BP Oil Spill Fund Drafts New Payment Rules

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The head of BP's fund to compensate victims of the of last year's Gulf Coast oil spill, has announced new rules on how payments will be determined. Kenneth Feinberg announced the new rules amid criticism of how the 20 billion dollar fund was being run. Louisiana Governor Bobby Jindal has called for a federal judge to intervene in the fund for the sake of claimants, many of whom say they've received little or none of their claims, and without explanation. To talk more about the claims process, Host Michel Martin speaks with Kenneth Feinberg and oyster fishing business owner and claimant Byron Encalade.

MICHEL MARTIN, host:

Next to the ongoing fight over the oil spill claims along the Gulf Coast. You might recall that President Obama chose attorney Kenneth Feinberg to oversee BP's $20 billion Gulf Coast oil spill fund, stemming from that massive oil spill from last spring and summer. Since then, Mr. Feinberg has heard from all sides, complaints about the size and pace of payments.

Louisiana Governor Bobby Jindal has called for a federal judge to intervene in the fund for the sake of the claimants, many of whom say they've received little or none of their claims and don't have explanations about why. Meanwhile, BP says that Mr. Feinberg has been far too generous with payments and is too pessimistic about the ability of businesses to recover. We will speak with Mr. Feinberg about all this in just a minute.

But first, since the oil spill began, we've been checking in with business owners and Gulf residents from an array of backgrounds since the spill started, and today we go to Byron Encalade. He's president of the Louisiana Oystermen Association and owner of an oyster fishing business in the town of Pointe a la Hache. And he's on the line now from New Orleans. Thank you so much for joining us.

Mr. BYRON ENCALADE (President, Louisiana Oystermen Association): Thank you for having me.

MARTIN: Can you give us the scope of the change in your business since the spill began? Like, before the spill began, like, tell me what like your volume was or some indicator of how much business you were doing and tell me how you're doing now.

Mr. ENCALADE: Well, we were back recovering from Katrina. We were transporting millions of pounds of seafood along the Gulf Coast, from Texas to Florida. And of course our boats were starting to get back to harvesting oysters. We had, our oyster beds were completely full of oysters and we were doing pretty good with the one boat. The other boat was due to go online right when the oil spill happened.

MARTIN: I see. So, how much of a claim have you filed? Do you mind telling me? What have you filed?

Mr. ENCALADE: Sure. I mean, I've told them, my business, of course, I needed $500,000 to get me through this, to make sure, protect my company and the people that worked for me.

MARTIN: And how much have you received?

Mr. ENCALADE: I've received $70,000. That was eight, nine months ago. And the fishermen that works for me haven't received anything. A lot of them got turned down. I have a little brother who is my fleet captain. He got turned down. I just typed up a letter (unintelligible) I'm sitting in here today - because of the change in the claims process, I have to go back and resubmit paperwork for all the fishermen that work me again.

MARTIN: Well, can I just ask you, what has been the hardest part of the process for you? Obviously the event itself, coming as you just told us, right after Katrina, that's, you know, devastating, but this process since then, what's been the hardest part for you?

Mr. ENCALADE: Well, the hardest part is knowing what they're looking for. We never knew. We submit paperwork - that's not enough, or that's not what we're looking for. We know you want tax records. We've produced that. They want trip tickets. But we have a big problem getting them to understand. We were in recovery from Katrina.

We have some of these boats - I have one right now that's on the shipyard and this boat, I have to go back to '05 to get its trip sheets because this is one that we completely overhauled for the last two years. That's what we've been doing with that boat. And maybe about a week before the oil spill, well, we was planning on going - adding that into the oyster fleet. There's nowhere in the claims process that you could explain this or do this.

MARTIN: You just feel it's too confusing?

Mr. ENCALADE: Yeah, well, I mean, it's not necessarily that it's too confusing. When you're asking for specific information that doesn't show the picture of a company, then of course you're going to get bad results. I mean, it's no different than if I give my - I'm a veteran, so I like to relate to the military. If I give a general bad information, he's going to make bad decisions.

MARTIN: I hear what you're saying. Finally, before I let you go, Mr. Encalade -respectfully, though, you would understand that they want to be careful that people aren't submitting fraudulent claims. So how do you think they should balance that out?

Mr. ENCALADE: Well, that's why we were at the table. That's why I went to Congress. We didn't want this to happen. We gave them a six-month plan. We gave them minimum, not to pay these fishermen below poverty. We gave them ways to get through this. And you had to categorize these claims. You couldn't fit everybody under one umbrella.

MARTIN: I see.

Mr. ENCALADE: These industries are different.

MARTIN: Byron Encalade is president of the Louisiana Oystermen Association. He's the owner of an oyster fishing company. We reached him in New Orleans. Mr. Encalade, thank you so much for joining us.

Mr. ENCALADE: I appreciate y'all for having me.

