Tuesday, August 31, 2010

Real Estate Agents in Gulf States Hit by Oil Spill Lobby for Cash

(Twitpic by BourbonRealty)

Real estate representatives from the gulf region secure $68 million in financial reparations for losses in sales they attribute to the oil spill

By Nicholas Moroni

Recognizing the adverse financial impact that the BP oil spill has had on the real estate industry in the gulf region, several industry representatives from five states in the area recently flew to Washington, D.C. and successfully lobbied for $68 million of BP's $20 billion escrow fund, The Daily Comet, a local newspaper in Lafourche, La., reported on Sunday.

According to the article, real estate agents motivated by a post-spill sales abatement, decided to make certain that they would be compensated through BP's escrow fund, which is being adminsitered by Washington attorney Ken Feinberg's Gulf Coast Claims Facility. The piece also states that a driving force in the decision to pursue lobbying was a shared concern that the real estate industry would not be provided for under the auspices of the Oil Pollution Act of 1990, which guides for the GCCF protocol - either through the GCCF or through litigation.

"If realtors were to sue BP under the Oil Pollution Act, they would not be awarded any funds," Malcom Young, CEO of Louisiana Realtors, told The Comet.

It should be noted though, that under OPA, spill victims with legitimate claims are to have their losses accomodated, with the possibility of interest, by the responsible party - in this case, BP, however, the fund will not accomodate moratorium-related losses.

Realtors are saying that buyers are backing out because of lack of capital due to a job shortage that now permeates the region as a result of the drilling moratorium, while out-of-town lenders are skeptical to loan to oil industry employees that could be out of jobs and default on payments. The region is heavily dependent on the oil industry.

Finally, the article cites a study by the research group CoreLogic which estimates that the gulf region could lose up to $648 in homes sales this year, and as much as $3 billion over five years.

Monday, August 30, 2010

Gulf of Mexico Well Sealing Stalled by Bad Weather

Bad weather stalls the plugging of the failed well in the Gulf of Mexico

By Nicholas Moroni

Poor weather conditions in the Gulf of Mexico prevented an operation to plug the failed well that resulted in the months-long oil spill in the gulf region, The Associated Press reported today.

The AP article cited a phone conference delivered this morning by retired Coast Guard Adm. Thad Allen (the federal go-to-man for the spill response effort) to a group of reporters, in which he said that waves "six to eight feet high" in waters off the coast of Louisiana pose too great a risk for BP engineers and rig workers that would attempt to remove the failed blowout preventer and replace it with a new one. The blowout preventer was supposed to seal the well, when a surge of natural gas mixed with oil in the well's pipeline causing the deadly explosion of the Deepwater Horizon on April 20.

A temporary cap that was applied in July to collect oil through a pipeline that lead to several vessels - one that was loosely fitted and failed to permanently seal the leak at the time - will also be removed.

The response team will then apply a new cap, and connect it to a relief well that is still a work in progress. 50 feet of drilling still needs to take place to complete that well, but after that scientists will pump cement and mud into the well to permanently seal the well.

Allen said operations will resume in two to three days.

Sunday, August 29, 2010

Gulf Oil Spill Hearings: Disorder Aboard the Deepwater Horizon

Gulf of Mexico oil spill hearings reveal little about the explosion on the Deepwater Horizon oil rig; A Wall Street Journal report discloses a haphazard operation aboard the rig prior to its explosion

By Nicholas Moroni

Whether additional measures could have been taken to prevent the explosion of the Deepwater Horizon oil rig was the central topic throughout federal investigative hearings in Houston this week.

All week, a joint panel hosted by the US Coast Guard and the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement scrutinzed - and discovered little - the actions of a number of players with connections to the doomed rig.

Throughout this past week, representatives from BP, Transocean (the Swiss countractor that leased the Deepwater to BP), and other companies largely dodged questions and played a blame game, while five witnesses invoked their Fifth Amendment rights, and refused to testify.

