Deepwater Horizon Disaster: How’s BP’s $20 Billion Claim Fund Holding Up?
Kenneth Feinberg, the administrator of BP PLC’s $20 billion claim fund, recently stated that it is too soon to say whether liability payments related to the Deepwater Horizon disaster will end up exhausting all of the $20 billion BP set aside for all claims.
Mr. Feinberg, hired by BP to evaluate private claims against BP concerning the largest oil spill in U.S. history, said about 80% of a group of 130,000 remaining unpaid claimants lack the proper documentation for payment. Mr. Feinberg also said that the Gulf Coast Claims Facility has paid more than $3.5 billion to about 170,000 individuals and businesses to date.
Thus, much of the $20 billion remains in escrow, and Mr. Feinberg said it was his understanding that BP and the Obama administration had agreed that BP could keep whatever remained in the account after all of the liability claims were settled.
Part of the remainder may go to state and local governments or other entities outside Mr. Feinberg's jurisdiction. BP also faces environmental restoration costs and the possibility of criminal charges by local, state and federal authorities.
Mr. Feinberg also said that there are significant claims still being evaluated, including one asking for $94 million. Approximately 45,000 claimants have opted for an interim payment structure that allows them to make claims each quarter until August 2013.
Asked about BP's final liability, Mr. Feinberg said "it is premature to finalize any aggregate amount of money over the next couple of years."
On Feb. 18, 2011, Mr. Feinberg finalized the criteria that he will use to pay final claims. Individuals or businesses that can document damage to their property as a result of the spill are eligible for payments, without regard to physical proximity to the Gulf of Mexico. However, claims related to the federal moratorium on deep-water drilling are not eligible for claim funds.
Mr. Feinberg said that 14,000 final payments have been made to date, and he expects the pace of final payments to accelerate.
Stay tuned for future updates.