and approaches that may be used to determine lost future
profits and impairment of income. The OPA is silent regarding which may
apply. Reviewing state common law with respect to those possible
theories is helpful, but claimants can hardly be expected to do so
without the benefit of counsel, a benefit that the Coast Guard
apparently wants to deny. 5/The insurer, who is plainly not bound by
this arbitrary position of the Coast Guard, is free to pay costs as
well. 6/regarding the kinds of costs of assessment of damages that are
recoverable. They say costs are recoverable, but don't say what those
costs are. This leaves a claimant in an untenable situation. I hire an
expert? An accountant? An attorney
7-/In the single reported decision under OPA, a court allowed the
Coast Guard and even private claimants to recover attorneys fees
associated with removal costs, but with respect to damages, did not
allow attorneys' fees to be recovered. This distinction, applicable to
claimants but not to federal or state agencies, or to the insurer for
that matter, is of questionable legal soundness. Avitts v. Amoco
Production Co., 840 F.Supp. 1116,1118 (S.D. Tex. 1994).END
LOAD-DATE: March 28, 1996
Copyright 1996 FDCHeMedia, Inc. All Rights Reserved. Federal Document
Clearing House Congressional Testimony June 4, 1996, Tuesday SECTION:
CAPITOL HILL HEARING TESTIMONY
LENGTH: 2725 words HEADLINE: TESTIMONY June 04, 1996 RICHARD H. HOBBIE,
III PRESIDENT WATER QUALITY INSURANCE SYNDICATE SENATE ENVIRONMENT OIL
POLLUTION ACT REVISION
BODY:
STATEMENT OF THE AMERICAN INSTITUTE OF MARINE UNDERWRITERS AND THE
WATER QUALITY INSURANCE SYNDICATE On S.1730, The Oil Spill
Prevention And Response Improvement Act before The United
States Senate Committee on Environment and Public Works
Presented by Richard H. Hobbie, III President, Water Quality
Insurance Syndicate
June 4, 1996
STATEMENT OF THE AMERICAN INSTITUTE OF MARINE UNDERWRITERS AND THE
WATER QUALITY INSURANCE SYNDICATE BEFORE THE SENATE ENVIRONMENT
AND PUBLIC WORKS COMMITTEE
The American Institute of Marine Underwriters (``AIMU'') is a non-
profit trade association representing 100 marine insurers in the United
States. AIMU members underwrite about 90% of the commercial marine
insurance done in the United States. The American Marine Insurance
Industry has insured federal statutory pollution liabilities for
vessels for nearly a quarter of a century. I appear here today on
behalf of AIMU and the Water Quality Insurance Syndicate (``WQIS''),
where I serve as President. We are honored to have this opportunity to
address the Committee on S.1730 and our experiences under the Oil
Pollution Act of 1990 (``OPA '90''), particularly with respect to the
NORTH CAPE oil spill.
The Water Quality Insurance Syndicate was founded in 1971 by
members of the domestic marine insurance industry in order to provide a
mechanism to insure liabilities under federal pollution statutes.
Today, WQIS is a pool of 17 marine insurers from the American market.
WQIS insures liabilities imposed on vessel owners and operators by OPA
'90, as well as the Comprehensive Environmental Response, Compensation
and Liability Act (``CERCLA''). We insure liabilities arising from oil
or hazardous substance spills for over 39.000 vessels operating
primarily in the inland and coastal waterways of the United States. As
the largest domestic insurer of such marine pollution liabilities, WQIS
provides about one third of the guarantees required for Certificates of
Financial Responsibility issued by the Coast Guard under OPA '90 and
under CERCLA. American marine insurers applaud the provisions in S.
1730 which would provide incentives to owners of single-hull barges to
convert to double-hulls. The bill would award statutory incentives to
encourage owners to replace single-hull vessels in their fleets with
double-hull vessels. If the owner replaced a double-hull vessel at
least five years prior to its required replacement date, he will be
entitled to assert his OPA limit of liability even if a violation of an
applicable federal safety, construction, or operating regulations has
occurred. We commend the authors of the bill on this incentive
approach. However, the incentives would be more effective if applied
more broadly. The proposal does not address the situation where an
owner wishes to expand his fleet. If the incentives were to become law
as drafted, some owners might see an advantage to first buying single-
hull barges which are scheduled to be scrapped and then replacing them
with double-hulls. Such maneuvering would not result in an early, net
reduction in the number of single hull vessels. As a practical matter,
all new builds should be eligible for these special incentives.
The domestic marine insurance market supports safety and prevention
measures which will contribute to the reduction in the severity and
frequency of oil-spill incidents. As a practical matter, such measures
must be commercially sound and technologically feasible. Any other
approach would simply add more confusion to an already difficult
situation. The requirement, proposed in S. 1730, that single-hull
barges over 5,000 gross tons operating in open ocean or coastal waters
have a crew member on board and an operable anchor is not a workable
solution. It will not be possible for most tank barges to implement the
crew provisions. In fact, implementation may put individual crew
members' lives at risk. Crew quarters may not be placed safely above a
tank filled with petroleum products. Most tank barges have no space
which could be used for crew quarters because virtually all of the deck
space on existing barges is above tank space. Failing to fill some of
the tanks so as to provide such void space would not be a satisfactory
solution. Empty tanks could result in serious stability problems and
more casualties.
We are unaware of any proven emergency system for retrieval of a
break-away barge, as provided for 101(b) of the bill, which is
effective in all circumstances. We urge the Committee to continue to
study this issue and adopt only those provisions which are both
feasible and consistent with protecting the safety of the lives of
those who go to sea, as well as with preventing oil spills and other
casualties.
Dredging is a major issue in many U.S. ports today, including New
York. The bill as drafted is too limited in this regard. Rhode Island
is not the only state to have problems with dredging. The need for
dredging is a national problem which can be addressed, in part, by
assuring that navigational charts are accurate and up-to-date.
The same can be said of the provisions on under-keel clearances.
Normally, the establishment of minimum under-keel clearances is based
on local conditions. A federal attempt to regulate this issue would be
far too unwieldy and costly. What agency on the federal level has the
resources to undertake this responsibility effectively? We know of
none. We suggest that a far better use of federal efforts to improve
navigational safety will be to provide the National Oceanic and
Atmospheric Administration (``NOAA'') with sufficient staffing and
funding so as to bring U.S. navigational charts up-to-date. This would
contribute far more to the oil spill prevention effort.
We are very troubled by the drafting of 203(b), which gives the
federal government the right to seek ``any monies'' paid out. This
would appear to permit recoveries for any expenditures whatsoever,
regardless of whether they are for damages as defined in 1002 of OPA.
The provisions would promote irresponsible and unrelated expenditures
and must be changed to require that only OPA defined damages may be
recovered. The purpose of proposed 205 is unclear. Near-term ecological
injury is not defined in OPA. We believe the existing statute and
regulations address these issues and that this section is unnecessary.
Section 206 would impose unworkable restrictions on the cleanup
process. A response plan can never anticipate every action which should
be taken in every ecosystem. Experience has shown that each incident
and spill response is unique. The On Scene Coordinator must retain the
flexibility to direct the clean-up based on the needs in the local
area. No response plan can foresee every eventuality. We urge that 1321
of the Federal Water Pollution Control Act not be amended as proposed.
Spill response is certain to go awry if blind adherence to a pre-
established plan is mandated. The flexibility permitted under current
law is more likely to permit environmentally sound spill response
activities.
In its 25 years of existence, WQIS has handled thousands of oil
spills. The January spill in Rhode Island was our first experience with
an extended closure of fishing grounds. Accordingly, it was the first
time that a need for partial or interim claims payments arose. In the
past, in the few spills where there has been closure of the fishing
grounds, it was only for a day or two in order to allow free access for
response vessels. As soon as it became apparent that Rhode Island
lobstermen and fishermen would suffer ongoing loss of income due to the
closing of the fishing grounds, a specialized team of adjusters was
flown into Narragansett and Point Judith to respond to their needs.
Over $178,000 was paid out in claims payments during the first week
alone. As a result of the program established voluntarily by WQIS, over
855 interim or partial payments now have been made.
In our experience, the NORTH CAPE spill was unique because of the
number of affected lobstermen and fishermen. Underwriters are pleased
to report again on the partial claims settlement process established in
Rhode Island. Immediately following the incident, our Oil Spill Claims
Center was set up along with our toll free telephone number (1-800-995-
4045). Over I 100 claims have been filed since then. Well over half of
the claims are for fish catch loss or for loss of income. A specialized
team of adjusters experienced in handling oil spill claims was flown
into Rhode Island in order to respond immediately. Six to eight
adjusters have been available on a daily basis to respond to citizens'
needs and to assist them in getting together the documentation needed
for their claims.
WQIS was particularly concerned about the needs of lobstermen and
fishermen in view of the closure of the fishing grounds. Claims
settling offices were opened at convenient locations throughout the
affected area. In addition to the 800 number, notices were published in
the local newspapers and posted in strategic locations. Claims
adjusters have conducted an extensive outreach program, visiting
lobstermen and fishermen on the docks, as well as talking to
wholesalers and others who can assist in getting the word out that
partial payments are available to alleviate problems suffered by those
who have been unable to work during the closure of the fishing grounds.
Civic organizations have also been contacted and are cooperating with
us in our efforts to reach all legitimate claimants.
Because of the special needs of those directly affected by the
spill and the closure, the adjusters provided guidance on putting
together documentation. A list of the kinds of documents which assist
the claims adjusters in providing a basis for payment of a claim has
been widely circulated. The National Pollution Funds Center, in
testimony before this Committee, supported our approach. We made it
clear that anyone who had trouble coming up with documents should not
hesitate to call. Our adjusters are prepared to work with any and all
claimants in an effort to put together a foundation for a claim. Our
efforts to reach out and establish communication with the lobstermen
and fishermen have resulted in a substantial number of partial claims
being paid. Once a claim is documented, checks are handed to the
fishermen and lobstermen, often on the same day.
As of May 30, 1996, 855 partial or interim claims have been paid.