The Washington Post reported last week on the testmony of Transocean's Paul Johnson, who accused BP of swapping a more experienced well-site leader for one the oil giant favored - albeit one with less experience. However, The Wall Street Journal cited a counterattack by BP, stating: "BP has said that Transocean bears at least partial responsibility...because of the equipment's failure."

That "equipment" would be the blowout preventer - the device that seals off a well in the event of an explosion. In the case of the Macondo well, the blowout preventer failed to do so.

Another recent article in The Journal also paints a portrait of disorder and disconcern with regard to a crucial test to the failed Macondo well in the days leading up to the Deepwater's demise, and the 86 days of crude that gushed into the Gulf of Mexico. According to the article, which sites investigative records, and the testimonies of witnesses from this week's hearings, several officials aboard the Deepwater allegedly failed to seriously assess unusually high pressure readings. The readings needed to be taken prior to a test that would enable the rig to make sure that cement and steel inside the well were locked together. The cement and steel had to bind together to prevent any natural gas from leaking, so the rig could depart the site and move on to another job.

Robert Kaluza, a BP well site leader, who declined to testify this week, told BP internal investigators that decisions made by some of the company's officials may have been done in an effort to expedite the process. "Maybe [they] were trying to save time." BP has also been accused of having economic incentives - moving forward in an attempt to pursue other drilling projects.

The article also states that an unusual amount of mud was removed (ten times the usual amunt) below the blowout preventer - possibly to drill deeper. Mud holds down any gas that may leak, so wells are usually tested before they are utilized.

In this case, the excessive amount of mud removed may have caused the potent mixture of natural gas and oil to surge up a the well and set the rig ablaze. What's more, the faulty blowout preventer failed to seal the well and prevent the dangerous concotion from rising to the top.

The well was also referred to by BP employees as the "nightmare well," prior to the explosion.

As for the federal joint hearings - they will resume on October 4 in either New Orleans or Houston.

Tuesday, August 24, 2010

Transocean Operatives Tesitfy at Federal Hearing

Deepwater Horizon oil rig following the April 20 explosion that led to
the oil spill in the Gulf of Mexico. Transocean leased the rig to BP and
Halliburton was responsible for the cement job in the well
that some have called the cause of the blowout.
(Photo by US Coast Guard/Courtesy of SkyTruth)

US Coast Guard and Bureau of Energy Management hearings in Houston illuminate a kerfuffled Deepwater Horizon rig

By Nicholas Moroni

The joint US Coast Guard/Bureau of Energy Management federal hearings into the ongoing oil saga in the gulf continue today in Houston; however, yesterday's session was marred with a self-inflicted portrayal of disorganization among the leaders aboard the ill-fated Deepwater Horizon oil rig - which sank on April 20, killing 11 crew members.

Transocean - the company that leased the rig to BP - operatives were on the hot seat yesteday as federal officials pushed to reveal a lack of communication and organization that in no way facilitated the crew's response to the blown-out well. When US Coast Guard Capt. Hung Nguyen asked rig manager Paul Johnson matter-of-factly, "Are you clear who was in charge?"; Johnson replied, "I'm not sure."

The Los Angeles Times also reported that after the blowout, crew members were awaiting orders from senior personnel - orders they never received.

Daun Winslow, a Transocean division manager, claimed that Curt Kuchta, the rig's captain, turned to him to inquire as to whether or not he should perfrom an emergency disconnect of the drill from the well. Winslow also said he had to urge Kuchta to deploy the lifeboats.

The LA Times also published a series of troubling findings from a September 2009 audit of the rig that were summoned at yesterday's hearings - among them:

  • Not all relevant personnel on the rig were knowledgeable about drilling and well operation practices.
  • A review showed significant overdue maintenance jobs that required more than 3,545 man hours.
  • No single person on board could account for which alarms had been disabled and for what reason.
  • A warning on understaffing was issued saying that any further reduction of experienced personnel may be "detrimental to the performance of the rig."
The hearings proceed today, with BP and Haliburton representatives being called to testify, although the Houston Chronicle reported yesterday that Brian Morel, a BP drilling engineer, plans to exercise his Fifth Amendment rights by refusing to say anything that might incriminate him in any wrong-doing.

