The Need for Assessment of the Existing Claims Process

The Need for Assessment of the Existing Claims Process

¶The Oil Pollution Act holds the responsible party liable for private claims brought by individuals or businesses for removal costs and certain damages. All claims must first be presented to the responsible party, but if the responsible party denies a claim, the claimant may pursue an in-court action or present an uncompensated claim for payment to the Oil Spill Liability Trust Fund. The Gulf Coast Claims Facility (Claims Facility), which is independently administered on behalf of BP (the responsible party), has established a claims processing mechanism that attempts to resolve claims against the responsible party outside of the courts.31 Kenneth Feinberg, formerly Special Master for the September 11th Victim Compensation Fund, administers the $20 billion escrow account through the Claims Facility. Eligible claims include: (1) removal and clean-up costs; (2) physical damages to real or personal property; (3) lost profits or impairment of earning capacity; (4) loss of subsistence use of natural resources; and (5) physical injury or death. The Facility does not pay claims brought by the government, or related to real estate, the moratorium, or the Vessel of Opportunity program.32

¶To date, some claimants have been dissatisfied with decisions to deny certain claims and with the amount and timeliness of compensation received from approved claims, which has required Feinberg to reconsider the rules and processes in place for reimbursement. The United States Department of Justice sent a letter to Feinberg on September 17, 2010, urging expediency.33 In response, the Claims Facility noted that the large number of fraudulent and undocumented claims have slowed the process.34 Nonetheless, after the September 17 letter, Feinberg made several adjustments to the program including streamlining processing time and removing geographic proximity to the oil spill as bar against payment, Feinberg also extended the timeframe within which claimants could receive interim payments without waiving their right to pursue litigation.35 As of December 11, 2010, the Claims Facility has paid more than $2.4 billion in claims to more than 164,000 claimants.36 The Commission believes it would be useful to evaluate the effectiveness of the Claims Facility as a means of informing the compensation process in future large spills.

¶Recommendation F4: The Department of Justice's Office of Dispute Resolution should conduct an evaluation of the Gulf Coast Claims Facility once all claims have been paid out, in order to inform claims processes in future Spills of National Significance. The evaluation should include a review of the process, the guidelines used for compensation, and the success rate for avoiding law suits.

Promoting Congressional Engagement to Ensure

¶Responsible Offshore Drilling

The Commission's recommendations in this report include some directed to Congress for specific legislation, and others directed to various specific federal agencies, responsible parties, and the oil and gas industry in general. The several recommendations directed to Congress, however, also highlight a further lesson: the need for Congress to engage more systematically in ensuring the safety of drilling in the OCS and environmental protection. This includes more active congressional oversight, and also includes congressional action to ensure that those in government responsible for safety oversight and environmental protection review have the resources necessary to do their jobs. To that end, this final set of recommendations addresses the need for Congress itself to take affirmative steps to ensure responsible offshore drilling.