The vast majority of these have been partial payments to lobstermen and
fishermen. Many of the claimants received their third and fourth checks
as the closure of the fishing grounds continued. Underwriters have paid
over $2,500,000 in such third-party claims. This is a remarkable
achievement for a field claims adjusting office. Attorneys representing
claimants worked with our adjusters to devise a partial settlement form
which met the needs of both sides. Unfortunately, there was one out-of-
state plaintiffs' attorney who waged a campaign against the interim
payments program. We believe that was an effort to increase the number
of claimants they represented. The problem was laid to rest. as the
success of the claims office became apparent.
The experience in Rhode Island shows that the massive overhaul of
OPA claims provisions is not appropriate. The system worked in Rhode
Island, but if the amendments proposed had been in effect it is
unlikely the system would have worked. The proposal would make claims
handling far more unwieldy. It is unnecessary and ill-advised to amend
1013 to require advertising about partial claims. The vast majority of
spills do not give rise to a need for partial payments. The Coast Guard
has the authority to require advertising regarding partial payments
when appropriate.
We are particularly concerned about proposed new 1015(c)(2) (Final
Damages) which would make virtually every claims payment interim.
Insurers would never be able to close the books on a spill. This
approach is counterproductive and will impede participation of
guarantors in OPA financial responsibility programs.
As drafted, the provisions regarding partial payments in S. 1730
would throw the claims process under OPA into disarray. It is proposed
that 1002(f) should be amended to define loss of profits and earning
capacity to include specifically partial claims. In our view, if any
amendment is made, this section should suffice. The proposed amendments
to 1013, 1014 and 1015 are wholly unnecessary and create confusion.
They appear to permit partial claims in any category of damage claims
under OPA. If enacted, the claims settlement process would become a
nightmare. Claims could never be settled. The proposed revisions to
1015 (Subrogation) appear to prohibit final settlements altogether. One
of the purposes of OPA '90 was to encourage prompt settlement and
payment of claims. The net effect of the proposal would make no
settlement final, a situation no insurer can live with. The
transactional costs will skyrocket and as a consequence the cost of
providing financial security will inflate. Guarantors under OPA will be
precluded from recovering for some partial claims in actions against
negligent third parties.
The program developed in Rhode Island to meet the special needs of
lobstermen and fishermen could serve as a guide in a future oil spill
where the fishing grounds are closed. We believe that the NORTH CAPE
claims experience proves that the process under OPA '90 is working
well. In fact, we understand that the partial claims settlement
procedures established in Rhode Island are being used as a model for
the claims process in connection with the SEA EMPRESS spill in Wales.
The unnecessary amendments proposed would be counter-productive. The
provision has been drafted without a clear understanding of the claims
process and of subrogation requirements. The ``overkill'' approach
adopted in S.1730 could put the entire process at risk.
The response to the need for a partial claims settlement program in
Rhode Island is an example of how industry and government can find
workable solutions to new problems through cooperation. Unfortunately,
not every problem that has arisen in connection with the implementation
of OPA '90 at the NORTH CAPE spill has been resolved so successfully.
American marine insurers were particularly concerned about the delay in
reopening the fishing grounds. Unnecessarily prolonging the closure of
the fishing areas imposes undue economic burdens on the lobstermen,
fishermen and related industries and added costs, borne by maritime
commercial interests. Some estimated that each day of unnecessary
closure costs as much as $100,000 or more. The delay in reopening the
fishing grounds was due to the inability of the various trustees,
federal and state agencies, and other bureaucracies to agree on a
protocol for testing.
Underwriters were frustrated by the bureaucratic morass we have
encountered in trying to open even some of the fishing grounds. The
various state and federal agencies are unable to agree on what the
acceptable criteria should be for testing to permit the reopening of
the fishing grounds. Even the recent partial reopening of the fishing
grounds for fin fishing took far too long. The data showing the fishing
grounds could be reopened for fin fishing was given to state officials
on February 10, who acted on February 13. The federal government
received the data on February 16, but it was not until over a month
later that the area was reopened. When potentially grave financial
damages are threatened, responsible officials should act expeditiously,
but a response from federal officials on an expedited basis takes from,
at a minimum, 10 days to 4 weeks. This is unacceptable. All of those
involved on the federal and state levels must work cooperatively to
expedite the reopening of a fishery when the financial implications are
so substantial. We support the changes proposed in Section 202.
AIMU and WQIS are grateful for this opportunity to present their
views on S. 1730. We would be pleased to provide any additional
information which might be helpful to the Committee.
LOAD-DATE: June 4, 1996
Responses to Attorney General Jim Hood
1. A release of future claims in return for a Final payment does
not violate the 1996 Amendments to OPA. As the Department of Justice
has stated:
``. . .the OPA does not specify any particular methodology for
assessing future damages for final claims and does not address
the issue of releases in any detail. From the perspective of
the United States, it has been critical that claimants have a
true choice: under the GCCF process they can either file
interim claims, for which the OPA requires Responsible Parties
to provide, receive payments for damages as they accrue, and
not sign any release; or they can, with appropriate legal
counsel available, finally settle their claims--past and
future--by agreeing to an appropriate release. ``
Statement of United States Regarding the Court's February 2, 2011
Order (February 18, 2911), In Re: Oil Spill by the Oil Rig ``Deepwater
Horizon'' (MDL No. 2179), p. 6.
The GCCF's option to provide claimants a generous Final payment for
future damage, as well as past and present damage, or the continued
filing of interim claims, is precisely why the United States Coast
Guard, in previous Senate testimony concerning the Gulf Coast Claims
Facility (``GCCF'') has opined that: ``the GCCF is even more generous
than the Coast Guard would be under OPA.'' The Final payment option--
not part of the OPA statutory scheme--is an innovative way to provide
claimants with additional compensation without having to return
periodically to the GCCF. But it is not mandatory. Claimants who wish
to abide by the OPA law, may voluntarily request Interim payments; no
release is required.
2. Certain GCCF claims offices are being closed, or their operating
hours are being reduced, because of diminishing claims volume over a
year after the Oil Spill. Other claims offices in each Gulf state
remain open. In the just the past sixteen months, the GCCF has
processed over one million claims from fifty states and thirty-seven
foreign countries. Claims continue to be filed but the GCCF can no
longer justify maintaining the operation of certain claims offices when
only a handful of new claims are filed each month. However, when a
claims office is closed, or its operating hours reduced, the GCCF has
made sure that other claims offices remain open in other locations to
service claimants.
______
Mr. Hastings. Thank you very much, Mr. Feinberg, for your
testimony. I know we are under some time, but we will try to
get through these questions here.
I just have a couple of them, and you alluded to this fact,
but I just want to make sure. There has been no oversight from
the White House at any time since June 16 when this Fund was
created and so forth. Is that correct?
Mr. Feinberg. That is largely correct if you say the White
House. Now, the Department of Justice monitors what I am doing,
just like BP monitors it. The Department occasionally has
suggestions, such as an independent audit and some other
suggestions. But there is no oversight as to how I decide
individual claims that appear before me for processing.
Mr. Hastings. In that regard, and this is probably more
speculation, but it would be interesting to hear what your
response is. In hindsight, since hindsight is 20/20 and you
just said that this is absolutely a unique fund, and let us
hope that we don't have to go through this with another
disaster, but is this the proper model?
Mr. Feinberg. That is for policymakers to decide. I would
say that at least with the Gulf Coast Claims Facility, Mr.
Chairman, the United States Coast Guard is at least there under
the Federal Oil Pollution Control Act to review any one of my
claims determinations.
But I think it is relative. This Congress 10 years ago--you
will recall when it enacted the 9/11 Victim Compensation Fund
and re-enacted it about six months ago during the lame duck
session--expressly prohibited any oversight of that Fund,
expressly said you cannot go to court to review 9/11
determinations.
So everything is relevant, but I must say it is problematic
when one person is delegated this type of authority with
limited oversight, so I share your concern, but I leave that to
the policymakers.
Mr. Hastings. We always have a debate in this country on
what the definition of a benevolent dictator is, and maybe this
falls under that category.
Mr. Feinberg. Maybe.
Mr. Hastings. You mentioned DOJ, Department of Justice, and
some interaction. Part of that interaction has been an audit.
When can we expect to have the results of that audit that you
have agreed to be made public to us?
Mr. Feinberg. That independent audit timing should be
directed to the Department. The Department, not the Gulf Coast
Claims Facility, is going to determine who that auditor should
be and how quickly that process will begin.
But I will say one thing. You can't win on this independent
audit. I know that on the one hand there is a request from
Members of Congress and others to get that audit going.
Correct. I welcome the audit, and we should do it as fast as
possible.
On the other hand, as many of you know, there are interest
groups, elected officials in the Gulf, lawyers, organizations,
all clamoring for some input into the nature of the audit, the
scope of the audit, and much of that input has just arrived at
the Department of Justice this month.
So on the one hand, speed. On the other hand, a demand on
the part of interest groups to participate. I think the
Department is moving as fast as it can considering it doesn't
want to be accused of delay. On the other hand, it doesn't want
to be accused of high-handedness. So I think that is something
that ought to be addressed with the Department.
Mr. Hastings. Correct me. When exactly was the audit
requested? Was that July of this year or last year?
Mr. Feinberg. Oh, no. This year. I think the audit was
requested for the first time I think around August, a few
months ago.
Mr. Hastings. OK. Good. All right. Thank you very much. I
will recognize the Ranking Member.
Mr. Markey. Thank you very much. Mr. Feinberg, can you just
briefly lay out for us what the situation is with people who
have decided that they would rather litigate than move through
the Compensation Fund?
Mr. Feinberg. Everybody has a right to litigate. In fact,
claimants come to the Fund. If they don't like what they see in
the way of my determinations or the determinations of the GCCF,
they have a voluntary choice to opt out and head to court
through the United States Coast Guard after the Coast Guard
reviews if they want. They ultimately have a right to go to
court.
Now, the first trial arising out of the explosion is
scheduled for February of 2012. By that time, the GCCF would
have distributed in the vicinity of slightly over $6 billion.
And I must say, a first trial in February of 2012 is
miraculous. I think that what the judge has done in New Orleans
and what the lawyers have done in accelerating the trial
schedule is a real tribute to them, frankly. They have pulled
it off.
Still, implicit in Congressman Markey's question, we will
have distributed over $6 billion between the explosion and the
date of the first trial.