MARTIN: Now we turn to the administrator of the Gulf Coast Claims Facility, Kenneth Feinberg. You may remember Mr. Feinberg's background includes his work overseeing the compensation fund for 9/11 victims. He's here with us in our Washington, D.C. studio. Welcome, thank you so much for joining us.

Mr. KENNETH FEINBERG (Administrator, Gulf Coast Claims Facility): Thank you.

MARTIN: You had the opportunity to hear from Mr. Encalade and the argument that he and others are making is that though the interests are just to disparate, the people are just too different to be handled fairly by one fund. How do you respond to that argument?

Mr. FEINBERG: Well, there's something to that. I think Mr. Encalade is right when he suggests that we better take a look at the special problems confronting oyster harvesters. We've done that in the final rule released last week. He says it may take him two or three years to get his business going together. The experts tell me it might be four years for oystermen.

So we've recognized that as to oysters it is different, but beyond that, the Gulf Coast Claims Facility ought to do a much better job of local hands-on treatment of claimants at the local level. And that's why, as we move forward with the final rule, we will supplement local claims offices. We'll have more people there to meet with local claimants.

Now, I must say, what is often overlooked, we have in less than six months, distributed over $3.5 billion to over or approximately about 170,000 people. The program's working. There are flaws in it, but I think that the program is working as intended.

MARTIN: Well, you're no stranger to emotional situations, obviously, you know the 9/11 fund was a very emotional experience for just about everybody involved. But in this case, people have complained from the beginning about both red tape and delay and also about not being heard. Why is it that this far down the line people are still feeling that they have not been adequately heard?

Mr. FEINBERG: First of all, do not underestimate the emotion associated with this. These people in the Gulf did nothing wrong. They are the victims of a horrible environmental tragedy. And that financial uncertainty promotes this type of frustration. I also think that the sheer magnitude of the spill and the sheer volume of claims guarantees a certain degree of inconsistency and a certain degree of inability - of transparency. But I think we're trying to deal with that and I think we're dealing with it effectively.

MARTIN: To the whole question of transparency, a federal judge has ordered you to stop saying you're independent of the oil giant, saying that the administrator, that you are acting for and on behalf of BP. How do you respond to that? Is it simply because of the fees, because - since your law firm is receiving a fee from the fund?

Mr. FEINBERG: Whatever the reason, I mean, you know, a federal judge has issued a ruling. I will follow the ruling every nit and tittle(ph). I mean you have to follow the rulings of a federal judge. I think that what's most important is that the fund be perceived as fair and transparent. And the money going out is critical. But, also, I think, I repeat, this notion that at the local level we've got to be better in being one-on-one with some of these claimants.

MARTIN: The fees - your law firm was receiving a fee of $850,000 a month from the fund, as I understand it. You know, fees are also obviously a very tricky issue, but do you think that that was a fair fee? And as I understand it, you are renegotiating, is that correct?

Mr. FEINBERG: That's correct. I don't, you know, a fair fee, I mean, the fact of the matter is who else but BP is going to pay for the entire cost of this entire program? Forget my firm for a minute, which is a small part of it. There are over 3,000 people involved in this process in the local - in the Gulf and elsewhere. And there's only one deep pocket for this entire program and that's BP. And I think that that is a question that has an obvious answer. There's nobody other than BP that can step up and make sure that this program gets funded.

MARTIN: What is the ultimate goal of the fund? Is it to make people whole or was it to give them the means to start over?

Mr. FEINBERG: I think that compensation here is designed to pay claimants who are eligible for the damage caused by the spill. Now, it's easy to say that, but I've been down in the Gulf and there are questions posed to me about, you know, I'm a fifth, sixth, seventh generation fisherman or oysterman and how are you ever going to make me whole? And you can't put a value on generations of expertise in the Gulf. All you can try and do is pay claimants for how they were damaged after the Horizon explosion.

MARTIN: I understand that. But, finally, before we let you go, I do want to go back to the red tape question. I do take your point that red tape is a part, or complaints about bureaucracy come with the territory, but in this particular case, this has been an ongoing and consistent complaint. Do you have any assurance for people that they're not going to feel this way on into the future?

Mr. FEINBERG: No. I have no assurance with the emotion involved in this, but I will say to oystermen and shrimpers and fishermen and hotel owners and commercial vendors, et cetera, that going forward we are trying to deal with one of the problems that you have addressed, which is a sense by the claimant that they can get a local fellow citizen to listen to their plight, to commiserate with them without simply a national bureaucracy involved with 500,000 claims.

That right to be heard that you mentioned is something that I think is critically important. It's been lacking in this program because of the volume. And I think we are now taking steps to deal with that and that will go a long way as it did in 9/11 in letting people feel that at least their voice has been heard.

MARTIN: Kenneth Feinberg is the administrator of the Gulf Coast Claims Facility. He was kind enough to join us here in our Washington, D.C. studios. Mr. Feinberg, thank you so much for joining us.

Mr. FEINBERG: Thank you.

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