Today, Kenneth Feinberg, Administrator of the Gulf Coast Claims Facility, testified before the
United States House of Representatives Committee on Small Business. In his testimony, he made the following points:
He anticipates a diverse number of claims: removal and clean up costs by individuals or businesses; claims for damages due to physical injury to real or personal property; lost profits and lost earning capacity; loss of subsistence use of natural resources; and claims for physical injury/death. All of these claims will be considered on their individual merits and decisions concerning both eligibility and the calculation of awards will be made promptly, with maximum efficiency.
Under Florida law, the Gulf Coast Claims Facility wouldn't pay for lost hotel and restaurant business in places where oil hasn't washed ashore. However, he is seeking discretion to make payments in places where oil may not be visible but where economic impact of in lost beachfront business has been felt.
However, a Boston restaurant suffering for lack of Louisiana shrimp clearly doesn't deserve compensation.
He will try to make emergency payments for six-month rather than one-month periods.
In an interview with the Financial Times, Kenneth Feinberg indicated that he would not be paying illegal immigrant claims.
"I think it's very difficult for the fund to engage in any programme that violates federal law," Mr Feinberg told the Financial Times. "I don't think the fund can be in a position to be paying compensation [to illegal immigrants]."
Feinberg has not stated whether he would voluntarily pay oil spill impacted businesses that employ illegal immigrants.
President Obama and Louisiana Governor Jindal have not yet publicly stated their positions on these issues.
In a recent interview with the Finaicial Times, Kenneth Feinberg reported that:
Where there is a difference in state law, he will apply the law of the majority across the board.
Claimants are not being required to sign any waivers during the emergency claims process, but will have to agree not to sue BP in the future when they apply for a final settlement.
"If you think there are going to be birth defects or cancer in the future, then don't take the cheque, don't sign the waiver" he said.
Q1. Is a taxpayer required to include in gross income payments the taxpayer receives for lost business income, lost wages or lost profits?
A1. Yes. The law requires that a taxpayer include in gross income payments the taxpayer receives for lost business income, lost wages or lost profits. For information on whether estimated tax payments may be required, see Publication 505, Tax Withholding and Estimated Tax.
A self-employed individual who receives a payment that represents compensation for lost income of the individual's trade or business should include the amount of the payment in net earnings from self-employment for purposes of the self-employment tax. For more information about reporting self-employment income and paying self-employment tax, see Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ).
Generally, a payment to an individual to compensate for lost wages will not be wages for purposes of the social security tax and Medicare tax because it is not an actual payment for employment within the meaning of the law. These payments will also generally not be subject to income tax withholding, unless backup withholding applies. See A2, below, for a discussion of backup withholding. However, if the payment is made by an employer to its own employees, or by a third party to employees of another employer in satisfaction of an obligation of that employer to its employees, the payment may be subject to social security tax, Medicare tax, and income tax withholding.
Q2. Are payments that are made to an individual for lost business income, lost wages, or lost profits required to be reported to the IRS by the person making the payment?
A2. Generally, yes. A person making payments to an individual for lost business income, lost wages or lost profits must report the payments to the IRS on a Form 1099-MISC, Miscellaneous Income, if the payments aggregate $600 or more. Generally, these payments are subject to backup withholding at a rate of 28 percent if the individual fails to furnish the individual's taxpayer identification number to the payor at or before the time of payment.
A payment that is treated as a payment of wages is subject to reporting on Form W-2, Wage and Tax Statement, and to the same social security tax, Medicare tax and income tax withholding rules that apply to regular wage payments made by an employer to an employee. For more information about withholding from employees' wages, see Publication 15, (Circular E) Employer's Tax Guide.
Under current law, a person making payments to a corporation for lost business income or lost profits is not required to report those payments to the IRS. However, a person who makes payments to a partnership, limited liability company or other non-corporate entity for lost business income or lost profits generally is required to report those payments to the IRS in the same manner as for payments to individuals, and the payments are subject to backup withholding at a rate of 28 percent if the entity fails to furnish its employer identification number to the payor at or before the time of payment.
