Fund chief vows faster, fatter checks

Published July 2, 2010 in the Pensacola News Journal

GULF SHORES, Ala. - Claims czar Kenneth Feinberg said Thursday that Gulf Coast residents can expect quicker and larger payments than they're getting now from a $20 billion fund established by BP to pay for oil damages and economic losses.

Feinberg said at a news conference that he plans to drop the current system of making emergency payments to claimants on a month-by-month basis and, instead, give larger lump-sum emergency payments.

"Time is the enemy," he said. "This is life for many people in terms of their financial instability and the need for financial certainty. We do not have a lot of time."

President Barack Obama chose Feinberg to oversee the escrow account, called the Gulf Spill Independent Claims Fund and established by the oil giant to reimburse affected residents. He oversaw similar funds for families impacted by the Sept. 11 terrorist attacks, the Virginia Tech shootings and Agent Orange during the Vietnam War.

Feinberg spent most of Thursday morning in meetings with Alabama Gov. Bob Riley and local businesses owners and individuals affected by the oil spill. He met with Florida Gov. Charlie Crist later in the day in Tampa.

He is administering both BP's emergency payments and the oil company's long-term settlements with businesses and individuals affected by the spill.

Those who receive the emergency money still have the option of suing later. Those who receive settlements do not.

On Wednesday, Feinberg testified before Congress that the difficult task ahead will come with tough decisions about whether businesses are eligible for payment in areas where the oil may not be visible but where its impact in lost business is clearly felt.

"Clearly, under Florida law, it's not compensable if there is no physical damages to the beaches," he said.

But he said he's seeking discretion to make payments in those areas.

"How we deal with that problem is something I've got to address," he said. "That's in this area where some discretion is going to have to exercised."

A Boston restaurant suffering for lack of Louisiana shrimp clearly doesn't deserve compensation, Feinberg said. But a beachfront hotel in Florida might deserve compensation if it lost half its business because of misperceptions about the spill, despite clean beaches, he said.

"There isn't enough money in the world to give everybody who would like it some money," he said.

While the Sept. 11 compensation fund will serve as a framework for Feinberg's approach, there are differences.

The terrorist attacks had some 3,000 well-defined victims whose families were left without incomes. BP has said the blowout won't be capped until August, so exactly how the disaster will continue to affect the environment and the economy is unknown.

"You don't know if your oyster beds, your shrimp or your hotel is going to be affected," Feinberg said. "We have an ongoing spill. Until it's capped, it's hard to do anything but emergency payments."

Feinberg said he will personally review as many of the individual claims as he can.

To date, BP has paid nearly $130 million on 41,000 claims. More than 80,000 claims have been filed.

As Feinberg took questions Thursday from the media, his booming New York accent was in contrast to Riley's Southern drawl. But Riley, in his second meeting with Feinberg, said he is confident that Feinberg's interests lie with the people who are suffering from the oil disaster.

"My visits here have reaffirmed what I thought, that these mass disasters that impact innocent victims generate a great deal of emotion," Feinberg said in a recent telephone interview. "People are upset at life's unfairness."

Sole arbiter

Zygmunt Plater, a law professor at Boston College and former chairman of the State of Alaska Oil Spill Commission's Legal Task Force after the 1989 Exxon spill, called the $20 billion BP fund a "master stroke."

"We had asked Exxon to do exactly this. Their answer: complete silence," Plater said.

Feinberg represents a neutral mediator with autonomy from both the shareholder-driven enterprise and the politics of government. The discretion over who gets what lies solely with him and his staff.

"Independence is very important to my credibility," he said.

Michael P. Allen, a Stetson University law professor who specializes in complex civil lawsuits, said attorneys across the country are clamoring to get a piece of the pie. So it goes without saying that attorneys would encourage people to sue, he said.

"The fees that can be generated through massive litigation can be huge," he said. "If they get their foot in the door by having an action filed, they're going to be able to belly up to the trough at some point."

Ronald Motley is a South Carolina attorney who has some 60 cases against BP. He also represented families who sued the supporters and financiers of Al-Qaeda, which orchestrated the Sept. 11 terrorist attacks, so he has experience in dealing with Feinberg.

"I don't think anyone can question his honesty," Motley said. "My experience is that he is very conservative."

So far, more than 200 lawsuits have been filed against BP.

It took 18 years for the legal battles waged by fishermen and Alaska residents in the Exxon Valdez oil spill to make their way through the courts. With the widespread impact of the spill, however, Motley doesn't believe the cases against BP will take so long.