One of the Halliburton employees expected to testify today was supposedly in direct contact with Morel and other BP representatives about the cement job in the weeks leading up to the well explosion. A faulty cement job by Halliburton may have caused the explosion: if the cement is not properly set in a well, oil and gas can mix and surge up the well at extremely high rates of speed, causing an explosive force.

As the federal hearings continue, and perhaps the finger-pointing, the question of whether or not these companies and other BP associates will be shielded under claimants' agreements to waive litigation following a settlement with attorney Ken Feinberg's Gulf Coast Claims Facility - something Feinberg is still pondering.

Monday, August 23, 2010

Gulf Coast Claims Facility Criticized

Ken Feinberg (Photo by Bill Starling/
Courtesy of Press-Register)

Ken Feinberg's Gulf Coast Claims Facility receives criticism in its earliest stages

By Nicholas Moroni

Ken Feinberg's Gulf Claims Facility began officially evaluating the claims of alleged spill victims amid a choir of criticism. In the days preceding the transition, Attorneys General from Florida, Louisiana and Mississippi have all offered up their qualms with the manner in which Feinberg will apparently determine the legitimacy of claims.

Feinberg has maintained that proximity to the spill will be a major factor - a cause for concern for residents in regions further away from the shoreline, who claim the spill's effects were still largely felt. In Florida, where oil did show up along the shoreline, tourism in the state has reportedly taken a nosedive, which some credit to the general region's image. Feinberg has stated that stigmatization is not legitimate cause for compensation.

"We've got a proposed geographic map along the Gulf Coast that gives us some flexibility of how we will define proximity," the Washington attorney recently told The Palm Beach Post. However, The Wall Street Journal reported today that Florida Attorney General Bill McCollum said there is more stringency to Feinberg's loosely defined protocol than is found in the Oil Pollution Act of 1990. He called Feinberg's described methods "completely unacceptable."

Claimants, the attorneys general, and elected individuals have taken issue with Feinberg's ill-deifined position on the responsibilty of business associates of BP. Uncertainty as to whether these companies can be sued following a final settlement, and the deduction of any money paid to fisherman that participated in BP's Vessel of Opportunity clean-up routine, are controverstial topics.

"Mr. Feinberg appears to be completely tone-deaf to the concerns of people along the Gulf Coast," Alabama Attorney General Troy King told The Journal.

Feinberg at this time is mending the protocol he released last week, so all of the evaluation process is subject to change.

To his critics, if litigation is a better options, he advises them to "go ahead."

Saturday, August 21, 2010

Gulf Coast Claims Facility Viewed Suspiciously

Ken Feinberg at a town hall meeting in Bayou La Batre, Ala.
(Photo by Bill Starling/Courtesy of Press-Register)

The Gulf Coast Claims Facility is being viewed suspiciously

By Nicholas Moroni

As attorney Ken Feinberg's Gulf Coast Claims Facility officially takes over the BP claims process on Monday, August 23, some have adopted a precarious view of the operation.

Fisherman, restaurant owners, distributors, hotel owners, and other entities are cautiosuly approaching the claims process. Many are uncertain that the initial emergency payments and a final settlement with BP - after which the right to sue is waved - will cover long term damages. The unfortunate reality, however, is that many spill victims cannot finance a potentially lengthy legal battle with BP and its affiliates; subsequently, some are uneasily taking the initial payments, but are not entirely committed to settling.

"The conern is you're going to have people essentially being taken advantage of because they have economic straits - they get quick, low settlements and out of economic necessity they take them, but in the long run they are not better off," Stephen J. Herman, a New Orleans lawyer, told The New York Times.

Throughout the past two months, Feinberg has toured the Gulf region conducting town hall meetings in an attempt to promote the $20 billion escrow account set up by BP in June, which will be used to compensate spill victims. At one meeting in July, he told a congregation that anyone with a legitimate claim that opts out of a settlement is "crazy."