Q3. Is a taxpayer required to include in gross income payments the taxpayer receives for property damage or destruction?
A3. A taxpayer is not required to include in gross income payments the taxpayer receives for property damage or destruction if the payments do not exceed the taxpayer's adjusted basis in the damaged or destroyed property. If the payments for property damage or destruction exceed the taxpayer's adjusted basis in the damaged or destroyed property, the taxpayer will realize gain for federal income tax purposes. If the damage or destruction is an "involuntary conversion," the taxpayer may defer the tax on any gain if the taxpayer purchases qualifying replacement property that costs at least as much as the payments received for the damaged or destroyed property. (Tax is deferred until the qualifying replacement property is later sold.) An involuntary conversion occurs when a taxpayer's property is destroyed, stolen, condemned or disposed of under the threat of condemnation and the taxpayer receives other property or money in payment, such as a condemnation award or insurance. See Publication 544, Sales and Other Dispositions of Assets. A person making payments for property damage or destruction is not required to file information returns with the IRS reporting the payments.
Q4. Can a taxpayer claim a casualty loss deduction if payments the taxpayer receives for property that has been damaged or destroyed are less than the taxpayer's adjusted basis in the property?
A4. A taxpayer may be able to claim a casualty loss deduction if the payments (including insurance proceeds or payments for damages) the taxpayer receives, or reasonably expects to receive, are less than the taxpayer's adjusted basis in the property. See A5, below, for a discussion of how to compute the possible deduction.
Q5. How does a taxpayer determine the amount the taxpayer may claim as a casualty loss deduction?
A5. With respect to personal-use property, the taxpayer generally may claim as a casualty loss deduction the lesser of (1) the difference between the fair market value of the property immediately before and after the casualty; or (2) the adjusted basis of the property. The amount of the deduction is reduced by any insurance proceeds or other payments the taxpayer receives or reasonably expects to receive. An individual taxpayer must reduce the amount claimed for each casualty loss deduction for personal-use property by $100, and reduce the total amount of casualty loss deductions claimed for personal-use property for one taxable year by 10 percent of the taxpayer's adjusted gross income.
With respect to business or income-producing property that is partially destroyed, the taxpayer generally may claim as a casualty loss deduction the lesser of (1) the difference between the fair market value of the property immediately before and after the casualty; or (2) the adjusted basis of the property. The amount of the deduction is reduced by any insurance proceeds or other payments the taxpayer receives or reasonably expects to receive. However, if business or income-producing property is completely destroyed and its adjusted basis exceeds its fair market value, the taxpayer may claim a casualty loss deduction equal to the adjusted basis of the property, reduced by payments the taxpayer receives or reasonably expects to receive for the property (including insurance proceeds or payments for damages).
Q6. How does a taxpayer establish the decrease in the fair market value of the property after a casualty?
A6. A taxpayer may use either an appraisal or the cost to repair or clean up the property to determine the decrease in fair market value of the property after a casualty.
Q7. How does a taxpayer report a casualty loss deduction on the tax return?
Q8. Is an individual required to include in gross income payments the individual receives for personal physical injuries or physical sickness, or for emotional distress that is attributable to personal physical injuries or physical sickness?
A8. No. An individual generally is not required to include in gross income payments the individual receives on account of personal physical injuries or physical sickness. Personal physical injuries include observable bodily harm such as bruises, cuts, swelling and bleeding. Likewise, an individual is not required to include in gross income payments the individual receives for emotional distress that is attributable to personal physical injuries or physical sickness. Payments for personal physical injuries or physical sickness, or emotional distress attributable to personal physical injury or physical sickness, are not required to be reported on an information return filed with the IRS by the person making the payment.
Q9. Is an individual required to include in gross income payments the individual receives for emotional distress (or symptoms of emotional distress such as insomnia, headaches or stomach disorders) that is not attributable to personal physical injuries or physical sickness?
A9. Yes. The law requires an individual to include in gross income payments the individual receives for emotional distress (or symptoms of emotional distress such as insomnia, headaches or stomach disorders) that is not attributable to personal physical injuries or physical sickness. However, an individual excludes from gross income payments for emotional distress up to the amount of medical care expenses the individual paid related to the emotional distress if the individual did not deduct the expenses in a prior taxable year.
