BP to process spill claims as long as needed, panel told

BP PLC already has paid $71 million in claims stemming from the oil spill from its Macondo blowout well in the Gulf of Mexico, and will continue to process them for as long as necessary, according to the BP America Inc. official overseeing the operation.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, June 17 -- BP PLC already has paid $71 million in claims stemming from the oil spill from its Macondo blowout well in the Gulf of Mexico, and will continue to process them for as long as necessary, according to the BP America Inc. official overseeing the operation.

“The BP claims process is integral to our commitment to do the right thing. We will be fair and expeditious in responding to claims,” said Darryl Willis, BP America vice-president for resources, speaking before a US Senate subcommittee. Willis spoke on June 16 before the Senate Homeland Security and Government Affairs Committee’s Federal Financial Management, Government Information, Federal Services, and International Security subcommittee.

Willis testified as US President Barack Obama and BP’s top officials announced an agreement under which the multinational oil company will establish a $20 billion independently administered escrow fund to compensate spill victims. Willis’ written statement provided more details about what BP has been doing already, however.

BP’s early focus was on those who directly felt the spill’s impacts and were temporarily unable to work, he told the subcommittee. “These are fishermen and shrimpers with the greatest immediate need; they often have minimal savings and rely on their monthly income to pay bills and feed their families,” he explained.

Expedited interim payments are being provided to those whose income has been disrupted, Willis said. “Within 48 hr of receiving supporting documentation, the claims will be evaluated and the claimant will be notified if an advance payment will be provided,” he said.

Automatically generated
Each interim payment is intended to replace one month of lost income and adjusted as additional documentation is received, he said. Subsequent checks will be generated automatically as long as a claimant is unable to earn a living as a result of injury to natural resources as a result of the spill, according to Willis.

“A claimant receiving income replacement need only go through the claims process at the beginning, and will not need to return to the claims center to get subsequent checks,” he said. “We have recently begun sending out second advance payments to individuals and businesses.”

BP has paid more than 18,900 of the 54,000 claims it has received, mostly as lost income payments, Willis noted. For documentation, it has generally asked for the claimant’s tax returns for the previous year. “If that documentation is not available, we have accepted other forms that should be reasonably available such as a fishing license, boat registration (in the case of a boat owner), trip tickets, or some other proof of income,” he said.

Documentation requirements will increase as claims grow more complex, he said. “But larger businesses and state and local governments should have ability to satisfy enhanced documentary requirements,” he said.

BP has not required and will not require a claimant to waive any legal rights where the company makes an interim payment, Willis said. It also will not require or request a release or any other waiver of liability for an interim payment of a claim under the 1990 Oil Pollution Act, he added.

Other sources
The US Coast Guard is overseeing the entire process, Willis pointed out. Any claim which BP denies or which the claimant believes has not been fully paid can be submitted to the Oil Spill Liability Fund, which the USCG administers. It can pay the claimant from that fund if it determines that the claim should be paid, and seek reimbursement from BP, he said.

He said claimants also do not give up rights to sue or participate in litigation against BP. “While we hope to avoid such outcomes, this option also serves as an independent check on our process,” Willis said. He said he has personally received “extensive positive responses” about BP’s claims process, but added, “It is not a perfect process and likely never will be perfect. We are committed to improving the process and will continue to do so.”

At the same hearing, Craig Bennett, director of USCG’s National Pollution Funds Center, confirmed Willis’ statement that most claims so far have been from individuals and small businesses, but predicted that property claims would increase as more spilled crude comes ashore. He said BP has responded as NPFC has identified problems, such as providing Vietnamese and Spanish translators where needed and establishing a mediation capability.

“That said, we do not have complete, ongoing transparency into BP’s claims process including detailed information on how claims are being evaluated, how payment amounts are being calculated, and how quickly claims are being processed,” Bennett told the subcommittee in his written statement.

Other witnesses at the hearing included US Sen. Frank R. Lautenberg (D-NJ), Transocean Ltd. Chief Executive Steven L. Newman, and Susan Fleming, physical infrastructure issues director at the Government Accountability Office.

Contact Nick Snow at nicks@pennwell.com.

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