There are other causes for concern. BP's business affiliates (Transocean, Cameron, Halliburton, and others) that were involved - directly, or indriectly - in the April 20 sinking of the Deepwater Horizon are shielded, so claimants cannot file suit following a settlement. What's more, spill victims that have been receiving emergency payments from BP, or fisherman that were hired to spot oil and lay booms thorugh BP's Vessel of Opportunity program, will have their wages deducted from any payment.

Friday, August 20, 2010

Ken Feinberg's Claims Protocol Released

Ken Feinberg (right) at a town hall meeting in Bayou La Batre,
Ala. (Photo by Bill Starling/Courtesy of Press-Register)

Ken Feinberg releases protocol for the Gulf Coast Coast Claims Facility

By Nicholas Moroni

As attorney Ken Feinberg plans to officially take over the administration of the claims process on Monday as head of the Gulf Coast Claims Facility, he announced today the protocol for his deliberations.

Not surprisingly, claimants seeking financial reparartions for alleged damage suffered subsequent to the BP oil spill, will largely have to rely on the Oil Pollution Act of 1990 as the framework that determines the legitimacy of their claims. Feinberg has announced that he will be slightly flexible in his determinations, however OPA is heavily referenced.

For example, with regards to businesses, the protocal states that a legitimate claim can be made for damages suffered as a result of injury and/or destruction or loss of property or revenue: a page right out of the post-Exxon Valdez legislation.

However, the guidelines also state that anyone, regardless of whether or not that individual is the owner of the business, is techinically eligible for compensation as long as he or she is able to prove a loss.

What's more, in certain cases, Feinberg will not require the heavy loads of paperwork BP mandated prior to even considering certain claims. Fisherman and deck hands that deal in cash, can call upon a third party to vouch for the vailidty of their claim.

"When the claims center opens on August 23, the entire claims process will be in place to get people out the door, and money to those most deeply affected," Feinberg told the Alabama news blog, al.com.

Thursday, August 19, 2010

Oil Still in Gulf of Mexico Waters

Phytoplankton plume in the Gulf of Mexico off of the coast of Louisiana.
The plume is the green-colored region closest the shoreline.
Phytoplankton is an important nutrient for many sea
organisms. (Photo by NASA/Courtesy of Wikimedia)

The explosion of the Deepwater Horizon rig on April 20,
which resulted in the death of 11 workers, and caused
the Macondo well to leak for three months.
(Photo by US Coast Guard/Courtesy of SkyTruth)

Scientists claim that much oil can still be found in the gulf

By Nicholas Moroni

Despite President Obama's recent Gulf Coast PR trip, aimed at reassuring the public that much of the region's waters are safe and the area "is open for business," and the Department of the Interior's claim that three-quarters of the surmised 200 million gallons of oil that leaked from the busted Macondo well has either dissipated or been dispersed, scientists insist that danger lurks on the ocean floor.

A recent article in the Los Angeles Times cites analysis by scientists claiming that significant portions of the oil can still be found on the seabed. Droplets of oil have appeared among the sediments in an underwater canyon off the coast of Louisiana that, prior to the Macondo well being capped last month, was the sight of clouds of leaking oil for months. That canyon, known as the DeSoto Canyon hosts an area rife with phytoplankton - tiny particles in plants integral to the diets of marine life in the region. Scientists worry that sea creatures eating the plants will be ingesting unknown levels of toxicity that may, in turn, be passed on to humans that eat seafood.

"The idea that this could have an impact on the food web and on the biological system is certainly a reality," Dave Hollander, a marine geochemist, told a Web writer for WUSF, a National Public Radio branch in Florida.

Hollander and a team of scientists from the University of South Florida underwent research for 10 days on a vessel, traveling throughout the region.

Furthermore, several scientists also told the Associated Press it is their opinion that 80 percent of the oil can still be found under the water.