Mr. Markey. You will have distributed. So how long in
contrast with going to court, and the first case doesn't begin
until February of next year. How long does it take for a
claimant to work through the process with you?
Mr. Feinberg. On average, a claimant gets an initial
determination, a response from us, within two weeks. Ten days
to 14 days. It wasn't like that at the beginning, as
Congressman Bonner I am sure will remind me, but we have
greatly accelerated this process.
So a claimant gets a signal. We have your file. It seems in
order. We can cut you a check. Here are your options. We need
more information. But we have greatly shortened the time for an
initial contact with the claimant.
Mr. Markey. OK. So earlier this week ABC News returned to
the Gulf of Mexico to interview shrimpers affected by the BP
oil spill. When asked about experiencing the worst season in 40
years in the Gulf, one shrimper said the quality of the shrimp
isn't there. The abundance isn't there. And when asked about
what happens to all the boats if there is no shrimp, another
shrimper just responded there are going to be a lot of boats
for sale.
What ability do shrimpers and fishermen who are
experiencing lingering, ongoing effects from this bill have to
compensation under the Fund?
Mr. Feinberg. Assuming that a shrimper or any other
fisherman can at least give us the minimal documentation that
we need, those shrimpers and other fishermen will be paid.
They will have three options. One of those options is a
hedge against the future. We better continue to take an interim
payment. We will document our current quarterly damage, but we
want to keep coming back. Thirty thousand people have taken
that option. If a shrimper or anybody else wants a final
payment for what we think will be future damage as best we can
surmise it at the GCCF that is an option also. It is strictly
up to the shrimper.
I want to just say one other thing, Congressman Markey. I
think that we have to do better by the shrimpers. I was down in
New Orleans last week, and we are now reviewing ways to make
the program even more generous for the shrimping industry in
Louisiana in particular.
Mr. Markey. OK. So the indications are that this is a real
catastrophe hitting the shrimpers down there, and it seems to
be related to the spill. Now, if this continues next year, the
year after, what happens to these shrimpers? How many times can
they come back in order to be compensated for what could be
damage that goes on for years?
Mr. Feinberg. The GCCF by agreement isn't around for years
and years and years. It expires automatically in August of
2013.
A shrimper, if he wants, or a shrimp company or an
individual shrimper, can decide, if it seems that the shrimp
are not going to come back, as you put it, a shrimper can
decide to file interim claims, take a check from the GCCF,
waive no rights, keep coming back until the shrimper either has
a sense that it is OK now or we want a final payment, or the
shrimper can take a final payment or until the program expires
and then the shrimper can of course go to court if the program
isn't extended.
Mr. Markey. I see. Mr. Chairman, Mr. Feinberg is from
Brockton, Massachusetts, the home of Rocky Marciano, and while
he doesn't shy away from a fight, Mr. Feinberg, he actually
tries his best to find a peaceful resolution for every one of
the issues that he has been confronted with not just here, but
in the 9/11 Fund and all of the other very difficult situations
that he has been tasked with trying to resolve over the course
of his career.
Mr. Hastings. Marciano was 49-0, so it sounds like he
didn't back away from a fight either, as I recall.
I have been advised that we may have votes as early as
10:15 and so that being the case, just to kind of figure out
how we will do this, we will recess and then come back
immediately after the last series of votes because Mr. Feinberg
has to leave by noon.
But I am advised we could have votes as early as 10:15, so
with that I recognize Mr. Lamborn.
Mr. Lamborn. Thank you, Mr. Chairman. Thank you for the
work that you are doing. I will make this very quick because I
am not from a Gulf Coast state, and I know that they have some
burning questions.
Just a procedural question, Mr. Feinberg. I understand from
your testimony that all claim determinations are made without
any interference from the Administration or BP. I know the
Department of Justice has sent several letters making
suggestions on the administration of the Fund, but does this
mean that the White House has not contacted you once about the
Fund since President Obama announced its creation last June?
Mr. Feinberg. That is correct.
Mr. Lamborn. And as a follow-up, what do you do with
suggestions when people send them to you such as from the
Department of Justice or from whomever?
Mr. Feinberg. We take very seriously any suggestions from
the Department of Justice, from Members of Congress, from
interested citizens. We have made changes based on constructive
criticism. It is always constructive. We welcome it, and we do
our best in this difficult assignment to move the process
forward and improve it day to day to day.
Mr. Lamborn. OK. Thank you. Mr. Chairman, I yield back.
Mr. Hastings. Mr. Holt is recognized for five minutes.
Mr. Holt. Thank you, Mr. Chairman, and thank you, Mr.
Feinberg. And I appreciate Mr. Markey for clarifying that you
are from Massachusetts. Who would have guessed? And I thank you
for doing work that I am sure many days seems thankless.
You know, we have heard from many that the six-month
drilling moratorium economic impact was worse than the impact
of the spill itself, but, Mr. Chairman, I would like to
introduce in the record a letter from the Baton Rouge Area
Foundation which administered the $100 million Oil Rig Workers
Assistance Fund over which Mr. Feinberg I believe has no
control, no responsibility, no direct association. I would like
to introduce this into the record.
Mr. Hastings. Without objection.
[NOTE: The letter from the Baton Rouge Area Foundation has
been retained in the Committee's official files.]
Mr. Holt. The Oil Rig Workers Assistance Fund was set up,
as you will recall, to help individuals who worked on the
Deepwater rigs that might have been affected by the moratorium
and experienced financial losses. To receive the assistance
under that Baton Rouge Fund, the rig workers had to submit some
simple documentation: their W-2 forms, paystubs, unemployment
forms and so forth.
At the time of the moratorium, the Fund expected that maybe
9,000 workers from the Deepwater rigs would apply for financial
assistance. In reality, it was 357. Three hundred and fifty-
seven applications were completed by the rig workers seeking
financial assistance for a total of $5.3 million in financial
assistance.
You know, I am not saying that the oil rig workers'
financial losses are unimportant. I am just saying that it
doesn't appear that they are anything like the losses that Mr.
Markey and others were documenting in the fishing industry and
the other associated industries.
Because over $90 million from the Fund was still available,
the Fund's eligibility was expanded to individuals who were
indirectly affected or might have been affected by the
moratorium--support vessels, those that transport food or
supply ice or supplies or whatever it is--and during this round
an additional 428 applications for financial assistance were
completed.
So if we just look at the numbers of people who have
applied to Mr. Feinberg, people who have applied to the Baton
Rouge Area Foundation, it looks pretty clear that the effects
of the oil spill on tourism, on fisheries are well greater than
the effect on the oil industry.
Mr. Landry. Would the gentleman yield?
Mr. Holt. Am I characterizing this fairly, Mr. Feinberg?
Mr. Feinberg. I think you are characterizing it fairly,
Congressman. The problem is I don't know how that Foundation in
Louisiana is treating non-rig workers, but these other vendors.
I have 1,600 claims that I am sending to that Foundation in
New Orleans, and it is not clear to me that the Foundation is
honoring all of those moratorium claims. Somebody should be
honoring those claims, and I hope you are right that the
Foundation is more receptive to claims that I am prohibited
from paying, but I am not sure that that Foundation is doing as
well as it should in honoring all those types of moratorium
claims. I just don't know the answer.
Mr. Landry. Will the gentleman yield?
Mr. Holt. Real quickly, Mr. Landry. Just a moment. Is there
something that we should be doing to see whether that
Foundation--I mean, I realize it is not a government
foundation. It is not a government institution. Is there
something we should be doing to see that they are giving
sufficient attention to people who might be hurting?
Mr. Feinberg. You might inquire and find out, as you are
with the Gulf Coast Claims Facility, just exactly what the
rules are, what the eligibility criteria area. All I know is I
am hearing from businesses impacted by the moratorium that they
can't get paid.
Mr. Holt. Mr. Chairman, would you care to join me in a
letter asking for that information? I realize we can't demand
it. I suppose we could, but----
Mr. Hastings. Let us work. We are going to have a lot of
questions that have come out of this hearing, I suspect, and I
will say this right now instead of at the end of the hearing.
We will continue to have oversight into this, and if that falls
into that category I am more than happy to work with the
gentleman.
Mr. Holt. OK. Well, it just sounds as if the effect really
has been on these other industries.
I am sorry, Mr. Landry.
Mr. Landry. No.
Mr. Holt. I intended to yield to you----
Mr. Landry. Yes.
Mr. Holt.--but I see my time has expired.
Mr. Hastings. Time has expired. I recognize the gentleman
from Louisiana, Mr. Fleming.
Dr. Fleming. Thank you, Mr. Feinberg. I appreciate your
willingness to take either the credit or discredit, whichever.
That is a model for us here in Washington. We generally have it
50 percent right here. We accept the credit, but not the
discredit. So we thank you, sir, for being willing to take the
heat on that.
Just a couple of quick questions before I get into
something deeper. Do you have or will you have a metric for
satisfaction among people compensated?
Mr. Feinberg. I have said from day one, as with the 9/11
Victim Compensation Fund, I would hope that at the end of this
program at least 90 percent of all eligible individuals and
businesses opt into the program. I think that is sort of an
objective measurement that I have used over the years in other
contexts.
Dr. Fleming. But, I mean, will you have a questionnaire or
a survey? I mean, obviously somebody might agree to something,
but not be satisfied. Do you have any way of measuring that?
Mr. Feinberg. No. Maybe we should measure that at the end
of the program. I am pretty confident that people who accept
compensation aren't satisfied.
Dr. Fleming. OK.
Mr. Feinberg. I think that is human nature.
Dr. Fleming. I would ask that you would consider that.
Again, it is sounding like to me that there may be money left
over at the end of the day, and that might be reason to go back
and reopen just a little bit some of these cases.
You mentioned fraud. Is there any prosecution or do you
plan to prosecute people who provide fraudulent claims?
Mr. Feinberg. There certainly is, and it has been pretty
effective. We have received, out of a million claims, about
10,000 claims that we think are fraudulent. After we do an
investigation with our antifraud team if it still appears
fraudulent, we send it to the Department of Justice, the
Criminal Division, Lanny Breuer. They have been fabulous
working with U.S. Attorneys in the Gulf. They have indicted
people. There have been guilty pleas. There have been
convictions, I believe.
I think fraud is an ever present concern. Nothing will
undercut the credibility of this program more than fraudulent
payments.