Q10. Are payments made to an individual for emotional distress that is not attributable to personal physical injuries or physical sickness required to be reported to the IRS by the person making the payment?
A10. Yes. A person making a payment to an individual for emotional distress that is not attributable to personal physical injuries or physical sickness must report the payment to the IRS on a Form 1099-MISC, Miscellaneous Income, if it is $600 or more. If the individual does not furnish the individual's taxpayer identification number to the payor, the payor must backup withhold on the payment at a rate of 28 percent.
Stephen Moret, Secretary of Louisiana Department of Economic Development, in a June 24, 2010 letter to the SBA, requests the SBA consider BP claims as collateral when underwriting loans.
June 24, 2010
Ms. Karen G. Mills
Administrator
U.S. Small Business Administration
409 3rd Street, SW
Washington, DC 20416
RE: Reducing the high rate of declines for SBA disaster loan applications related to the BP oil spill disaster
Dear Administrator Mills:
I am writing to request your immediate action to address an important issue that is impacting hundreds of small businesses in Louisiana that have been economically damaged by the BP oil spill.
As you are well aware, Louisiana has suffered severe economic and ecological damage from the BP oil spill. Our seafood industry is experiencing huge economic losses that have only been partially mitigated by a frustratingly slow and inadequate BP claims process. Our precious wetlands are suffering incalculable, permanent damages, while our tourism industry faces escalating losses. More recently, we have begun to face the loss of many thousands of jobs associated with the federally imposed deepwater drilling moratorium. The moratorium will not only impact large oil and gas companies but it also will result in the closure of many small businesses that depend on the deepwater drilling industry. Likewise hundreds of small businesses are under severe strain due to other effects of the oil spill.
According to BP, more than 21,000 claims have been filed by individuals and busines ses in Louisiana that have been damaged by the BP oil spill. Hundreds of these claims have been filed by small businesses that do not have the financial capacity to weather an extended wait for reimbursement of their impact claims by BP.
These vulnerable small businesses, many of which already were struggling to survive due to damages they incurred from recent hurricanes, are exactly the kinds of businesses that could most benefit from the SBA's disaster recovery loan programs. Unfortunately, we recently learned that more than 70 percent of the initial Louisiana applicants for SBA's loan programs were denied. According to the SBA, most of these applications were denied due to credit concerns and/or SBA's assessment of the repayment ability of these companies. Yet in many cases these small businesses have legitimate claims with BP that could be utilized to fulfill their loan obligations once their claims have been adjudicated and paid.
As you may be aware, my economic development team has had multiple conversations with SBA managers about our concerns and potential solutions. Our understanding from those conversations is that SBA could change its internal policy to allow expected BP claim proceeds to be assigned as needed to SBA to ensure repayment of any loans made, thereby significantly reducing any potential losses that SBA might otherwise experience. In fact, we were told that SBA utilized a somewhat similar process after the Exxon Valdez disaster to help small businesses impacted by that spill.
Given that BP has committed to fully compensate those negatively impacted by the oil spill, we request that you implement a policy change that would allow an exception to the normal underwriting standards of SBA to specifically allow repayment in the form of BP claims, if needed, in lieu of SBA's normal process for assessing credit history and repayment ability. Such a mechanism would be particularly helpful for those small businesses with more complex claim issues that may take a significant amount of time to fully resolve.
Thank you in advance for your swift consideration of our request.
Sincerely,
Stephen Moret
Secretary
Louisiana Department of Economic Development
cc: Bobby Jindal, Governor of Louisiana
Mary Landrieu, U.S. Senator
David Vitter, U.S. Senator
Rodney Alexander, U.S. Representative
Charles Boustany, U.S. Representative
Anh "Joseph" Cao, U.S. Representative
William "Bill" Cassidy, U.S. Representative
John Fleming, U.S. Representative
Charlie Melancon, U.S. Representative
Steve Scalise, U.S. Representative
NOAA has opened more than 8,000 square miles of previously closed fishing area in the Gulf of Mexico, because the agency has not observed oil in the area. The most significant opening is an area due south of Mississippi which was closed Monday, June 21.