Wednesday, August 18, 2010

Florida Files Lawsuit Against BP

Florida is the latest state to file a lawsuit against BP; $1 billion is sought for damages to tourism industry

By Nicholas Moroni

Florida plans to file suit against BP in response to damages suffered by the tourism industry, Bloomberg Business Week reported today.

According to the publication, Florida plans to seek $1 billion in reparations for a loss in revenue due to alleged stigamtization the entire state experienced (including regions away from the Gulf of Mexico). A steep decline in tax revenue is also believed to be part of the state's incentive in pursuing a suit against the London-based company.

"We're hoping that rather than jobs lost and[/]or services to Floridians being lost, that we can develop some type of dialogue to get interim relief," Steve Yarrid, a Tampa Bay lawyer appointed by Florida governor Charlie Christ to oversee legal issues surrounding the spill, told Bloomberg.

Florida would not be the first state pursuing litigation: Alabama and Mississippi have turned to federal courts to seek reparations, as well.

Tuesday, August 17, 2010

BP will Transfer Claims to Ken Feinberg

Ken Feinberg (right) at a town hall meeting in Bayou La Batre,
Ala. (Photo by Bill Starling/Courtesy of Press-Register)

BP hands claims process to Ken Feinberg, who begins deliberating on August 23.

By Nicholas Moroni

BP will hand over the claims process to third-party administrator Ken Feinberg this Wednesday, The Associated Press reported today. Feinberg will begin evaluating the merits of claims on August 23 as chief of the Gulf Coast Claims Facility.

The oil giant reports that it has paid upward of $300 million in claims subsequent to the April 20 sinking of the Deepwater Horizon rig, which led to the death of 11 workers and caused the Macondo well to spew oil for 86 days before being capped. BP has been accused of keeping claimaints in limbo, though, in a supposed effort to pass the buck on to Feinberg, who will then be forced to "officially deny" claims, something BP often reminds the public it has not done. Note, though, only 29 percent of claimants have receieved any payment from the company.

In a telephone conversation, BP spokesperson Mark Proegler scoffed at the notion that the company was simply waiting to place the burden of denying claims on Feinberg, and stated that BP "[hasn't] denied any legitimate claims."

Bloomberg Business Week recently reported that claims from all 50 states have already poured in; and the total number is close to 150,000. Meanwhile, as Feinberg prepares to take the reigns, he acknowledges the daunting task before him

"The further away you are from the Gulf, the less likely it is you will have a valid claim," Feinberg told Bloomberg. "But I will rake a look at each claim."

Feinberg is a Washington attorney noted for administering payments to the family members and victims of 9/11 victims, Vietnam Veterans who suffered effects from Agent Orange dispersants, and victims of the Virginia Tech shootings.

Monday, August 16, 2010

Oily Waste: Where is It All Going?

Clean-up Workers on a beach in Grand Isle, La. in July
fill a bag with oily waste. Throughout the gulf 61 percent
of the waste is reportedly being dumped near minority
communities. (Photo by Nicholas Moroni)

Reports indicate that 61 percent of oily waste ends up in minority communities in the gulf region

By Nicholas Moroni

The Washington Post post reported today that a disproportionate amount of oily waste - that is, oily booms, rags, hazmut suits, gloves, etc. - are being dumped in landfills near minority communities in the gulf region.

According to the article, waste from cleanup efforts subsequent to the April 20 explosion of the Deepwater Horizon, which killed 11 workers, and led to an 86-day oil well gusher, 40 miles off the shore of Louisiana, has produced some 45,000 tons of garbage. Of that waste, roughly 61 percent has been dumped near areas that largely comprise minority communities.

"Low income communities are getting dumped on in such a way that is so overwhelming it should raise eyebrows," Robert Bullard, director of the Environmental Justice Resource Center at Clark Atlanta University, told the Post.

Residents have also allegedly complained of being disregarded in the decision-making process, and BP had promised to engage and include residents in discourse before dumping oily waste in neighboring landfills.