Dr. Fleming. All right. Thank you sir. OK. What I want to
turn to in my remaining time is you may well be aware that
Louisiana has been the biggest oyster production state in the
Union. Forty percent of the total yield has been from
Louisiana.
Washington state is now overtaking us because it appears
that it wasn't the spill itself, but the downstreaming of
freshwater that has now changed the salination of the water in
their beds, which was heretofore perfect for growing oysters.
And as I understand it, there is a multi-year rebuilding of
that. You have to reseed the beds. I am not sure if I have all
the terminology correct. Can you kind of walk through that and
see where we are? I do think there are some special issues on
compensation.
Mr. Feinberg. There clearly are special issues. We treat
oysters separately from any other industry. Oysters are
different, and what we have decided is that an oyster claim, if
somebody wants interim damage or can show their immediate
damage, we will pay it.
If somebody wants a final payment, if someone says to us we
are filing a claim, we want a final payment and we will be
gone, we give them four times their 2010 damage, and if a
claimant leases oyster beds--that is, not only harvests
oysters, but has a lease involving the beds themselves--at the
bottom of the Gulf, there is a special additional payment that
we will make. We have tried with oysters to recognize the
uniqueness that you reference in your question.
Dr. Fleming. And the four times is a reference to the four
years, I assume, it takes to build these beds back up and get
them back.
This may be a little bit outside of your purview, but is
there any evidence that the saline content of that area is
beginning to return to normal?
Mr. Feinberg. Outside of my bailiwick, I think the
independent evidence, at least from what I am hearing in terms
of the oysters being good to eat and urging people to come back
to the Gulf and eat those oysters, I think the predictions are
pretty positive.
But I agree. I agree. Nobody knows for sure. It is an
uncertain biology, and people who want to wait it out and see
have every right to do so.
Dr. Fleming. All right. Just one final question in my time.
How many lawsuits are out there, or how many do you expect at
the end of the day?
Mr. Feinberg. I really don't know. I think as a layman
reading the newspaper, I think there are about 130,000 lawsuits
that have been filed, but I haven't checked to see how many of
those that have been filed have already been paid by us and are
released. I could get you that information, but I don't have it
at my fingertips.
Dr. Fleming. OK. Thank you. I yield back, Mr. Chairman.
Mr. Hastings. Thank you very much. I recognize the
gentleman from South Carolina, Mr. Duncan.
Mr. Duncan of South Carolina. Thank you, Mr. Chairman. Mr.
Feinberg, thanks for being here and answering these questions
for us today.
It was interesting to hear that you can't pay moratorium
claims because I think that has been a significant impact on
the Gulf region. With the loss of businesses, the domino
effect, not just the oil rigs, but the oil field servicing
industries of welders and pipefitters and people haulers and
food services, and it just goes on and on as you delve into it.
I do know that from talking with Mr. Landry, the Baton
Rouge Foundation actually paid some moratorium claims, but is
closed now, and the remaining money, because they didn't pay
out 100 percent, went to another charitable organization versus
paying folks that were hurt in the moratorium.
I don't have any specific questions for you, but I want to
yield the balance of my time to someone that knows this issue,
Mr. Landry from Louisiana.
Mr. Landry. Thank you, Mr. Duncan. Mr. Feinberg, how are
you?
Mr. Feinberg. Good. Thank you.
Mr. Landry. I am concerned about the moratorium fund
because is it not correct, just very short because we have a
limited amount of time, that the Fund that you administer you
cannot pay out to companies who were affected by the
moratorium? Is that not correct?
Mr. Feinberg. That is correct.
Mr. Landry. OK. So they have to go to the $100 million
fund. You have a $20 billion Fund. I think there is some
disparity in there.
And I am going to visit with you, Mr. Holt, because I don't
have a lot of time, but I will tell you how that is a disaster
as well. I have a guy in a fab yard looking for that.
The problem I am having, do you know how many claims were
settled in regard to the shrimping industry that were paid to
shrimpers who were Louisiana certified commercial fishermen?
Mr. Feinberg. I can probably get you that number.
Mr. Landry. OK. Because the concern I have is that once you
all opened that Fund there was a blue light special on white
boots, OK, down in Louisiana, and to me that allowed people to
claim that they were shrimpers, but that were not shrimpers or
were not traditional commercial shrimpers. Of course, I have
heard stories where there are shrimpers that got paid very
little and there are hobbying shrimpers I guess you would call
them or tourism shrimpers that got paid a lot.
And to me it is very simple. Wildlife and Fisheries in
Louisiana certifies our commercial fishermen, but you all are
not using that in the matrix when you all are paying out, and
that concerns me because it seems as though when I go back on
the ground I continue to hear stories of people who really need
this money, people who have been in the shrimping industry for
generation after generation, that are not getting the help.
But the fly by-night people are getting a check, and maybe
it is not as much as the actual traditional shrimper would be
eligible for, but a $5,000 and $10,000 and $15,000 check to a
guy that just puts up a trawl on his boat. That is a concern of
mine. Can you address that?
Mr. Feinberg. Yes. I can address it a couple of ways.
First, we are paying commercial shrimpers, large shrimp
companies, individual shrimpers. We do not discriminate against
commercial shrimpers.
But I want to agree with you, Congressman. I think that if
there is one area where the Gulf Coast Claims Facility has to
be more receptive and generous it is with the commercial
shrimping industry in Louisiana.
Mr. Landry. OK. So you say that, and you have said that
this is the second time. I appreciate that. The question is
what are you going to do about it?
Mr. Feinberg. Here is what we are doing about it. Within
the next few weeks--weeks--we hope to announce rules, new rules
to deal particularly with the Louisiana shrimpers.
I have been down to New Orleans in the past few weeks to
meet with a whole group of shrimpers--one of them is here today
in the audience--and I am listening exactly to the point you
are making. I hear from them. ``Mr. Feinberg, we don't begrudge
you are paying people who are shrimpers, but we are the real
historical shrimping industry in the Gulf and we think that you
are not paying sufficient attention to our parochial
concerns.''
Mr. Landry. Well, let me make this suggestion in the 20
seconds that I have, because you are a very, very bright lawyer
I know. You have a great reputation. It is simple. Go to
Wildlife and Fisheries down in Louisiana. That is your client.
They have the records.
You don't need to visit with anyone else other than those
that are Louisiana certified commercial fishermen. I would
appreciate it if you took that and built that into your matrix.
Mr. Feinberg. Will do.
Mr. Landry. Mr. Chairman, I yield back.
Mr. Hastings. Thank you very much. The Chair recognizes the
gentleman from Arizona, Mr. Grijalva.
Mr. Grijalva. Thank you very much, Mr. Chairman. Mr.
Feinberg, researchers discovered that there has been
potentially dangerous changes following the spill in one of the
most abundant fish marshes of the Gulf, an indicator many
believe of the health of the ecosystem, which may indicate the
presence of a much larger problem.
In fact, researchers concluded that there may be some of
the same early warning signs that we saw in the years following
the Exxon Valdez oil spill in Alaska before species like the
Pacific herring and pink salmon suffered severe population
declines.
If in fact there are those ticking environmental time bombs
in the Gulf that may lead to longer term impacts on fish and
result in future losses by fishermen and shrimpers, can they be
compensated in the years to come if this ticking clock goes
off?
Mr. Feinberg. Well, that is an excellent question. We are
around, the Gulf Coast Claims Facility, until August of 2013,
so alleged damage between now and then caused by this oil, by
the Horizon explosion, we will compensate. Also, we are daily,
weekly monitoring what the experts tell us about the impact of
the spill, as you point out.
So when we make a final offer, and some 60,000 individuals
and businesses have accepted the final offer, we are trying to
factor in what the best experts tell us about the future. If
somebody doesn't agree, Congressman, with our estimation of
long-term damage, they don't need to accept a final payment.
Thirty thousand people have accepted an interim payment for
immediate damage, and they want to wait and see, as you point
out, what the future holds and then they can come back at that
time.
Once August 2013 expires, there is no more Gulf Coast
Claims Facility. They will have to go to BP itself.
Mr. Grijalva. And so after 2013 if there are still impacts
being felt or impacts that have developed in that interim the
source of their making themselves whole in some way would be
with the company?
Mr. Feinberg. Or a courtroom, I guess.
Mr. Grijalva. OK. One other point if I may, sir. For those
people that have been harmed by the spill, isn't it true that
the documentation requirements in place to receive compensation
from the Claims Fund are much more inclusive than it would be
in a court proceeding?
Mr. Feinberg. When you say inclusive, I think we are much
more liberal, much more generous in recognizing a valid claim
than would be the case in court, but that can be argued, I
suppose.
I am confident that we are paying claims on a record that
is much less rigorous than would be required in the courtroom.
Mr. Grijalva. I appreciate it and yield back.
Mr. Hastings. The gentleman yields back. Mr. Flores of
Texas?
Mr. Flores. Thank you, Mr. Chairman. Mr. Feinberg, thank
you for joining us today. I am going to yield the first four
minutes to Mr. Landry and ask him to--is he gone? Never mind. I
am not going to yield to him.
In any event, I want to thank you for your candor in the
buck stops here statements that you made. That is, in the words
of Mr. Fleming, refreshing to see around Washington, D.C.
I have a couple of questions. I noticed in going through
the statistics, the metrics that you included in your
testimony, that there were 17,000 claims that were final
settlements that were offered, but weren't accepted. What
happens with those, and can you tell me roughly? Does that mean
that the offeree did not accept them or that you rejected them?
What does that mean?
Mr. Feinberg. Most of the 17,000 final claims that were not
accepted they have 90 days to make a decision.
Mr. Flores. OK.
Mr. Feinberg. I will bet you the great bulk of those 17,000
claims are within the 90 day period and the claimant hasn't
decided yet whether to accept the final offer or not. If they
don't want the final offer, they don't have to take it. They
can take in lieu of that an interim payment for their immediate
damage and come back every quarter and seek additional
compensation.
Ultimately, Congressman, if they just can't get
satisfaction they ultimately always have the right eventually
to get to court and file a lawsuit as if the GCCF had never
been established.
Mr. Flores. Right. And how many of those 17,000 have
actually already gone to litigation? Do you have a feel for
that?
Mr. Feinberg. Very few.