Additionally, some smaller areas were opened off the Louisiana and central Florida coasts.
These areas were initially closed as a precaution because oil was projected to be within those areas over the next few days. However, the review of satellite imagery, radar and aerial data indicated that oil had not moved into these areas.
The federal closed area does not apply to any state waters. Closing fishing in this area is a precautionary measure to ensure that seafood from the Gulf will remain safe for consumers.
The closed area now represents 78,597 square miles, which is approximately 32.5 percent of Gulf of Mexico federal waters. This leaves more than two-thirds of Gulf federal waters available for fishing. The closure will be effective at 6 p.m. EDT. Details can be found at http://sero.nmfs.noaa.gov/. The last closed area modification was June 21, when 86,985 square miles were closed to fishing, or roughly 36 percent of federal waters of the Gulf.
Federal and state governments have systems in place to test and monitor seafood safety, prohibit harvesting from affected areas and keep oiled products out of the marketplace. NOAA continues to work closely with the U.S. Food and Drug Administration and the states to ensure seafood safety, by closing fishing areas where tainted seafood could potentially be caught, and assessing whether seafood is tainted or contaminated to levels that pose a risk to human health. NOAA and FDA are implementing a broad-scaled seafood sampling plan. The plan includes sampling seafood from inside and outside the closure area, as well as market-based sampling.
According to NOAA, there are approximately 5.7 million recreational fishermen in the Gulf of Mexico region who took 25 million fishing trips in 2008. Commercial fishermen in the Gulf harvested more than 1 billion pounds of fish and shellfish in 2008.
Fishermen who wish to contact BP about a claim should call 800-440-0858.
NOAA will continue to evaluate the need for fisheries closures based on the evolving nature of the spill and will re-open closed areas as appropriate. NOAA will also re-evaluate the closure areas as new information that would change the boundaries of these closed areas becomes available.
NOAA has a number of new methods for the public to obtain information or be notified when there is a change to the closed area:
•Sign up to receive Southeast Fishery Bulletins by email at SERO.Communications.Comments@noaa.gov
•Call 1-800-627-NOAA (1-800-627-6622) to hear a recording of the current coordinates
•Listen to NOAA Weather Radio for messages about the closure
•Receive text messages on your cell phone about changes to the closed area by texting fishing@gulf to 84469 (visit http://www.deepwaterhorizonresponse.com/go/doc/2931/558107 for more information)
•Follow them on Twitter: usnoaagov to get a tweet when the closed area changes
The Coast Guard's website reports that BP has been forced to remove a cap that was containing some of the oil gushing from its ruptured Gulf of Mexico well.
This morning at approximately 8:45 a.m. CDT, a discharge of liquids was observed from a diverter valve on the drill ship Discoverer Enterprise,which is on station at the MC252 well-site. As a precautionary measure,the lower marine riser package (LMRP) containment cap system, attached to the Discover Enterprise, has been moved off the Deepwater Horizon's failed blow-out preventer to ensure the safety of operations and allow the unexpected release of liquids to be analyzed.
Capture of oil and gas through the LMRP cap is therefore temporarily suspended until such time that the cap can be re-installed. Capture of oil and gas through the BOP's choke line to the Q4000 vessel on the surface continues.
Coast Guard Admiral Thad Allen said an underwater robot bumped into the venting system, sending gas rising through vent that carries warm water down to prevent ice-like crystals from forming in the cap.
Separate from the $20 billion compensation fund, those affected by the disaster can now apply for emergency funds, without forfeiting their right to sue BP at a later date.
Victims who receive money from the compensation fund, however, must give up their right to litigate against BP.
By agreeing to the $20 billion compensation fund, BP was taking first steps to limit its liability.
Feinberg agreeds that no one should sign away their right to sue BP at this point in time since the details of the compensation fund are unclear.
"One of the goals I've got in the next few weeks and months is to make it very clear," said Feinberg. He plans to clarify the process so that claimants understand it and exactly how much money they will be receiving, should they choose to accept payment from the $20 billion fund.
