Jun 21, 2010 8:29 PM by Chris Welty
NEW ORLEANS (AP) - The administrator of a $20 billion fund to
compensate Gulf oil spill victims pledged Monday to speed payment
of claims as a federal judge considered whether to lift a six-month
moratorium on new deepwater drilling.
Kenneth Feinberg, who has been tapped by the White House to run
the fund, said many people are in desperate financial straits and
need immediate relief.
"We want to get these claims out quicker," he said. "We want
to get these claims out with more transparency."
Feinberg, who ran the claim fund set up for victims of the Sept.
11, 2001, terrorist attacks, said BP has paid out over $100 million
so far. Various estimates place total claims so far in excess of
BP said it has spent $2 billion fighting the spill for the last
two months and compensating victims, with no end in sight. It's
likely to be at least August before crews finish two relief wells
that are the best chance of stopping the flow of oil.
The British oil giant released its latest tally of response
costs, including $105 million paid out so far to 32,000 claimants.
That figure does not include the $20 billion fund BP PLC last week
agreed to set up for residents and businesses hurt by the spill.
Also Monday, the government sent BP a $51.4 million bill for the
response effort. BP has already paid two other bills totaling $70.9
Shares of BP, which have lost about half their value since the
April 20 oil rig disaster that killed 11 workers, fell nearly 3
percent Monday in New York trading to $30.86. The rig was owned by
Transocean Ltd. but run by BP.
BP chief executive Tony Hayward canceled a scheduled Tuesday
appearance at a London oil conference, citing his commitment to the
Gulf relief effort. The last-minute pullout followed stinging
criticism of Hayward's attendance at a yacht race on the Isle of
Wight off the coast of southern England on Saturday.
President Barack Obama's administration has also been struggling
to show it is responding forcefully to the spill, which has gushed
anywhere from 68 million to 126 millions gallons of oil into the
As part of that effort, the Interior Department halted the
approval of any new permits for deepwater drilling and suspended
drilling at 33 existing exploratory wells in the Gulf.
But a lawsuit filed by Hornbeck Offshore Services of Covington,
La., claims the government arbitrarily imposed the moratorium
without any proof that the operations posed a threat. Hornbeck says
the moratorium could cost Louisiana thousands of jobs and millions
of dollars in lost wages.
After hearing two hours of arguments Monday in New Orleans
federal court, Judge Martin Feldman said he will decide by
Wednesday whether to overturn the moratorium.
Plaintiffs' attorney Carl Rosenblum said the six-month
suspension of drilling work could prove more economically
devastating than the spill itself.
"This is an unprecedented industrywide shutdown. Never before
has the government done this," Rosenblum told the judge Monday.
Government lawyers said the Interior Department has demonstrated
that industry regulators need more time to study the risks of
deepwater drilling and identify ways to make it safer.
"The safeguards and regulations in place on April 20 did not
create a sufficient margin of safety," said Justice Department
attorney Guillermo Montero.
Feldman asked a government lawyer why the Interior Department
decided to suspend deepwater drilling after the rig explosion when
it didn't bar oil tankers from Alaskan waters after the Exxon
Valdez spill in 1989 or take similar actions in the wake of other
"The Deepwater Horizon blowout was a game-changer," Montero
said. "It really illustrates the risks that are inherent in
Feldman asked Rosenblum if it's true that a recent Securities
and Exchange Commission filing by Hornbeck suggests "basically
things are pretty good" for the company and it can survive the
moratorium. Rosenblum said the full impact of the shutdown cannot
"Thousands of businesses will be affected," he said. "These
dominoes are falling as we speak."
Louisiana Gov. Bobby Jindal's office filed a brief supporting
the plaintiffs' suit. A lawyer for the state told Feldman that the
federal government did not consult Louisiana officials before
imposing the moratorium, in violation of federal law.
Catherine Wannamaker, a lawyer for several environmental groups
that support the moratorium, said six months is a reasonable time
for drilling to be suspended while the government studies the risks
and regulations governing the industry.
"The risks here are new," she said.
Government lawyers said the plaintiffs haven't seen much of the
data that served as the basis for the Interior Department's
decision to suspend drilling operations.
Secretary of the Interior Ken Salazar "wants to be sure
deepwater drilling is as safe as we all thought it was on the day
before the incident on April 20," said government lawyer Brian
U.S. District Judge Nancy Atlas in Houston listened to Monday's
hearing over the telephone. Atlas is presiding over a similar case
against the Interior Department filed by Diamond Offshore Co.,
which operates a fleet of drilling rigs.
Along the coast Monday, some cleanup workers reported progress.
On Barataria Bay off the coast of Louisiana, thick globs of oil
that washed onto marshy islands a week ago had disappeared, leaving
a mass of stained bushes and partly yellowed grasses.
Blackened lengths of boom surrounded the islands, which were
still teeming with brown pelicans, gulls and other seabirds, some
with visible signs of oil on their plumage. Nearby, shrimp boats
that have been transformed into skimmers hauled absorbent booms
across the water's surface, collecting some of the remaining oil.
Crews aboard Navy and Coast Guard boats teamed with local
fishermen using booms to funnel oil into a vessel and haul it
This is the area's new economy - dependent as ever on the
sprawling bay, but now those who made their living harvesting its
bounty are focused on its healing.
"It looks 10 times better than it did a week ago," said Carey
O'Neil, 42, a commercial fisherman idled by the spill who now
provides tours of the damaged areas for media and government
observers in his 23-foot boat anchored in Grand Isle. "But what
impact will this have for the future - two, three, four, even 10
years? That's what worries me."
The number of oil-soaked birds in the area is down
significantly, from 60 or 70 a day at the triage center on Grand
Isle to more like seven or eight, said Steve Martarano, a spokesman
for the U.S. Fish and Wildlife Service.
"We've been sending 55 boats a day out pretty much since day
one, when the oil hit this area, and so we feel like we've really
made inroads," he said.