BP Cuts Payments to 40,000, La. Official Says

Byron Encalade, the President of the Louisiana Oystermen Association, during a meeting with top U.S. Department of Labor officials to discuss the ongoing economic effects of the BP oil spill on July 7, 2010 in Phoenix, Louisiana. The Labor officials are meeting with local fishermen, community-based organizations and state and local elected representatives from Louisiana to Florida as they continue the effort to help people that have been affected by the millions of gallons of oil that have flowed from the Deepwater Horizon spill causing economic hardship throughout the gulf region. (Photo by Joe Raedle/Getty Images) Getty Images

BP has decided to reduce payments to tens of thousands of people whose claim files are incomplete, the secretary of Louisiana's Department of Children and Family Services said.

Special Section: Disaster in the Gulf

"This action is irresponsible and in complete contrast to BP's repeated promise that they will 'make things right,'" the secretary, Kristy Nichols, wrote in a letter sent Friday to federal oil spill claims administrator Kenneth Feinberg.

It was not immediately clear how severe the payment cuts would be. BP did not immediately respond to a request for comment.

Nichols said her department discovered the change after reviewing BP's Thursday claims summary, which showed a significant cut in daily payments.

She said a BP representative estimated more than 40,000 of the 99,508 people who have filed claims may get lower checks. That "will be devastating to individuals surviving financially month-to-month," she wrote.

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"It is rash for BP to make this decision" without checking to see whether the state might be able to provide needed information, she wrote.

Nichols said many people don't have records that BP finds acceptable. "It is crucial that BP not continue to penalize these individuals and instead accept alternative forms of documentation, such as records held by the Louisiana Department of Wildlife and Fisheries," she wrote.

Nichols says BP should have asked states if there are other ways to get the needed information from state records.

BP also told the state "it will begin adjusting claim payments based on the seasonal nature of fishing activities, which will also result in a decrease in payments," Nichols wrote.

Nichols also took issue with what she said is BP's policy against considering business expenses, including loan payments on fishing boats, when paying captains of shrimp, fish and oyster boats.

"This is especially significant because many captains were forced to buy new vessels after they were damaged or destroyed by hurricanes Katrina and Gustav. Monthly payments of $5,000 are simply not sufficient to maintain timely payments on boats and continue to pay for living expenses incurred by small business owners," Nichols wrote.

BP also cannot tell the state how many people haven't gotten any money because the company classified their claims as related to the moratorium on deepwater drilling, Nichols wrote.

"This is a significant flaw in the design of the system and one that must be corrected," she wrote. "The moratorium is the direct result of the oil disaster and people affected should be adequately, accurately and promptly compensated.

The BP-leased rig Deepwater Horizon exploded April 20, killing 11 workers. It sank two days later. Oil spewing from the well a mile under the surface of the Gulf of Mexico began arriving in mainland Louisiana on April 29.

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Louisiana's Letter to Kenneth Feinberg
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