In this April 21, 2010 file image provided by the U.S. Coast Guard, fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon.
NEW ORLEANS -- BP is arguing that victims of last year’s Gulf oil spill should not be paid any more claims for future losses because the areas affected by the spill have recovered and the economy is improving.
The British oil company makes its case in a 29-page document filed with the Gulf Coast Claims Facility, which administers the $20 billion fund for victims.
It criticizes several aspects of the fund’s policies and claims that at some times it has paid victims more than is allowed under the federal Oil Pollution Act.
“Multiple lines of evidence demonstrate that, to the extent that portions of the Gulf economy were impacted by the spill, recovery had occurred by the end of 2010, and that positive economic performance continues into 2011, with 2011 economic metrics exceeding pre-spill performance,” the BP document said.
To back up its argument, the document notes that all commercial fisheries have re-opened, hotel industry statistics indicate strong occupancy rates, and news reports on tourism venues reporting strong business.
The company is not arguing against paying out claims for documented losses. And those who feel more damages for future losses are warranted, or who are otherwise unsatisfied, can reject the final compensation offer and pursue litigation.
“Any claimant who is of the view that, notwithstanding the economic data, there is too much risk of future loss to enter a final settlement has the right to file an interim claim and seek the payment of past loss without signing a release of liability,” the BP document said.
The fund’s administrator, Kenneth Feinberg, said BP’s arguments would be considered, but he declined further comment.
As for BP’s claims that various GCCF payments exceed that authorized by federal law, Mr. Feinberg said the GCCF was authorized to use that law as a guideline. “Many of our claims, I readily admit, go beyond what’s required by federal law,” he said. “But it was always understood in our original protocol establishing the GCCF, that the GCCF would use the federal law as a guide, that’s all.”
BP had already argued months ago that Mr. Feinberg’s formula for determining final payments includes a “future factor” that artificially inflates future expected losses. That formula would provide individuals and businesses twice their documented 2010 losses. Oyster harvesters, in some limited cases, would be offered four times their losses.
In its latest filing, BP says Mr. Feinberg should end automatic “’future factor” payments for everyone, except in limited cases involving oyster harvesters.
BP notes evidence of recovered fisheries and government assurances that seafood is safe to eat as part of its argument. New Orleans seafood processor Harlon Pearce says that doesn’t address the lingering effect of the spill on the seafood business.
“For someone to say we don’t have damage in the future is clearly wrong,” Mr. Pearce said. While BP comments cited evidence that Gulf Seafood is safe, Mr. Pearce said the public’s perception hasn’t caught up with that reality. He estimated his distributions are down about 25 percent and it will take years to regain the trust of consumers and a place in the national market.
Mr. Pearce, who is president of the Louisiana Seafood Promotion and Marketing Board, said the board’s research indicates it took three to five years for the Alaskan seafood market to rebound after the Exxon Valdez spill, and noted a study commissioned by the board that says 75 percent of consumers around the country are still concerned about seafood safety.
Economist Loren Scott in Baton Rouge said there are points favoring BP’s argument. He cited sales and “bed tax” revenue from tourist-dependent areas of northwestern Florida, which were only beginning to recover from the Great Recession when the April 20, 2010, Deepwater Horizon explosion killed 11 offshore workers and caused the spill.
And, while the seafood industry can point to a drop in consumer confidence, Mr. Scott said, BP lawyers would likely argue that it was the industry’s own complaints of oil spill damage that contributed to the drop.
“As it has from the outset, BP supports the payment of legitimate claims, and to the extent that a claimant can substantiate future losses, a final offer covering past and future losses and a release of claims are appropriate,” spokesman Tom Mueller said in a statement. “Given the strong evidence of recovery, what we are objecting to is GCCF’s practice of assuming future losses on certain claims,” he said.
Still, the BP comments stirred lingering animosities.
“They go back on their word. They try to weasel out of everything they told you they’d do,” Orange Beach, Ala., Mayor Tony Kennon said.
Mr. Kennon said BP still owes Orange Beach $2.5 million for lost revenues during 2010. While the summer season is off to a good start this year, it’s too soon to say whether different sectors of the coastal economy including lodging, restaurants, seafood, retailers and tourist attractions have fully recovered because there’s no data yet to show whether visitors are spending as much as they once did.
In Mississippi, Tom Becker, head of the Charter Boat Captains Association and a fisherman in Biloxi, said he has only booked eight trips for this month, when before the oil spill he would have expected three times as many.
Mr. Becker said some charter boat captains are still hoping to get money out of BP and he thinks it’s premature for BP to seek to end any payments.
He said potential customers still ask if the seafood is safe to eat.
“It hasn’t recovered,” Mr. Becker said. “I wish they wouldn’t come out with statements like that. It’s just depressing. It’s like, ‘Here we go again.’ A lot of us don’t believe that this is over with.”
Ocean Springs Mayor Connie Moran said she was “astounded. I was really just flabbergasted.”
“While I understand BP is still committed to paying losses from last year and early 2011, there are many businesses that continue to be negatively impacted by the spill, among them the seafood industry and charter fishing,” Ms. Moran said.
Ms. Moran said it will take years to fully recover and the long-term impact on delicate ecosystems is not clear.