New rules limit claims for oil spill

MIAMI - New guidelines for BP's $20 billion victims compensation fund say that the nearer people are geographically to the oil spill and the more closely they depend on the Gulf of Mexico's natural resources, the better chance they will have of getting a share of the money.

A second set of rules expected in the fall will require that businesses and individuals seeking compensation for long-term losses give up their right to sue BP and other spill-related companies - something that could save the oil company billions.

People affected by the spill seeking final settlements will face a choice: If they decide to sue instead of accepting a settlement, they could face years of litigation; and if they decide to accept the settlement, it could come before the full damage from the spill is known.

The new rules for the claims process were released Friday by Washington lawyer Kenneth Feinberg, who was chosen by President Obama to run the fund and who previously oversaw claims for the victims of 9/11.

Beginning Monday, the claims will begin to be handled by Feinberg rather than BP, which is still footing the entire $20 billion bill.

Who gets paid and who does not will depend largely on how much proof there is that losses were caused by the spill and not by something else, such as the recession. Feinberg's guidelines say that key factors include a claimant's geographic proximity to the disaster and how much the business or property is linked to "injured natural resources."

Feinberg elaborated on his reasoning during town meetings this week in Louisiana. "How close are you to the beach? To the gulf?" he said. ". . . That's a major factor."

For instance, fishermen, shrimpers, and seafood processors as well as hotel and restaurant owners with beachfront property in areas where oil washed ashore will have the easiest time getting reimbursed. An ice cream parlor or golf course miles from the affected shore but along the main highway headed to the beach would not be eligible, according to documents obtained by the New York Times.

That proximity stipulation worries business owners such as Susan Mitchell, who runs a flower shop about a mile from Pensacola Beach, Fla., where tar balls from the spill washed up. She said her business was down about $4,000 this year in July from the year before.

"But it is hard to prove exactly why that is, and everyone keeps telling us we have to prove that it was because of the oil," she said. "We usually have beach weddings all summer. We deliver to hotels with people having birthday parties and celebrations on the beach."

Jeffrey Breit, a Virginia-based lawyer who represents more than 600 gulf coast fishermen, said the geographic limitations would certainly cut out many deserving claimants. "I think it's unfair to draw arbitrary geographic lines when it is clear that many businesses rely on the natural resources of the gulf for their livelihoods," he said.

The new rules govern emergency claims that can be made between Monday and Nov. 23 at gulf coast claims offices, by mail, or through the Internet. Feinberg said his goal was to issue emergency checks within 24 hours for individuals and seven days for businesses. Many people have complained about the sluggish BP process.

The attorneys general of Alabama and Florida sent Feinberg letters objecting to the new rules. Florida's Bill McCollum said people would face a much heavier burden of proof trying to show the spill caused their losses. "The current process appears to be even less generous to Floridians than the BP process" of emergency payments, McCollum wrote. "Such an outcome is completely unacceptable."

Those seeking emergency payments will not have to give up their right to sue BP and other companies. But the rules for final, long-term settlements will include a waiver of that right.

That drew protests Friday from a leading trial lawyers group, the American Association for Justice, which said the rule could force claimants to decide whether to accept a BP payment or go to court before the full extent of the damage is known. For example, attorneys said, there could be health effects that take years to develop, or environmental damage that might not surface for years.

"BP is trying to cut off damages," said Jere Beasley, a Montgomery, Ala., lawyer who is representing oil-spill clients. "They realize that small payments will be grabbed by some, and then in the future they will have no access to justice."

Already more than 300 lawsuits have been filed against BP and other companies involved in the disaster, which began April 20 with an explosion aboard an offshore oil rig that killed 11 workers.

Other parts of the protocol include a provision that property owners will not be reimbursed strictly for loss of property values. Also, there will be no reimbursements for anyone adversely affected by the Obama administration's moratorium on most deepwater drilling in the gulf, people with mental-health claims, or businesses that were far from the spill but lost tourism revenue because of government predictions that the slick was headed their way.

Feinberg will determine on a case-by-case basis what qualifies as beachfront property and how payments will be adjusted on a sliding scale based in part on geographic proximity to the spill.