U.S. Representative Edward Markey said Andarko and Mitsui ought to contribute to the BP Oil Spill Victim Compensation Fund. Anadarko owns a 25 percent stake in the Macondo well and Mitsui, Japan's second-largest trading company, owns 70 percent of Mitsui Oil Exploration Co., which holds a 10 percent stake.
Anadarko has taken the position that BP was grossly negligent and engaged in willful misconduct leading up to the explosion aboard the Deepwater Horizon drilling rig that caused the oil spill. Under the typical language in set forth in deep-water agreements--the American Association of Professional Landmen's Form 810--parties to the agreement bear liabilities for damages in proportion to their stakes except "when liability results from the gross negligence or willful misconduct" of one of the parties.
The $20 billion fund provides for both emergency payment and full compensation. It's an independent program. Ken Feinberg, the administrator of the BP Oil Spill Victim Compensation Fund, is not beholden to the Obama administration or to BP. However, Mr. Feinberg is being paid by BP.
The shrimper (and apparently other fishermen and oystermen) impacted by the spill will get an emergency payment without any obligation as long as he can demonstrate he's got a legitimate claim. With the emergency payment, there is no requirement to waive your right to sue. The fund will pay that claim immediately, and then sit with him and over the next 30, 45 days, come up with a program that will provide him full compensation. (Mr. Feinberg implies the claimant will be required to give up his right to sue to receive "full compensation".)
Congress provided some valuable guidance in the 911 fund as to what constitutes a "legitimate claim." The direct causal connection between the claim and the spill, pay it. If it's an indirect claim, a restaurant in, in Las Vegas or Omaha, "I can't get shrimp so our business is being harmed," in the 911 fund, Congress said look to the law of the state of that claimant's residence. The congressional guidance in 911 might work here as well.
Well, in the short term, emergency payments with minimum corroboration, that's easy. In the longer term, just as with the 911 fund, we'll have to develop a business interruption methodology. Look, file your claim, give us some information on what you've earned in the past, not a lot, not detailed, so that we can, within 30 to 45 days, try and get checks out on business interruption. It sure would help if the oil would stop flowing so we could get some break date from which we develop these formulas.
ESIS, Inc. is part of the ACE Group and is a Third Party Administrator ("TPA") TPAs process claims for separate entities like BP. BP has outsourced the administration of claims processing to ESIS.
ESIS is seeking the "best possible outcome" for BP. ESIS is NOT seeking the best possible outcome for oil spill victims.
A June 18, 2010 U.S. House of Representatives Committee on the Judiciary Report refelcts:
•As of this Tuesday, June 15th, BP had paid less than 12 percent ($71 million dollars out of an estimated $600 million) of outstanding claims submitted by individuals and businesses.
•Two weeks after the disaster, BP had not paid a single dollar to the individuals or businesses harmed by the explosion and the oil spill. As of May 18th (four weeks post-disaster), BP had only paid $11,673,616.
•In apparent response to congressional oversight and the efforts of the federal government, BP began increasing their payments to affected individuals and businesses in the past few weeks.
•Although the oil spill disaster occurred on April 20th, BP has only begun to compensate individuals for their full loss of income in the past two weeks. We understand individuals continue to experience delays in the receipt of full income awards.
•BP has not paid a single bodily injury claim. As of Friday, June 18th, there were 717 claims submitted for bodily injury, including claims for respiratory issues, headaches, and skin irritation.
•BP has not paid a single claim for the diminishment in value of homes in the affected areas of the Gulf South, out of a total 175 claims submitted.
•Out of the 267 claims submitted, BP has paid only $169,371 in loss of income claims for affected restaurants. However, the lack of data from BP on the damage amounts requested by the affected restaurants or the number of claims paid makes it impossible for the Committee to determine if restaurants and other Gulf Coast businesses are being properly compensated.
Anadarko Petroleum Corp., owner of 25 percent of the damaged Macondo well pouring 60,000 barrels of crude per day into the Gulf of Mexico says BP Plc, the project's operator, should pay the costs from the spill because it acted recklessly and unsafely at the drilling site.