Mr. Flores. OK.
Mr. Feinberg. I know that about 1,500 individuals were
dissatisfied with what we decided and went to the Coast Guard.
The Coast Guard independently reaffirmed what we have done.
Now, how many of those people who didn't get satisfaction
from the Coast Guard then went on to file a lawsuit? I do not
know the answer to that.
Mr. Flores. It looks like the process is working, I mean,
if 1,400 claims that they didn't like went to the Coast Guard
and 1,300 of those the Coast Guard upheld, so it looks like you
are doing right.
I am going to yield the balance of my time to Mr. Landry.
Mr. Landry. Thank you, Mr. Flores. I think this is
important because this has come up twice. My question to you is
if the claim process is dragged out there is a prescriptive
period by which those claimants would have to file a suit in
Federal court against BP. That is correct?
Mr. Feinberg. Yes, but I think that that prescriptive
period isn't a barrier. I mean, I think many, many people have
made that filing in court.
Mr. Landry. How would they make it? I mean, are you saying
that there are people who have made the application and still
filed?
Mr. Feinberg. Oh, I think there are many people, maybe
thousands of people, who filed with the GCCF and filed in court
as well.
Mr. Landry. When do you believe that prescriptive period
actually ends, because in Louisiana that would be a one year--
that would be a tort claim. Is that correct?
Mr. Feinberg. Again, the statute of limitations. I don't
know what the period is in Louisiana.
Mr. Landry. Well, in Louisiana the target would be one
year, but my question to you would be in your legal analysis
would that period have expired already?
Mr. Feinberg. No.
Mr. Landry. No?
Mr. Feinberg. No. I think anybody who comes to the Fund and
presents their claim, I think under the Oil Pollution Control
Act, and I am not an expert in this, but I think ultimately
they preserve their right to file a claim in Federal court.
Mr. Landry. And so the period when they come to you in the
Fund, you are saying that the prescriptive period----
Mr. Feinberg. Will be extended.
Mr. Landry. The timing is suspended?
Mr. Feinberg. Either suspended or extended so that they are
not going to be precluded from filing. But again I want to
emphasize I am not an expert in how you litigate Federal Oil
Pollution Control Act cases.
Mr. Landry. I mean, Mr. Chairman, that is the biggest
concern is that there are people out there, and as they try to
navigate their way through both a complex legal system and what
I think is somewhat of a complex application through the BP
fund that Mr. Feinberg administers is that there is timing. You
know, time is moving against them.
I would hate to see that at the end of the day, and I know
Mr. Feinberg wouldn't do this, wouldn't set up a system by
which claimants would just drag on and on and on to a point
where we get to the point where they lose their right to court,
but only because they have done what he and BP and a lot of us
have asked them is to go through that process, and so that is a
concern of mine.
Mr. Chairman, I yield back.
Mr. Hastings. Mr. Flores, you have 22 seconds. Do you yield
back your time?
Mr. Flores. I yield the balance of my time.
Mr. Hastings. OK. When the gavel dropped we had a nonmember
of the Committee here, and I am going to recognize him, Mr.
Bonner, for five minutes.
Mr. Bonner. Thank you, Chairman, for allowing me to be a
member of the Committee. I have always wanted to be, and I am
glad to fulfill that promise today.
For the record, I, as has already been noted, have had an
opportunity to have a lot of experience with Mr. Feinberg, and
while there has been effusive praise and at times even sympathy
for the task he has been assigned, I would remind everyone that
Mr. Feinberg's firm is paid $1.4 million a month. I believe
that is correct.
Mr. Feinberg. No.
Mr. Bonner. How much?
Mr. Feinberg. $1.250.
Mr. Bonner. $1.25. Thank you.
Mr. Feinberg. I just lopped off $150,000.
Mr. Bonner. Well, regardless, it is a generous amount of
money to administer this, and while it is a complicated
process, and I think Mr. Feinberg has realized that it is even
more complicated than the 9/11 Fund in many ways with a million
claimants, it is not a perfect system.
If anything, it is a very flawed system, and so many
promises have been made by Mr. Feinberg himself to people who
live along the Gulf Coast not just in Alabama, but in Louisiana
and Mississippi and Florida and Texas. So many broken promises,
unfortunately. So I am grateful for the opportunity to be here,
but I will obviously have more questions than there will be
time for.
And I would like to ask. I mentioned this to the Chairman.
If Mr. Feinberg has no objection, I would like to invite the
people who live along the Gulf Coast to take advantage of this
time where we traditionally have five days to submit additional
questions for the record that Mr. Feinberg would respond to.
I would like to give the people who live in Alabama a
chance who have met with you before at town meetings and who
were promised certain things and they didn't get those promises
fulfilled. Would you have any objection to letting us get those
questions submitted to you?
Mr. Feinberg. No objection. I would welcome it.
Mr. Bonner. Good. Thank you. A couple questions. Vice
President Biden said that $20 billion is a floor, not a
ceiling. Is that correct?
Mr. Feinberg. That is correct.
Mr. Bonner. Let us just round it up. $6 billion. How much
do you think you will actually before August of 2013, based on
the trends you have seen thus far? How much do you think you
will exhaust?
Mr. Feinberg. I would be reluctant, Congressman, to take an
estimate of that, but I remind you, as you know, that that $20
billion is used for purposes other than the Gulf Coast Claims
Facility. Local cleanup costs come out of the $20 billion.
Government claims that are being paid in Alabama by BP comes
out of the $20 billion.
So I can't venture a guess as to how much the total amount
will be that will be spent. I would like to think that the $20
billion would be adequate to compensate eligible claims, but BP
has made it clear that if $20 billion is not enough they will
honor all additional financial obligations.
Mr. Bonner. You also indicated that you were independent of
BP. Your quote in July in 2010, ``I work for the people of the
Gulf region. That is who I work for. I am totally
independent,'' although the Federal judge has now questioned
that. ``I want to try and maximize as much compensation as I
can do fairly and consistently to the people I am trying to
serve down there.'' Do you still stand by that statement?
Mr. Feinberg. I do indeed.
Mr. Bonner. But does BP not have the final say on these
large settlement claims? Do they not have to approve or
disallow those claims?
Mr. Feinberg. Absolutely not. Absolutely not. What BP can
do under the protocol if it so desires for claims that are
overpaid by the GCCF in amounts in excess of $500,000, they
have the right to seek to appeal if they want to a three judge
panel that was set up not by me. It was set up to review the
claim. BP, to my knowledge, has exercised that right in one
single case.
Mr. Bonner. Well, that is inconsistent with information we
have received, but we will take that up separately.
You also indicated in answer to an earlier question that
there is basically one percent of the claims that are
fraudulent. Is that right?
Mr. Feinberg. We have received--I think I have this. We
have received what we think are 14,000 fraudulent claims, and
we have sent 2,800 to the Department of Justice.
Mr. Bonner. OK. Regardless, data that we have from your own
website that an auditor, an accountant, in my district has
collected every day to compare shows that 116,000 of the
331,560 claims processed have been refused payment, which would
mean 35 percent of the claims have been refused payment.
According to your data, are you stating that 35 percent of
those that have been refused payment are because of fraud?
Mr. Feinberg. No, not at all. If we have refused claims it
can be for a number of reasons: no documentation, insufficient
documentation, ineligible. It might be a claim from Idaho. I
don't know. I am just throwing this out.
Government claims are ineligible. Moratorium claims
unfortunately are ineligible. There are all sorts of reasons
that we either deny claims or deem claims to be deficient.
Mr. Bonner. Thank you again, Mr. Chairman.
Mr. Hastings. Thank you. The votes have just been called,
but we will try to get in some further questioning.
Mr. Thompson of Pennsylvania is recognized.
Mr. Thompson. Thank you, Chairman. Thank you, Mr. Feinberg.
My question is you mentioned that because there have been
approximately one million claims submitted, and in your
testimony you said that there may be certain inconsistencies in
the treatment of similarly situated claimants who offer similar
proof of damage.
My question is pretty straightforward. What have you been
doing or what are your thoughts on how can you improve on that
consistency? I recognize the sheer volume is a huge variable.
Mr. Feinberg. You are correct. In some weeks we have more
claims in a week, Congressman, than we received in the entire
life of the 9/11 Victim Compensation Fund. The sheer magnitude
of the claims will result in some inconsistency. It is
inevitable.
What we do when we find inconsistency--either we find it on
our own, or the claimant brings it to our attention, or the
claimant's accountant or lawyers bring it to our attention--we
will look at it. If we made a mistake, if it is inconsistent,
we will true it up and pay the difference. We are not looking
to promote inconsistency. It is a problem that we don't want to
have magnified.
Mr. Thompson. Thank you. I would yield the balance of my
time to Mr. Bonner from Alabama.
Mr. Bonner. Thank you. I have a few more questions.
According to data again collected from your website every
day and analyzed independently by an accountant, medical doctor
and also a city official in Gulf Shores, Alabama, 95 percent of
the claims that have been processed and reviewed, 54 percent
have been processed, issued for final payment, but 46 percent
have not received final payment. Sixty-nine percent paid of the
quick pay variety that require no additional documentation to
process. Thirty percent paid for the final payment.
I throw those numbers out to you because basically you
would lead us to believe that this has been a success because
so many people have continued to apply. I think you said 2,000
people a week continue to apply.
And yet is it not true that the burden you have placed on
many of these individuals and businesses for additional
requests for information, even when they have submitted their
claims with certified accountants who have shown the
documentation, that there has been a great inconsistency in the
payment process, and in fact that more people have not been
paid than have been paid?
Mr. Feinberg. I don't think there has been great
inconsistency. I mean, that is one reason you are promoting,
and rightfully so, the notion of the independent audit to get
some answers to that question.
I think that people that take the quick payment take the
quick payment because they don't have any additional
documentation to show us or have already been adequately paid
by an interim payment during the emergency payment period.
I point with pride, frankly, to the fact that overall there
is almost $6 billion that has gone out in one year,
Congressman. I think we are doing something right. And when you
say that people are applying at 2,200 new claims a week----
Mr. Bonner. Well, you said that.
Mr. Feinberg.--because they are being tricked or deceived,
I don't think that is the case at all. I think they see their
next door neighbor getting paid and they are going to file a
claim, and they are going to make the same argument and hope
that they can get paid as well.