Motley also believes people might get more if they sue rather than settle through the claims process.

"You might have to wait longer, but some people might not be able to wait," he said.

Wise to apply

Still, some attorneys whose clients are suing for long-term economic hardships say it's wise to apply for money through the fund. People who aren't satisfied can turn down the award and take their case to court.

Pensacola attorney Mike Papantonio, whose law firm Levin Papantonio has multiple plaintiffs suing BP, said "anybody in their right mind" would like to deal with compensation outside of court.

But he said many plaintiffs won't be eligible for the fund.

"You're going to have these subgroups and there's going to have to be some judicial finding on how far the dominos fall," he said.

Papantonio said people who end up dissatisfied with the Feinberg offer will have their information already prepared to take to an attorney.

"We'll know in the next 90 days what this all really means," he said. "Whether this is BP trying to put everybody at ease while they continue to do deplorable things or if it's just a shiny thing they put out there to distract us."

Feinberg believes he can do right by the people of the Gulf Coast as BP pledged to replenish the escrow fund if the well runs dry.

"Fortunately I am not in a position where I'm required to allocate a limited amount of money, which would pose tremendous emotional problems," he said.


City of Pensacola assembles 'dream team' attorneys for BP lawsuit

Published April 16, 2011 in the Pensacola News Journal

The City of Pensacola has retained a team of attorneys from around the country to file a claim against BP and other companies associated with the Deepwater Horizon oil spill.

Pensacola Mayor Ashton Hayward announced that he has assembled what he calls a "dream team" of local and outside attorneys to represent the city in an upcoming legal battle over lost tax revenue.

"If this legal team is able to get BP and its subsidiaries to pay for the damages caused to our city, then the city and the taxpayers win," he said. "We are going to have a reduction in revenue because of the oil spill. It might take us a year or two to see that reduction, but it's coming."

Two firms are from Pensacola: Beggs & Lane and Levin Papantonio. Also included are the New York firm of Weitz & Luxenberg, Tallahassee-based Hinkle & Foran, the Orlando law firm Morgan & Morgan, and Dallas-based Baron & Budd.

"When you're already tightening your belt as a government entity, any revenue you lose, especially in the summer in tourist season, that's a tough situation to deal with," said J. Nixon Daniel III of Beggs & Lane. "I think we've got a very good team of lawyers put together."

Many of the law firms already have pending litigation against BP.

The Levin firm and Beggs & Lane represent groups of restaurant, hotel, property and business owners along the Gulf Coast who claim that they've suffered as a result of the spill.

The law firms will be paid on a contingency basis, meaning there is no cost to the city unless it's awarded damages as a result of the yet-to-be filed lawsuit.

Travis Peterson, spokesman for Hayward, said the law firms agreed to an 18 percent contingency fee in the event that the city receives money. Standard fees range from 33 to 40 percent.

The Levin firm attorneys include Mark Proctor and Brian Barr, who already are heavily involved in oil spill litigation.

Barr, is part of the steering committee of the Judicial Panel on Multi-District Litigation. The MDL committee is a panel of plaintiff's attorneys assembled to deal with pretrial issues in the more than 400 lawsuits that have been filed since the April 20 oil rig explosion off the coast of Louisiana.

How much effect the spill had on local property values - and how much less property tax revenue that means - still isn't clear.

"When you get into those types of issues, I think the attorneys will have to look into how much of that's a result of the bad economy, how much of that is because of BP," city finance director Dick Barker said.

While the City of Pensacola hasn't yet filed a lawsuit against BP, it has, like most municipalities, received some money for costs related to the cleanup.

Currently the city has $122,000 in outstanding claims against BP related to the loss of sales tax and bed tax revenue. It has already received $83,9466 from BP for water monitoring and engineering, the costs incurred by the visits of Vice President Joe Biden and President Barack Obama and other legal fees.

The city's potential legal claim against BP is much smaller than that of Escambia County, which includes heavily affected Gulf-front tourist destinations like Pensacola Beach and Perdido Key. The county's role in the cleanup was also more sizable with its oversight of the Emergency Operations Center and the lion's share of the booming, air patrol and monitoring operations.

The county already has received $1.8 million in emergency money from BP to cover day-to-day expenses during the cleanup.

It has also received $1.48 million from May to September 2010 for lost tourist development taxes, tipping fees from the landfill and franchise fees for electricity and natural gas, among other losses. The county also received $846,000 for operational expenses, such as boom purchase and deployment, staff overtime and the activation of the EOC.