The Atakapa-Ishak Indians have been in Grand Bayou catching seafood before any other culture arrived in that area.
Before Katrina, there were 23 extended families settled in the Grand Bayou area. The storm decimated this community, and many Atakapa-Ishak had to move elsewhere. A number of homes have been rebuilt by volunteer groups, but this oil spill has further jeopardized the community's existence. There is little to draw wayward tribe members back, or keep current residents there, when fishing is nonexistent and the waterways are dangerously polluted.
It has been estimated by fishermen that the oil is 35 minutes away by boat.
For these residents of Grand Bayou, the water means more than fiscal security. If the water is polluted to the point where they cannot fish, then many cannot eat. This community is wholly dependent upon the waterways as a means of daily nutrition, in addition to commercial ventures. Members of this group liken the water to a grocery store; most of what they consume comes from the marsh.
In a situation such as this, the oil spill is more of a pressing and life-threatening issue than it would be in most of the Gulf region. Lives have been impacted throughout Louisiana and the Gulf Coast states, but in the context of the Atakapa-Ishak group, lives are acutely threatened by BP's disaster.
U.S. Justice Department lawyers, in a June 10 filing made public yesterday, urged a panel of judges to gather all the federal court suits before a single judge in New Orleans for pre-trial proceedings. The government didn't identify the judge. BP officials have asked that the cases be sent to U.S. District Judge Lynn Hughes in Houston.
New Orleans "is centrally located and is geographically closest to the key events giving rise to liability in these matters," U.S. lawyers said in the nine-page filing.
Raymond James analyst Pavel Molchanov estimates the total legal cost of the BP Oil Spill (including criminal fines) at $62.9 billion. This estimate far exceeds the $20 Billion escrow account BP has agreed to establish to pay claims adjudicated by the independent claims facility, as well as judgments and settlements, natural resource damage costs, and state and local response costs.
How and when will BP provide for the $42.9 billion estimated shortfall?
Following is the text of White House fact sheet on claims process for the cleanup of the Gulf Coast oil spill and compensation to victims:
INDEPENDENT CLAIMS FACILITY
A new, independent claims process will be created with the mandate to be fairer, faster and more transparent in paying damage claims by individuals and businesses.
To assure independence, Kenneth Feinberg, who previously administered the Sept. 11 Victim Compensation Fund, will serve as the independent claims administrator.
The facility will develop standards for recoverable claims that will be published.
A panel of three judges will be available to hear appeals of the administrator's decisions.
The facility is designed for claims of individuals and businesses who have been harmed by the oil spill; local, state, tribal and federal government claims will continue to be handled directly by BP.
The facility will decide all claims as expeditiously as possible, and in any event within the existing statutory time frame.
Dissatisfied claimants maintain all current rights under law, including the right to go to court or to the Oil Spill Liability Trust Fund.
Decisions under current law by the independent claims facility shall be binding on BP.
All claims adjudicated under this facility have access to the escrow account for payment.
ESCROW ACCOUNT
BP has agreed to contribute $20-billion (U.S.) over a four-year period at a rate of $5-billion per year, including $5-billion within 2010. BP will provide assurance for these commitments by setting aside $20-billion in U.S. assets.
BP has reaffirmed its commitment to pay all removal costs and damages that it owes as a responsible party. It will not assert any liability cap under OPA (Oil Pollution Act) to avoid liability.
The creation of the escrow account will provide assurance to the public that funds will be available to compensate the injured.
This account is neither a floor nor a ceiling on liability.
The escrow account is to be used to pay claims adjudicated by the independent claims facility, as well as judgments and settlements, natural resource damage costs, and state and local response costs.
VOLUNTARY CONTRIBUTION FOR RIG WORKERS
BP will contribute to a foundation $100-million to support unemployed oil rig workers.
The administration's May legislative proposal would create a new program of unemployment assistance, modelled after the Disaster Unemployment Assistance Program, to provide benefits to workers who lose their jobs as a result of a spill of national significance.