Mr. Bonner. You mentioned audit. I believe I contacted you
in the spring of last year and asked for you to initiate an
audit on your own, and I don't believe that the GCCF agreed to
do that.
Mr. Chairman, we actually have a provision added to the
CJS, Commerce, Justice, Science, appropriation bill demanding
an audit and requiring the Justice Department to do it because
the Assistant Attorney General, Mr. Perrelli, who came to our
district, came to the Gulf Coast, realized that this was not
adding up as it was intending to be, and even the Attorney
General when he was along the Gulf Coast earlier this year then
contacted Mr. Feinberg and said an audit is necessary.
So the Chairman asked you in his question where the audit
is. The truth is the audit has not even begun yet. They have
not even named a firm to do the audit. Is that correct?
Mr. Feinberg. That is correct. Congressman, I just want to
say I don't speak for the Department on this.
The Department is going to choose the auditor and move at
your demand. I only want to point out about that independent
audit it is my understanding, and I mentioned this earlier,
that on the one hand there is a demand that the Department move
forward with great speed to get this going. Overdue, you would
say. Overdue.
On the other hand, the Department, as I understand it from
letters, copies of which I get, there are various public
interest groups, lawyers, elected officials in the Gulf who
want input into that process, and some of them have just in the
last few weeks got to the Department with their suggestions.
So I think the tension between speed and inclusiveness is
partly the reason why there has been a delay in your view.
Mr. Hastings. Thank you. We have less than 10 minutes to
vote if you look at the timing. If you look at the number that
haven't voted, we have more time than that.
So I will recognize Mr. Wittman, and this will probably be
the last question, and then we will recess. The time of getting
back here is approximately 11:30. Mr. Feinberg at that point
would only have a half hour, so for those of you that want to
engage, please get back here after the last vote.
Mr. Wittman, you are recognized for five minutes.
Mr. Wittman. Thank you, Mr. Chairman. Mr. Feinberg, I
wanted to follow up on Dr. Fleming's assertion about the oyster
industry there in the State of Louisiana; as you know, the
largest in the United States. They distribute shell oysters all
around.
The oyster industry is interconnected. Processors in one
state rely on harvesters and dealers in other states to have
their market needs to be met in those areas. Obviously the
Middle Atlantic is part of that, and you heard the synopsis
about the West Coast also.
In that vein, there are processors out there that have
these relationships with Gulf producers that have contracts
that say listen, I have to deliver a certain number of oysters.
In this realm of you considering claims, is it reasonable to
consider a claim from somebody that processes oysters in the
State of Virginia that relies on those oysters from the Gulf as
a legitimate claim under your process?
Mr. Feinberg. Absolutely. Absolutely. If there is a direct
link in your hypothetical between a Virginia oyster processing
company that depends for its livelihood on Gulf Coast shrimp,
by all means. I can go back and see, but I am sure we have paid
some of those claims. I know we have in Maryland.
Mr. Wittman. OK.
Mr. Feinberg. In Maryland, we have paid I think there are a
couple of oyster restaurants that we paid that were totally
dependent on Gulf shrimp for their livelihood.
Mr. Wittman. And we see that obviously the seafood industry
is interconnected both with shrimp and with oysters and in some
instances even fish, so to make sure that you are keeping in
mind the impacts, those secondary impacts on states and
producers I think is absolutely critical.
Mr. Chairman, I would like to yield the balance of my time
to Mr. Palazzo.
Mr. Palazzo. Thank you, Congressman Wittman. Thank you,
Chairman, for allowing me to sit in here today.
Mr. Feinberg, I have to share the same frustrations my
other Gulf states colleagues have expressed from Congressman
Bonner to Congressman Landry. Of course, I can't put it as
eloquently as Congressman Landry, but I would have to say we
are frustrated. We are tired. Many of us feel hopeless in the
whole process, but we also feel insulted.
You know, we have some very smart people. We have
accountants and lawyers that are trying to help people all
along the Gulf Coast provide claims and support and
documentation, and as they do it they feel like they are giving
the best information. They are giving exactly what the Claim
Center wants, and it is still rejected or there are delays in
processing.
So the comment Congressman Landry made, it is like is this
a stonewalling? Is this to drag it out, to not pay out the $20
billion, which again was supposed to be the floor, not the
ceiling, on making those affected by the worst manmade disaster
in our nation's history whole again?
But people don't feel like it. They see inconsistencies. I
mean, a perfect example is Omega Protein, a large company that
got a $45 million payout in their first year, and when you have
shrimpers and charter boat captains and others who have made a
living for generations off the Gulf Coast have yet to receive a
first payment, or the payments that are being offered are
insulting.
They are embarrassing, and it leaves them either with the
option of take what they can, cut their losses or go to
litigation. You know, quite honestly, to people in Mississippi
litigation is the last thing we would really like to go to. So
some people are adverse to it, but some people will go to it.
I guess the main thing is I am expressing what South
Mississippians and probably my colleagues all up along the Gulf
states, this is what we are seeing. This is what we are
feeling. Going forward, look. You have $14 billion left.
I noticed you sent out a mass mail out. If you have been
denied pay, if you have your paperwork now, come in. Keep
communicating that to the public. Keep letting people know that
they can receive reimbursements or they have the right to come
in and do a claim.
But also listen to the people who have made a living out of
the Gulf, have made a living, the fifth and sixth and seventh
generations of people in South Mississippi. If your methodology
for reimbursement is not acceptable to them, try to come in and
find some common ground, find that place, because these are the
experts.
I mean, I don't expect you to know how to reimburse a
shrimper. You probably have an idea now, but if that is not
what you are doing, and especially in going to the cities and
municipalities. I know that is supposedly not in your range,
but you have been on ground zero for a long time. The
methodologies that are being offered up to our cities and
municipalities are insulting. The City of Gulfport has been
offered $79,000. You know, maybe $79 million would be
acceptable at $1 per resident.
Again, I share the same concerns as my colleagues. I
appreciate the Chairman for allowing me to come in. Please take
that back home and make it right.
Mr. Feinberg. Thank you.
Mr. Palazzo. Thank you.
Mr. Hastings. I thank the gentleman. Yes?
Mr. Markey. If I may, Mr. Chairman?
Mr. Hastings. Yes.
Mr. Markey. I have just one quick question. I am
sympathetic to Mr. Landry on this shrimping question, on the
question of how we get with these fishermen. You know, this is
a huge, unprecedented science experiment that took place at
BP's hands dumping all the chemicals in with the oil, and now
we are seeing the worst shrimping year in 40 years.
If it continues past 2013, my understanding in the law is
that after 2013 all of this money goes back to BP. So do you
have a recommendation to us in terms of how we should handle an
issue like that, given the fact that the science might be
pointing toward a much longer term economic catastrophe for the
shrimpers and the funds in 2013 just dissolve? So do you have
any words of wisdom to us how we should handle it?
Mr. Feinberg. I would say two things. One is, what happens
after August 2013? That is a subject the Congress should raise
directly with BP and, I suppose, the Administration, which is
part of that escrow agreement.
But as you pointed out, Congressman, this is a rather
unprecedented situation. BP, as you pointed out, in putting up
this $20 billion, it is rather a unique contribution by a
private corporation to try and create a system that is not
required by existing law. I think BP deserves some credit, as
you point out.
Mr. Markey. No, no. I am giving them credit.
Mr. Feinberg. And I think----
Mr. Markey. I did that in the opening statement. It is only
what happens, given the fact that there is a causal connection
between what BP did and what could continue to be happening in
the Gulf in 2013, 2014 and 2015 in terms of ensuring that there
is some capacity to compensate people if the harm is still
occurring in a significant way, especially for the fishermen.
Mr. Feinberg. Again, one option would be if BP wants to
extend the deadline of the program or whatever past August of
2013 into some foreseeable future, but that is something that
Congress might raise directly with BP.
Mr. Markey. Thank you. Thank you, Mr. Feinberg.
Mr. Hastings. We are going to break, and I would just
simply say, and I referenced this in my opening statement, very
simply this is unprecedented. It has been repeated several
times. But the fact that the initiative did come from this
Administration without any semblance of oversight is somewhat
problematic, and this is maybe an experience, something in
progress, and we will have to see how it works.
We are getting very close to votes, so the Committee will
be in recess. Mr. Feinberg, we anticipate the votes will be
done approximately 11:30, and we will reconvene at that time.
The Committee stands in recess.
[Recess.]
Dr. Fleming [presiding]. The Chairman notes we have a
quorum, and we will resume. Thank you, Mr. Feinberg, for
hanging with us.
So we are back in session, and I believe, Mr. Southerland,
you are up next for five minutes.
Mr. Southerland. All right, Mr. Chairman. Thank you. Mr.
Feinberg, thank you for coming up, and I also want to thank
you. I had some questions that I called you several months ago
and you were kind enough to discuss my concerns on the phone,
so really some follow-up on the dialogue that you and I--can
you hear me OK? OK.
I want to ask. As far as the determining, how do you
determine loss based on the documentation that you require and
should require in order to pay a fair claim to restore the
damage that small businesses have incurred? Talk to me a moment
about what your examiners look at as far as historical, how far
you go back.
If someone has already asked you this question I apologize,
but address that for a moment for me.
Mr. Feinberg. We will look, Congressman, to an income
statement, a wage statement prespill. We will go back and look
at before the spill, 2009. We will look at the beginning of
2010 in appropriate cases, 2008.
We will try and get a composite picture. What was this
small business doing before the spill? What did the trend look
like? How were they doing? And what does it look like
postspill? Now, sometimes a business will say to us gee, be
careful. That was during Katrina and that is a bad example.
Mr. Southerland. Right. Right.
Mr. Feinberg. And we will take that into account. We try to
come up with a fair picture pre/post.
Mr. Southerland. If I may, to address that a little deeper,
in our community, and I live in Panama City, Florida, so Bay
County, which is one of the larger coastal communities along
the Gulf Coast. We had a significant event that occurred in the
history of not just our county, but also our region. We opened
our brand new airport in Bay County just a month or so prior to
the oil spill.
And the reason I bring this up is because that was done in
2010. The 10 years preceding that was, as you can imagine, an
incredible effort to get this project done. There has not been
an airport built from scratch since Denver, so it was a pretty
big deal.