Like the city, the county is considering its own lawsuit against BP, according to County Attorney Allison Rodgers.

"We don't know the total effect based on oil yet," she said. "We are preparing. We're going to have to put significant resources into recouping those losses."



RICO suit: BP manipulated Bush team

Published June 15, 2010 in the Pensacola News Journal

A newly filed federal lawsuit in Pensacola accuses BP of manipulating government agencies during the Bush administration to relax regulatory oversight of offshore drilling and oil operations in the United States.

It's that relaxation of the rules that allowed BP to run afoul of safeguards that could have prevented the April 20 explosion aboard the Deepwater Horizon oil rig, the civil lawsuit claims. Eleven workers aboard the rig, located off the coast of Louisiana, were killed in the blast.

"In the greedy interest of billions of dollars in offshore drilling profits, BP chose to misrepresent its capability to respond and prevent impact to the environment, the public and the plaintiffs, and concealed its incapacity to response," the suit says.

The Levin Papantonio law firm in Pensacola and the Eastland Law Offices of Greenwood, Miss., filed the 36-page, class-action suit over the weekend.

It refers to "an ecological Armageddon that could literally destroy the marine and coastal environment and way of life for generation of Americans."

The suit is filed under the Racketeer Influenced and Corrupt Organizations Act, or RICO, which is designed to combat organized crime networks and the mafia.

It lists Pensacola Beach developer and property owner Robert Rinke as a plaintiff and BP, its North American subsidiaries and BP CEO Tony Hayward as defendants.

The conspiracy of deregulation and shallow oversight lowered the value of Rinke's property and other home and condominium owners' properties along the Gulf Coast, the suit says.

"If you consider why we are where we are with this catastrophe, it's because we allowed the oil industry to dictate what we were supposed to do rather than us dictating what they are supposed to do," attorney Mike Papantonio said. "An agency charged with safeguarding all of us became captive and simply an extension of the petroleum industry."

BP spokeswoman Lucia Bustamante that she cannot comment on pending litigation.

Novel approach

The RICO suit joins some 200 filed in state and federal courts. In a separate class-action suit, the Levin Papantonio firm also represents a swath of businesses and individuals, including beach rental owners, shrimpers and fishermen, against BP and its partners in the drilling operation.

The RICO tactic is relatively novel among the numerous legal challenges, Stetson University civil law professor Michael Allen said.

"It's quite unusual to say that the (criminal) enterprise is created between private industry and the government," he said. "I'm not sure RICO sweeps that broadly and I am not sure what legally this action will bring to the table considering all of the other actions out there."

The RICO suit shines a light on a years-old controversy involving the Minerals Management Service, the branch of the U.S. Department of Interior that oversees both the regulation of drilling operations and the collection of lease fees for oil operations on public lands and in public waters.

In 2008, the Inspector General's Office uncovered a cozy relationship between MMS and the oil industry that included industry officials hosting sex and drug parties for government workers whose duty was to regulate the drilling. Industry officials also showered their own regulators with lavish gifts, vacations, tickets to sporting events and parties.

"Since 2000, the relationship between the oil companies and the MMS agency that regulates their offshore drilling has been characterized as an incestuous revolving door," the lawsuit says.

The suit also references a 2000 retreat for government officials hosted by former Vice President Dick Cheney with the goal of drafting a national energy policy.

The meeting, which is now referred to the "Cheney Energy Task Force," was attended by a number of oil executives, including BP's regional president Bob Malone, the lawsuit alleges.

"Upon information and belief, part of BP's agenda at the meetings included installing oil industry appointments to MMS and other agencies so that BP could fraudulently cut corners on safeguards for offshore drilling projects," the lawsuit claims.

Those rolled-back safety standards are at the heart of the Deepwater Horizon explosion, a 2005 explosion at BP's Texas City Refinery and the 2007 release of 200,000 gallons of crude oil into the Alaskan wilderness, the suit says.


Republican lawmakers like Florida's Sen. George LeMieux and U.S. Rep. Jeff Miller have said the finger-pointing at the Bush administration is unfair.

They've noted that Obama hasn't remedied the problems within the MMS and that his campaign benefited from BP donations.

"You have Democrats and Republicans who have taken contributions from the oil industry in the past," Miller said. "It was the Obama administration that permitted this well to go to its permanent status."

But Papantonio, a liberal pundit on cable TV talk programs and on blogs, casts the blame on the previous administration.

"The only way that happened was because there was a concerted effort to take all of the teeth out of regulations," he said.