As contracted haulers dump tons of oily waste daily, one of the greatest unknowns is the effect(s) of any lingering dispersants - traces of which might still be on soiled booms.

A Louisiana resident who lives just miles from a landfill in Venice (off the gulf) called the move "a slap in the face."

Thursday, August 12, 2010

Damages Lawsuits Filed Against BP by Spill Victims Tests the Claims Process

Damages suits against BP to be heard in New Orleans

By Nicholas Moroni

Hundreds of lawsuits filed by spill victims seeking finanical damages from oil giant BP will be heard in a New Orleans court.

Federal judge, Carl Barbier will hear some 300 cases that have been filed by spill victims seeking reparations for financial damages allegedly suffered subsequent to the spill. BP had hoped to avoid such litigation when it agreed in June to earmark a $20 billion escrow fund for spill victims. However, the Financial Times reports the aftermath of the sealed Macondo well has all the makings of Exxon-Valdez litigation.

BP had hoped to have the cases heard in Texas (its headquarters are in Houston): perhaphs in an attempt to appear before a friendlier jury.

Judge Barbier's hearing the cases initally carried some controversy, as well. BP maintained that Barbier's presiding over the cases, would be a conflict of interest because of shares that he held in Transocean (the operator of the sunken Deepwater Horizon rig) and Halliburton, which was involved in the Macondo drilling. Barbier has since sold the shares, and a Court of Appeals conceded that the sale of the shares posed no conflict.

The oil giant claimed it respected the decision, and that it "look[ed] forward to the cases proceeding as expeditiously as possibly."

Monday, August 9, 2010

BP Puts $3 Billion Into Escrow Account For Spill Victims

BP shows signs of good faith by making $3 billion into escrow fund for spill victims

By Nicholas Moroni

BP put $3 billion dollars into a $20 billion dollar escorw account that, in June, the company agreed to pay into for a period of five years.

The initial deposit is being promoted by the company as a token of good faith - a sign, according to incoming BP CEO Bob Dudley, that BP intends to compensate and "stand behind" those affected by the worst oil spill in US History.

In the fourth quarter BP has pledged $2 billion; moreover, an additional $1.25 billion will be added each quarter, until the BP has made settled with all eligible claimants. Note, though, that the White House said that the $20 billion is neither a ceiling, nor a floor.

Hotels in Oil Spill Town Made Money; How Does Feinberg Deal With Claims For Future Losses?

Steve Chevalier (right), owner of the Tropical Motel in Grand Isle, La.
repairs one of the inn's second-story floorboards from ground-level.
Chevalier maintains that his hotel is filled nightly with spill workers.
(Photo by Nick Moroni)

Hotel owners in Grand Isle, La. saw high occupancy rates throughout the summer due to the armies of oil spill response crews lodging on the island. Nonetheless innkeepers fret over the sustainability of the industry and Ken Feinberg is not sure how he will handle their claims.

By Nicholas Moroni

Along the southernmost tip of Louisiana Highway 1 (LA 1) ‐ a diagonal stretch of road that traverses over four hundred miles of the state – a few outdated, Nuclear-era motels line Grand Isle’s main drag. They rest on stilts – quasi protection from hurricane flooding – and most are located near marshes or beach side, by the Gulf of Mexico.

The amateur fishers and vacationers that usually occupy these places during the summer did not show up this year because of federal restrictions on gulf waters and beaches subsequent to the recently tamed BP oil spill. In lieu of the tourists, relief workers descended upon this vacation town for four months, filling its hotels on a nightly basis and providing innkeepers with a decent take for the summer season.

Nonetheless, Grand Isle’s hotel owners question the sustainability of the industry here and have moved to file claims for future losses. But how will the claims of businesses that experienced little or no financial calamities in the immediate aftermath of the spill be assessed?

