The Gulf Oil Spill - BP Victims Compensation Fund
BP Victims Compensation Fund
As required by OPA, BP began processing and paying claims directly to affected individuals in May, 2010. BP invited individuals who had been affected to submit applications through the “BP Claims Process.” BP offered to reimburse affected persons and businesses for costs deemed attributable to the oil spill including direct property damage, lost income and wages or lost net profits, natural resource damage, and oil removal and cleanup. The claim process implemented by BP required the submission of significant amounts of paperwork including past tax records, pay stubs, or business ledgers.
BP’s internal efforts were seen by many as insufficiently transparent, and after significant public and political pressure, on June 16, 2010, President Obama announced that BP had agreed to set aside $20 billion for a victim compensation fund to be administered by an independent organization overseen by Kenneth Feinberg. BP deposited an initial cash payment of $3 billion into the fund, with the remainder of the $20 billion to be paid out of BP’s future revenue over the next three years. According to Mr. Feinberg, his goal in administering the BP fund is to compensate victims for their losses, not to punish BP. In contrast, litigation in federal court holds the prospect of a big punitive damage verdict and is likely to extend to other entities involved such as Transocean (the rig owner), Halliburton (the cementing contractor), and Cameron International (the manufacturer of the failed blowout preventer).
Under Mr. Feinberg’s direction, BP established the independent Gulf Coast Claims Facility (GCCF) to assume responsibility for processing claims for assistance. The facility officially took over responsibility for all claims from the BP Claims Process on August 23, 2010, and all claims that had previously been submitted directly to BP were automatically transferred to GCCF for processing. At the time of the August 23 handover, BP announced that the BP Claims Process had paid out $399 million, which would not count towards the $20 billion budget for GCCF.
GCCF accepts applications from persons claiming an impact, makes a determination as to eligibility for payment and what the appropriate payment should be. Applications may be completed online, by mail, or in person. While the GCCF was seen as an improved process, the application process still requires extensive paperwork, and GCCF is the sole arbiter of the sufficiency of an application.
Applicants to the GCCF can apply for either Emergency Advance Payments (EAP) or Final Payments. EAP applications are intended to be interim payments for ongoing damages, and as such GCCF has announced that they will only be accepted until November 23, 2010. Filing for, and accepting, an EAP does not affect the claimants legal rights and the claimant does not waive any claims or the ability to file future legal actions. The claimant only agrees that any EAP payments will be deducted from any future “Final Payment” or legal claims.
If a claimant wishes to make a claim for all of their damages, they may also file a “Final Payment” claim. This type of claim is intended to encompass all damages that the claimant has experienced. In accepting BP’s determination of a Final Payment the claimant also agrees to waive all rights to assert any additional claims, to file an individual legal action, or to participate in other legal actions associated with the spill. No final payments will be made until a protocol for such payments has been finalized. Mr. Feinberg has stated that he would like to see most claimants go through this process and settle their claims with BP completely. BP has similarly informed the Judge Barbier in the multidistrict litigation of its position that economic damages claims must first be presented to BP through the GCCF before a legal claim can be filed with the court.