ENVIRONMENTAL AND HEALTH MONITORING
BP has previously committed $500-million for the ten-year Gulf of Mexico Research Initiative to improve understanding of the impacts of and ways to mitigate oil and gas pollution.
As a part of this initiative, BP will work with governors and state and local environmental and health authorities to design the long-term monitoring program to assure the environmental and public health of the Gulf Region.
In a Letter to BP's CEO Tony Hayward, Representatives Henry Waxmann and Bart Stupak address the rush to speed up finishing the Macondo welll, particularly the following five crucial decisions made by BP:
the decision to use a well design with few barriers to gas flow;
the failure to use a sufficient number of "centralizers" to prevent channeling during the cement process;
the failure to run a cement bond log to evaluate the effectiveness of the cement job;
the failure to circulate potentially gas-bearing drilling muds out of the well; and
the failure to secure the wellhead with a lockdown sleeve before allowing pressure on the seal from below.
The common feature of these five decisions is that they posed a trade-off between cost and well safety.
Today a U.S. scientific team used new data and multiple scientific methodologies to reach updated estimates of oil flow from the BP well. That team now estimates that as much as 60,000 barrels of oil could be flowing into the Gulf of Mexico.
The scientists stressed the need for continued and refined pressure measurement, but emphasized that today's improved estimates have a greater degree of confidence than estimates that were possible prior to the riser cut. There are several reasons for this, including:
More and different kinds of data is available now: The improved estimates are informed by newly available, detailed pressure measurements from within the Top Hat taken over the past 24 hours. In addition, scientists could draw on more than a week of data about the amount of oil being collected through the top hat.
A single flow is easier to estimate: Prior to the riser cut, oil was flowing both from the end of the riser and from several different holes in the riser kink. This made estimates - particularly based on two dimensional video alone - more difficult.
Sheriffs of the spill region are often instructed to block the free access of the press to the most contaminated areas.
All the cleaners hired by BP are strictly forbidden to talk to reporters.
These barriers to information are tolerated by the government leaving one to conclude that the government seeks to minimize the magnitude of the disaster.
As the oil spill situation in Louisiana becomes more dismal, the proposed solutions and remedies appear increasingly more desperate. The most recent controversy that has arisen from the BP oil spill is whether or not to use sand berms to combat oil encroachment.
Sand berms are essentially barriers constructed of sand or other natural sediment which has been dredged from one area and re-assembled in the fashion of a blockade. They have been proposed as an alternative to the already implemented booms in the Gulf, which have recently proven to be less than successful in containing the spreading oil threat. Governor Jindal has become an extremely vocal proponent of sand berms, claiming that they are a necessary defense against this ongoing disaster, as the berms act as a safeguard for the fragile wetlands ecosystem which could be crippled by the oil's effects.
The controversy surrounding these sand berms stems partially from the potential ill effects that they could have on Louisiana's environment, but it is largely related to the temporary nature of the solution. By all accounts, sand berms are the mitigation equivalent of a band aid; they will stop some of the bleeding, but only if the cut is small and manageable. In our current situation, it is apparent that the wound left by BP's oil spill is not only large, but will continue to fester for years to come.
A more permanent solution, by contrast, is the rebuilding of barrier islands off the Gulf Coast. Such a venture is considerably more expensive and time consuming, but it would not only help to alleviate the ill effects of the oil spill. Barrier islands, unlike sand berms, are hardier and would be more likely to survive a catastrophic natural disaster, such as a hurricane. Moreover, they would represent a concerted effort to restore the ecological health of Louisiana's marsh and wetland environment, rather than a quick fix. Considering how much the environment of Louisiana has suffered in recent years, it is only appropriate that any major alterations should be long term and restorative.
Presidential Historian Douglas Brinkley reports that President Obama will continue to pressure BP to capture as much oil as possible, finish the relief wells and provide for an immediate cleanup. Further, Mr. Brinkley hinted with the help of Congress, President Obama will require BP and perhaps other responsible parties to save the Louisiana wetlands by redirecting the Mississippi River into the marshlands.
TRANSCRIPT:
COOPER: All right, back now with James Carville and Douglas Brinkley.
I don't want to get you in more trouble with the White House than you're probably already in.