Steve Chevalier, 51, is part owner of The Tropical Motel, one of the archaic inns that define the architecture on LA 1. In a recent telephone conversation, he said that “business is great,” but ceded, “What I’m afraid of is what’ll happen in three years.” It’s an allusion to a time when the spill‐response crews with tabs that are picked up by contracted and subcontracted companies have shuffled off; and, when the fishing groups that once came every summer do not return because of environmental damage to the gulf and the bayous, as well as the stigmatization of the region.

In the event that Chevalier’s doomsday scenario plays out, he and other hotel owners on the island will be at the mercy of an ad hoc claims system that BP is currently operating, but will hand off to attorney Ken Feinberg this month. Businesses currently filing claims with BP need to prove loss of income subsequent to the spill, something Chevalier and other Grand Isle innkeepers are incapable of at this time.

“I’m on a balanced scale, I can’t pursue a claim. I know they’re not going to write me a check for what I made last year right now,” Chevalier said.

“BP will argue that it doesn’t have to pay claims for lost revenue due to hotel reservations which may or may not be canceled in the future,” Brian Donovan, an engineer and an attorney specializing in business, securities, and corporate law, stated in an e‐mail. His blog, The Donovan Law Group, which shares the same name as his Tampa Bay firm, has chronicled an array of legal issues surrounding the oil spill.

Controversy regarding the company’s handling of the claims process, which has delivered payments to just under one third of claimants since May, has the oil giant salivating at the thought of transitioning the outfit to Feinberg. “We’re ready to go, he’s [Feinberg] the one taking his time,” said Mark Proegler, a BP spokesperson. Feinberg will administer a $20 billion escrow fund, dubbed the Gulf Coast Claims Facility, set up for spill victims; and, will be charged with the task of officially denying claimants. Or, as BP America Vice President Darryl Willis said, “making the tough decisions.”

Feinberg has not yet published any specific protocol for his deliberations. The Oil Pollution Act of 1990 will no doubt be leaned upon, but the claims expert indicated there might be flexibility when he pledged “an expansive view of eligibility.”

“At some point I will offer the claimant a lump sum for all future loss,” Feinberg told the Financial Times. He has also admitted to a level of uncertainty regarding the assessment of such claims, though.

“Feinberg plans to apply tort law principles in weighing claims, meaning [claimants]
will have to show that their losses wouldn’t have occurred but for the spill,” Donovan wrote in a recent blog entry.

Under the OPA, BP’s culpability could extend to damages to natural resources, in the case of Grand Isle’s hotels. In other words, if, say, the fishing groups that frequent the town’s inns significantly decline in attendance next year because of damage to marine life, BP could be held responsible for the sum of the hotels’ losses, if not more. Those eligible for reparations are initially entitled to six months of emergency payments, after which the decision must be made to either move forward with a settlement or to file a lawsuit. However, if claimants agree to a final settlement, the right to pursue future litigation is waived.

Presently, a claimant such as Chevalier, whose occupancy rate supposedly rose from 85 percent last summer to 95 percent this year, might not be a shoe‐in for compensation. However, BP will be paying into the escrow account for four years, at a rate of $5 billion, annually; so, a claim could be pursued in the future, if his business bottoms out. Moreover, if Chevalier’s claim is denied by Feinberg, he can appeal the decision to a panel of three judges; or, he can seek damages through the Oil Spill Liability Trust Fund, which is paid into by taxes levied on major oil companies. The National Pollution Funds Center, a division of the United States Coast Guard, is facilitating that fund.


Chevalier maintains that 75 percent of what the Tropical grosses annually – he said the hotel generally makes $200,000, but it costs that much, if not more, to maintain the facility year round ‐ is usually made between the months of May and July.

“Any profit we made, we turned around and put it right back in. Every time I turn around I’m spending money on something that needs to be done,” said Chevalier, describing how he has operated the hotel since acquiring it in ramshackle conditions in 2006, following Hurricane Katrina. Each year, he invests in repairs and hopes he will eventually receive a substantial return on his investment ‐ one that far exceeds the near‐even margins he claims to regularly see at the end of each tax year.

“We’ll make that target,” said Chevalier, noting that the hotel would turn a small profit this year – something of an anomaly.