Well, we have bounced back, and we have bounced back
soundly. In 2011, bed taxes were great. Businesses were
starting to recover, and they really had a wonderful year. So I
could make an argument that you have to factor in 2009 and 2011
if you are going to determine what 2010 would have been like
with that significant event.
And what we have done in securing other airlines into that
airport--Delta and Southwest and airlines that we have never
enjoyed--I can make a pretty good argument that if you just
look backwards and not forwards then the small businesses that
will file those claims will not have the benefit of the doubt
of recovering a fair and equitable amount of money.
Mr. Feinberg. Two answers. One, these small businesses
ought to have you representing them. I mean, we welcome that
type of dialogue.
Mr. Southerland. I am representing them, by the way.
Mr. Feinberg. Good. Before the GCCF.
Mr. Southerland. I understand.
Mr. Feinberg. To try and get a good, fair composite
picture. Now, let me just say it sounds to me, and you will
correct me, that is probably if it is an airport damage claim,
that is probably a government claim.
Mr. Southerland. Yes.
Mr. Feinberg. If the airport can show that it has actually
lost revenue because of the spill because people didn't fly
in----
Mr. Southerland. Right.
Mr. Feinberg.--because they were in fear of the spill, that
sounds like a government claim----
Mr. Southerland. Right.
Mr. Feinberg.--which I wouldn't handle anyway.
Mr. Southerland. No. I understand. And we have been meeting
with the BP representatives regarding governmental claims, and
that is a whole other effort for our office.
But I just want to say that if our small businesses can
have, especially around the geographical area of that airport
because that airport serves multiple counties. You know, I have
Walton, I have Okaloosa, and then I have Gulf. And so I am
pleased to hear you say that.
Mr. Feinberg. Congressman, if you want to convene that
group or you want me to meet down there with a group that can
explain the situation----
Mr. Southerland. Sure.
Mr. Feinberg.--make sure we do it the right way, I will of
course respond immediately to your suggestion.
Mr. Southerland. Very good. We will do our homework to try
to gather them, those individuals that have that concern, and
we will reach out to your office. You gave me your contact
information, so you will hear from me.
Mr. Chair, I yield back. Thank you.
Dr. Fleming. The gentleman yields back. Mr. Holt, you would
be up next----
Mr. Southerland. Here he is.
Dr. Fleming.--if you have any more questions.
Mr. Holt. Let me yield to Mr. Landry, but retain the----
Dr. Fleming. OK.
Mr. Holt.--space.
Dr. Fleming. Very good. All right. Mr. Landry?
Mr. Landry. Sure.
Dr. Fleming. You are up next for five minutes.
Mr. Landry. Thank you, Mr. Chairman. Mr. Feinberg, I want
to go back and just clarify a couple of things. I know this
isn't directly your responsibility, but going back to the
moratorium fund. That fund has now been closed off. Is that
correct? You have no----
Mr. Feinberg. Until I heard this morning the representation
that it was closed off, I didn't know it was closed off. I
doubt that it is closed off, but I don't know. I have enough
problems of my own with the GCCF.
Mr. Landry. Well, I know, but the problem I am having is
that actually see, to me it concerns me because I believe that
oil and gas companies, along with our fishermen and everyone
else, the moratorium was a direct impact from the spill, you
see.
And so there are a lot of businesses both directly tied to
the oil and gas industry or indirectly tied to the oil and gas
industry who have been impacted, that were impacted by the
moratorium, and I am concerned that they are not getting paid
as well. Recently I visited an oil and gas supply company.
Their business is down 75 percent, and yet when they sent their
information over, all of their accounting information, they
were denied.
Of course, that folds into or dovetails into what I think
is another problem that I think Mr. Bonner had alluded to is
that I am hearing across the Gulf Coast from people who have
applied to your Fund that when they check in, when a claimant
checks in and says where are we, they will say listen, we lost
some paperwork. Could you resubmit this? Could you resend this
to us?
And what I am telling you, Mr. Feinberg, is it is just too
coincidental that the person in Houma, Louisiana, is having the
same problem as the person in Mobile or the person in Pensacola
when it comes to the GCCF losing their paperwork. I mean, it
just doesn't happen that coincidentally.
Now, I know that you have set up in Louisiana the Long law
firm to assist people in trying to put their paperwork
together, and I think that has helped as well, but it just
seems like the process is taking way, way too long.
Mr. Feinberg. Three answers. One, there is no
misunderstanding here. I share your concern about the
moratorium claims. I wish I could pay those claims. I have no
jurisdiction over those claims from day one. You are preaching
to the choir. I think I have 1,600 claims, Congressman, that I
would like to pay and I can't.
Mr. Landry. Well, do you move those over to the other Fund?
Mr. Feinberg. I move them over to the other Fund, but the
other Fund, as far as I can tell, has shown no inclination in
paying these claims because they are not rig worker claims or,
as Congressman Holt pointed out an hour ago, even if the
moratorium fund will pay some of those claims, as he cited some
statistics, they haven't broadened it sufficiently.
Mr. Landry. OK.
Mr. Feinberg. So I am sharing that view.
Mr. Landry. OK.
Mr. Feinberg. Second, we are not losing any paper. Now,
when we started, Congressman Landry, when we took over for BP
last summer into the early fall paying the emergency payments,
transitioning from BP paying the claims over to the GCCF taking
over, then we did.
We have processed 95 percent of the claims, over a million
claims, and the idea that we are losing paper, I just don't buy
that idea.
Mr. Landry. Well, I will tell you what. I mean, look. I
don't believe people down in the district are being
disingenuous as well, and of course I have seen a lot of times
where what we are being told up in Washington and maybe what
you are being told up in Boston is different from what exactly
goes on to the ground.
So, Mr. Chairman, I would just ask, put in a request that
we look for both with Mr. Holt and with Mr. Markey and Chairman
Hastings, that we try to look to maybe doing a field hearing
down somewhere in between. Maybe we can go down to Biloxi. You
know, we will split the difference between Florida and
Louisiana.
Mr. Feinberg, if you would be so grateful as to come with
us, and we could hear directly from--before we put you up, we
will give you the benefit of the doubt. We will put them up to
the table, and then we will listen to them and then we will
bring you on and then somewhere in the middle I guess we will
find what the truth is.
Mr. Feinberg. Since we took over last August, I have
received 60 million pieces of paper. It is conceivable. I would
suggest, Congressman, if there are particular constituents who
claim lost documents you just get me their name and their claim
number. I will personally get back to you with a status report
on those claimants who claim lost documentation.
The other thing I just want to mention before you depart. I
checked during the break, and I have an answer for you. If
somebody files their claim with the GCCF they are protected by
the Federal statute of limitations.
Mr. Landry. Thank you so much. That makes me feel so good.
Thank you. That is important. Thank you so much. Mr. Chairman,
I yield back.
Dr. Fleming. Yes. The gentleman yields back, and next is
Mr. Holt. You have five minutes.
Mr. Holt. Thank you, Mr. Chairman. I thank you again for
the work you are doing, and I think no one here is surprised
that you are a good witness and very forthcoming. We appreciate
that.
To some extent following on what Mr. Landry was talking
about, or at least a related point, if there is money remaining
in the Fund that hasn't been expended by 2013 what happens to
it, and do you happen to know, although it is not your
responsibility, what about the moratorium relief fund, this
Baton Rouge Foundation Fund? What happens to that money?
In your case, does it go back to BP? If so, what are the
safeguards built into the system to prevent--what would you
call it--an unintentional tendency not to give it out?
Mr. Feinberg. Congressman Holt, you ask the same tough
questions that you did when we were doing the 9/11 Fund, and I
just want to thank you again for what you did 10 years ago--10
years ago--to get those New Jersey constituents to understand
how the 9/11 Fund worked. I'm in your debt for that.
Now, during the break I checked on this because I wanted to
make sure I am accurate. In August of 2013 when the GCCF is
ready to close by agreement between the Administration and BP,
there are three independent trustees in charge of the overall
escrow $20 billion. Remember, it is not just me drawing on the
$20 billion.
If those trustees conclude that there are more than $1
billion worth of claims that appear to be outstanding, even
though they are beyond 2013, they have the power to keep the
Fund open, and every six months those trustees will review the
state of the claims. Only if the total claims fall under $1
billion will that money then revert back to BP. So the
independent trustees--not me, but the independent trustees--
have some say.
On the $100 million moratorium fund, it is my understanding
that money is forever gone from BP's dominion. They have no
control over it whether $100 million is used or $80 million is
used or $20 million is used. That money is then going to be
distributed by the Fund, by the trustees administering that
Fund. That money will not go back to BP, as I understand it.
Finally, if anybody in my day-to-day administration, if
anybody feels that I am not spending the money the way I
should, that if claimants feel they are not being paid
adequately, they have the right to take their claim to the
United States Coast Guard and have the Coast Guard do an
independent review of how I have ruled on their claim. Fifteen
hundred people have done that, and the Coast Guard has agreed
with the GCCF every single time so far.
Mr. Holt. Yes. Thank you. So just to be clear, BP, to whom
the money would return if there was money left over less than
$1 billion and fewer than $1 billion of claims remaining, they
have no say in how it is administered now, so there is no
hidden bias for them to hold onto it. OK.
Mr. Feinberg. That is absolutely correct.
Mr. Holt. Apart from the trustees ruling on whether there
are still outstanding billions of dollars of claims, could BP
voluntarily keep alive your function?
Mr. Feinberg. I think they could. I think BP would
technically need the support of the U.S. Government, the
Administration, to do it, but I think that is up to BP. I must
say, as Congressman Markey pointed out earlier, whatever
criticism one wants to level at BP, I know of no case in
history--I can't think of one--where a company voluntarily put
up $20 billion to resolve claims.
I think the criticism ought to be tempered by the fact that
this is a rather extraordinary step that BP took for whatever
the reason, and I think the Administration frankly, just as the
Bush Administration was able to promulgate this 9/11 Victim
Compensation Fund 10 years ago, I think that the Administration
in getting BP to do this I think was a major positive step.
Mr. Holt. Well, thank you. And with the Chair's indulgence
for 10 or 15 more seconds, the reason I am following this line
of questions is, as Mr. Markey was saying earlier, the
shrimping grounds, it looks as if there will be hard times for
years to come and so we want to make sure that people aren't
left out, so to speak, in the cold.
