US To Oil Spill Claims Czar: Loosen Purse Strings

ATLANTA (AP) - The job of the administrator of the $20 billion fund for Gulf oil spill victims is not to preserve money or return it to BP, and he should loosen the purse strings to help people still suffering from last year's disaster, the Justice Department said Friday.

In a letter to claims czar Kenneth Feinberg obtained by The Associated Press, Associate Attorney General Thomas J. Perrelli alluded to the fact that only roughly $3.5 billion of the fund has been spent. Any money not spent goes back to BP.

Perrelli also said that Feinberg needs to be more transparent, and that his Gulf Coast Claims Facility should take a second look at the emergency advance payments the fund paid to victims to determine if the process was fair.

"Your immediate attention to these issues will go a long way toward fulfilling BP's commitment, and the GCCF's responsibility, to provide a fair and efficient process that serves the needs of the people of the Gulf," Perrelli said.

Feinberg told the AP in a telephone interview that he would give Justice's concerns his attention. He didn't promise any immediate changes to the program.

"I welcome their input. It's always constructive," Feinberg said. "I plan as I move forward to take into account the constructive suggestions of the department and the administration."

Feinberg was appointed last June by BP and the White House to oversee the claims process for individuals and businesses. He doesn't report to the government, and Feinberg has said he is independent of BP. But a federal judge said this week that the claims czar is an agent of BP and is acting on behalf of the company to fulfill its duties under the Oil Pollution Act.

Feinberg wouldn't say Friday how much he thinks will be consumed from the fund when the claims process ends. It is scheduled to run until 2013, though Feinberg is now in the process of issuing final payments to eligible claimants for past, current and future damages. He has not committed to spending the entire $20 billion and has suggested previously that as long as he does his job there is nothing wrong with the idea of money being returned to BP.

U.S. Sen. Bill Nelson, D-Fla., asked President Barack Obama on Friday to order an administration review of the claims fund's operations. Among his concerns, Nelson cited a recent AP story that showed that of the 92,000 claimants who have already filed for a final settlement, only one company has been paid, and that was after BP intervened.

BP called it a "a unique situation" when it sought a $10 million payment from the fund for a business associate, which Feinberg paid. Feinberg has said he never reviewed the claim, but paid it anyways because BP asked him to.

"In any other context involving a fund of this size, questions that touch on accountability and transparency would normally be reviewed by a regulator or outside auditor," Nelson said in his letter to Obama. "I believe a high level of scrutiny should apply not only to claimants, but also to the claims handlers - and to BP."

On Wednesday, Feinberg said the Gulf of Mexico should largely recover from BP's oil spill by the end of next year, and all final settlement offers to victims who lost revenue from the disaster will be based on that assessment.

Feinberg said the GCCF relied on experts to determine that a 30 percent recovery is likely in 2011 with full recovery in 2012. He noted, however, that oyster harvesting will take longer.

Feinberg has faced repeated criticism about the slow pace of payments and the small size of checks to victims, as well as complaints about lack of transparency and perceived influence from BP. About half the total 485,000 claims filed have been denied because of ineligibility or lack of documentation.

Perrelli, in his letter Friday, said that businesses in the Gulf that have suffered harm as a result of the Deepwater Horizon explosion and oil spill need to be investing in their businesses and marketing themselves now to avoid losing another year of revenue and to continue the revitalization of the Gulf, which he described as a national priority.

"This is a matter of urgency," Perrelli said.