At daily rates of $100 and $150, for single and double rooms, respectively, the orange‐vested men and women that were hired to clean the area’s beaches and marshes, and the representatives of companies that flipped the bills, kept the neon “Open” sign in the front of the hotel off throughout this summer’s oil saga.

After viewing the Tropical’s dated appearance and its simple quarters, Mr. Chevalier’s rates might be hard to swallow. In fact, he bemoans having to “charge 2010 prices for 1966 accommodations.”

“I had eight months of paying the bills out of my pocket,” said the innkeeper, in reference to financial adversities this past offseason. “March 1 came around, and I broke even. Then the oil spill hit and I had three weeks of no money when I’m normally full.”

By early May that changed. Grand Isle – a town heavily dependent upon summer
tourism – was crawling with factions of BP’s spill response.

Gary Lavette, 70, the owner of the 40‐plus‐year‐old Breaker’s hotel, located just up the road from the Tropical, said his busy season is usually between Memorial Day and Labor Day. Lavette also attested to having limited vacancy, but unlike Chevalier, he cut his daily rates nearly in half. This summer he received $66 for a double room that would otherwise have gone for $129 during the week, or $139 on the weekend, at this time of year. He said he was forced to do so because many of his occupants represented companies involved in the spill response, and claimed to have limited expense accounts that could not accommodate his seasonal per diem rates.

“This is just a little brief period of money, which is going to be followed by a long, huge draught,” Lavette said grimly. “This is like giving an alcoholic a sip of wine and saying that’s it.”

Anticipating forthcoming losses in profits, both Chevalier and Lavette filed claims with BP in May, but were told they could not receive any payments because they lacked the necessary paper work. Lavette said he needs a 2009 tax return that he has not yet received due to a filing extension granted by the IRS; and, Chevalier has procrastinated compiling an array of financial documentation he was told to return with.

If Lavette is covered for his expenses, which he said usually total between $42,000 and $45,000 annually, he will be more than content. He was unwilling to specify what the hotel brings in each year; however, he did say the amount was more than half the cost of upkeep. What’s more, 85 percent of the gross is allegedly gathered during the summer months.

Karen England, 48, who owns the vintage Blue Dolphin Inn, another dusty LA 1 lodge, said she also received an extension for her 2009 income taxes, and is awaiting a return. When she contacted BP to file a claim, she was told that her case could not be evaluated absent the tax return. She is in no rush, though.

“Our claim is not loss of income today,” said England. “Our loss is going to be more of
a long term problem.”

Like the Tropical and Breaker’s, England’s Blue Dolphin was filled with spill workers this summer staying at daily rates between $125 and $190. “We’re making more money than we usually do because there’s more people,” England said over the phone a few weeks ago. She refused to provide any figures, though. “But we all know that’s temporary,” she added.


BP maintains that it has received over 140,000 claims, and has paid out $300 million. “Let’s be perfectly clear, we haven’t spared any expense or any effort,” Proegler said. The company has spent close to $6 billion in the gulf thus far.

Gary Lavette is aware that his situation does not require urgent assessment, but he is nonetheless skeptical about the future, and whether he will be compensated, if need be. “Once this thing is over, BP is gonna ride off in the sunset and we’re still gonna be here,” said Lavette. “And they just want to dump this thing on Feinstein [sic] so he’ll get the blame.”

If all goes accordingly, Feinberg will take the reigns of the Gulf Coast Claims Facility this week, much to the delight of BP, which has already announced its plans to defer many of the “tough” decisions to the pay guru, who will begin judging the merits of hundreds of thousands of claims.

For the last month, Feinberg, who was appointed by the White House and is being paid by BP, has traveled the gulf region and hosted a number of town hall meetings, in an attempt to promote his new outfit. What’s more, he wishes to illuminate his autonomy, telling one congregation, “I am your lawyer,” and informing another that he thinks any potentially eligible person that does not pursue the claims facility is “crazy.”