It is a fairly warm climate there, but you get my point.
The shrimping industry and perhaps others look like they will
be hard hit for a long, long time. Thank you.
Dr. Fleming. The gentleman yields back. The Chair notes
that we are up against a hard time, noon, and it is going to
work out perfectly because we only have one other questioner,
my colleague from Louisiana, Mr. Scalise. He has five minutes,
and that should get us out right on time.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate the
courtesy of the Committee to allow me to participate, and I
thank Mr. Feinberg for coming and have a few questions in the
five minutes.
When we talk about the trustees, who appointed the two
trustees? How did they----
Mr. Feinberg. Again, not part of my--I have enough
problems, Congressman. I am not sure how those trustees were
appointed pursuant to the escrow agreement. It was some
agreement between the Administration and BP.
Mr. Scalise. OK. We will continue to try to find out
specifically how that came about.
When we talk about the agreement between the Administration
and BP, I think in earlier questioning by Mr. Landry he was
asking about the issues relating to the permitorium, the people
that haven't been able to go back to work because of the lack
of timely issuance of permits, and you said that you can't pay
those. Is there something in the agreement between BP and the
Administration that prohibits you from paying them?
Mr. Feinberg. That is right. I think that when the Gulf
Coast Claims Facility was established there was an
understanding entered into.
I don't know if it is in writing in the escrow agreement or
an agreement between the Administration and BP or that BP
unilaterally declared this before bringing me on board, that
the moratorium claims would not be part of my jurisdiction, nor
would government claims, as you know, be part of my
jurisdiction.
Mr. Scalise. Thanks. A few months ago I had asked you for
some detailed information broken down in metrics on claims paid
out, as well as claims rejected. I was able to get some of the
information on claims paid out, although I didn't get it broken
down by state and region, and that was one of the things that I
had requested.
I would like to ask you about that, and also we were not
able to get any information on claims that have been rejected.
Mr. Feinberg. Take a look after we adjourn or have your
staff, I suggest, take a look at Attachment B of my testimony
today. Attachment B breaks out the overall statistics by state,
including Louisiana, and under Louisiana how much has been paid
out, how much deficient, how many denied, how many accepted,
how much paid out.
Mr. Scalise. Do we have that by industry too so if we want
to go into seafood, let us say, some of our seafood processors,
because that is my next question I want to ask you about.
Mr. Feinberg. That is not in Attachment B. I can get you
that. You don't even have to send me a letter. Have you staff
email me, and I will get you that information.
I do know that approximately as of the middle of this month
$1 billion in the aggregate has been paid to the seafood
industry.
Mr. Scalise. OK.
Mr. Feinberg. But I can get you more information.
Mr. Scalise. I am sure the email is going out from my staff
right now. But the specific request that we want to know is
within the seafood industry how is that broken down by region.
If you can only give it at the state level, but if possible
even at the more local level.
Mr. Feinberg. I will try and get that for you.
Mr. Scalise. Finally, the complaints that we are getting
still seem to be some coming from, for example, some shrimpers
that have processing facilities, some that just brought on more
people right in advance of the Macondo Well explosion and have
since had some severe layoffs, still dealing with severe
problems from the industry not coming back, and yet I think you
have met with a few of them individually, and they still
haven't been able to get any kind of answer.
Can you tell me what the holdup is, especially with shrimp
processors? Maybe it is just in Southeast Louisiana. Some of my
other colleagues might be experiencing it along the Gulf Coast
too.
Mr. Feinberg. I have two answers. One, we have processed
and paid plenty of--and I can get you the numbers as you have
requested--shrimpers, shrimp processors, shrimp harvesters, the
shrimp industry, but you are absolutely onto something here.
Earlier I mentioned this. I have been down in the Gulf, as
you know, and to your district----
Mr. Scalise. Yes.
Mr. Feinberg.--on a number of occasions, and it is clear
that the GCCF does have to be more responsive to the shrimpers.
Mr. Scalise. Yes.
Mr. Feinberg. There are a lot of shrimpers that haven't
filed a claim yet with the GCCF because they are watching and
waiting to see how the GCCF will treat the shrimp industry.
You have been very constructive and very vocal with me
about the need to do something about those shrimpers. We will
in a matter of weeks take another look at how we deal with the
shrimpers, but I assure you, Congressman, that your concern
about the shrimpers is not going unnoticed, and we are going to
try and find a way to be more generous toward the shrimpers in
Louisiana.
Mr. Scalise. Well, thank you. I will continue to work with
you because there are a few specific shrimp processors who I
know have filed formal--not a complaint--they filed formal
paperwork with the GCCF and haven't gotten any answer yet, so I
will continue to push to make sure we can get those resolved,
and then that may provoke some others to get involved.
I only have a couple seconds left. I will give a plug real
quickly for the RESTORE Act because this is on a separate issue
not in your shop, but all five Gulf Coast states have now come
together in the House.
We filed legislation just a few weeks ago that would
dedicate at least 80 percent of the fines BP will have to pay
under Clean Water Act to allow us to restore specific
environmental and economic damage that is not covered by your
operation that we know we will have and may have for years to
come.
Mr. Feinberg. If you can get me the name of those
shrimpers, I will look at those. Nobody has been a more
constructive critic than you, Congressman. I hope to continue
to work with you. Your people have been very forthright, and I
appreciate your concerns.
Mr. Scalise. I appreciate that. That will probably be
included in the email. There might be a second email, because
the other one probably already went out.
But I appreciate you coming before our Committee. I
appreciate the Chairman and the Members for their discretion in
allowing me to ask questions. I yield back.
Dr. Fleming. The gentleman yields back. Mr. Feinberg, we
have one more Member who has appeared, and in an effort to be
as fair as possible to both sides if you would indulge us one
more questioner I would appreciate that.
So I now recognize Ms. Lee, the gentlelady from Texas.
Ms. Jackson Lee. I thank the gentleman and the Chairman for
their indulgence and their kindness, and I will be pointed.
I thank my colleague. I am an interested neighbor and one
who has worked with your constituents just because of my role
on the Homeland Security Committee and my familiarity with the
original work that Mr. Feinberg was assigned to. I want to
thank him for that and, however, express that I am likewise a
Boy Scout serving on the Boy Scout board, having a husband Boy
Scout and a son Boy Scout, so I am an unhappy camper.
I would like to ask first how much of the money have you
spent of the $20 billion?
Mr. Feinberg. With final offers outstanding, in 14 months
we have authorized about $6 billion.
Ms. Jackson Lee. And the life of this Fund is until it is
spent, or you have a period of time?
Mr. Feinberg. August 2013.
Ms. Jackson Lee. I am sort of disappointed at the pace. I
am going to ask you whether or not you have heard the
discussion of the shrimpers, and I did not know if I came in
too late to listen about the oystermen. Have you engaged with
the oystermen in that area?
Mr. Feinberg. We certainly have, and we have created a
methodology designed to take into account oystermen concerns.
Ms. Jackson Lee. Well, as you well know, I have attempted
to meet with you. It has been frustrating, and I would like to
officially make a request to meet with you as soon as possible
in my office and also in Houston. So who should we reach out to
get that done?
Mr. Feinberg. I will get in touch with you, Congressman, in
the next day or so to set up a date to meet with you here.
I am going to be in Houston Monday, Tuesday, Wednesday--one
of those dates--November 28 through 30. I am working with, I
think, Congressman Green of Houston to try and get community
leaders together in Houston, and I will be glad to meet with
you in Houston as well.
Ms. Jackson Lee. All right. If we can work on that? We
happen to all be in the same area, but we have different
jurisdictions.
There is a group led by, I believe, Dr. E. Faye Williams. I
would like to ensure that you could meet with that group and
meet with her. I may ask her to come in to Houston for the
meeting or how we can arrange that meeting, and so we will work
together on that.
Let me just proceed with some line of reasoning. One of the
points, as you well know, that has maybe plagued the
shrimpers--I am not sure--but the oyster persons and others is
all of the documentation questions. That is a very challenging
question about individuals working in a different kind of work
and not having the documentation.
How are you responding to that? They still exist. I don't
know whether they are restaurants. There is also the issue of
collateral damage. How are you dealing with that?
Mr. Feinberg. We work with these claimants to try and come
up with proof, some proof that their claim is linked to the
spill and they can show some damage.
Congresswoman, as you know from my 9/11 work, I don't need
a full panoply of tax returns and profit and loss statements,
but I need a minimal amount of documentation, and we will
continue to work with claimants in trying to get the bare
minimum that will allow us to pay a damage claim.
Ms. Jackson Lee. Well, when we have this meeting we will
meet with some of those who you may be able to give them
courage or, excuse me, encouragement because you may say that
what they already have.
The reason why I know that some communities, and I see Dick
Gregory and want to acknowledge his presence here, have not
reached out is because they are intimidated by the process. You
have $15 billion left. We are talking about 2013. That is a
long road for somebody to have their doors closed and never
have hope ever again.
The reason why I came to this hearing is to indicate that
my region is impacted by it as well. I have lived through not
only the BP oil spill, but Hurricane Katrina and Rita. I know
that is not your responsibility, but compounded there are those
who can connect their present status to this incident that
occurred. We want to put people back to work. We want to make
sure these funds are utilized to rebuild communities.
So as I close and respect the time that you have to leave,
I would simply say there are those out there that we need to
reconstruct or have some of your staff work with these
community organizations so they can legitimately present to you
documentation to be compensated.
Mr. Feinberg. I completely agree.
Ms. Jackson Lee. Thank you. And I yield back, Mr. Chairman.
Dr. Fleming. The gentlelady yields back. I thank the
gentlelady and also thank you so much, Mr. Feinberg, for
appearing. Thank you so much for holding over. You are
obviously a very sincere person, very candid and attempting to
do the best job possible. We certainly appreciate that in
Louisiana, Texas, Mississippi, Florida, all the states,
Alabama, that are affected.
With that, Members of the Committee may have additional
questions for the record, and I ask that you respond to these
in writing.
If there is no further business, without objection the
Committee stands adjourned.
[Whereupon, at 12:10 p.m. the Committee was adjourned.]