CARVILLE: Oh, no.
COOPER: But, I mean, what do you -- how do you assess where the federal government is in all this and the White House?
CARVILLE: I just -- and I don't think -- I don't care if the President calls Tony Hayward or not. I want him to call the attorney general and say, how's that criminal investigation -- you know, the criminal investigation, or what do we have on this civil thing?
It's they tell these people that we don't want to be jacked around anymore, period. And get Senator Boxer on the phone, get Congressman Markey on the phone and say, what can we do to help your committee be sure that you're not getting jacked around? Just -- again, my personal view is, is this country is being invaded. We ought to treat it that way. This is going to -- has the potential to destroy life as we know it in South Louisiana and all over the northern Gulf Coast, and, who knows, maybe if it gets in the gulf stream, the East Coast of the United States.
So this is a -- a thing of the first magnitude here. And call whoever you want, but get the attorney general and get everybody involved in this, we're -- we're under assault.
COOPER: I should point out that I asked to have the number -- you know, for days now, CNN has been putting the number of gallons spilling out in the corner of their screen.
And I know it's dramatic to look at that thing. But that's just -- I mean, no one knows. I mean, the idea that we have some sort of handle on how much oil is leaking out is just a false notion. And so we've taken that thing off the screen.
I think it's more important you just see the actual oil flowing. That tells you what you need to know.
Doug, what do you make of -- of the way the Obama White House is -- and the federal response by the Coast Guard is -- is going?
BRINKLEY: Well, I mean, there are three things, I mean, I think, big baskets, going on.
One is close that well, get the -- capture as much oil as you can, keep the pressure on BP on the relief wells. Second is immediate cleanup. And I think more can be done by the Obama administration. And I -- and but I think the big third piece is coming, when President Obama comes to Florida and Alabama and Mississippi, and that is holding BP responsible for the Natural Resource Damage Act, for the Oil Spill Response Act.
And, by that, I mean BP is going to end up paying somewhere between $10 billion to $15 billion, maybe even $20 billion, because they're going -- one of the only ways to save the Louisiana wetlands is going to be -- you know, the Mississippi River has been channelized for navigation.
Well, now the Mississippi River has to be redirected. It's going to have to be flooded and sediment pumped into these marshlands to save it. I think the Obama administration --
(CROSSTALK)
COOPER: So, no, wait. No, wait. Doug, is this just a hope on your part?
BRINKLEY: No.
COOPER: Or -- I mean, I know you have been talking to sources. Do you believe this is actually going to happen?
BRINKLEY: Yes. Yes.
And it's one of the reasons why the President is not talking to Tony Hayward. And they are going to come out with a large Gulf Recovery Act, because the oil and gas industry has been dredging. We have disappearing barrier islands. For 40 years down there, it's abused the wetlands.
This is a turning point. There is an appetite on Capitol Hill for Gulf Recovery Act. The Mississippi River is going to have to be redirected into the marshlands. And BP and TransOcean and other, you know, operations, Cameron, other companies are going to have to pay up to $10 billion and $15 billion for breaking national acts.
(CROSSTALK)
COOPER: Right.
BRINKLEY: In addition, for offshore drilling in the Gulf, Anderson, there will be a conservation excise tax, that yes, there will be offshore drilling, but Louisianans will start getting some of the revenue to stay in state.
CARVILLE: If -- if the President does that, I will be the biggest supporter in the world. He will be beloved in Louisiana.
If he -- if he has a restoration act and the kind of things that Doug Brinkley is talking about, who Doug, by the way, lived here, his wife is from here. He knows exactly what he is talking about. If there is that kind of action from the White House and this President, then he'll, he'll go down, in my opinion, as one of the great presidents in history.
And I have not hesitated to criticize him. But if that kind of action is -- that -- that kind of thing starts to happen, that's going to be a very encouraging sign for south Louisiana, and for the country, too.
COOPER: And Doug, I mean, what percent -- I mean, you -- you -- you're saying this based on people you have talked to?
BRINKLEY: Yes.
And what is -- one of the reasons there's a frustration, because of the legalities of calling Tony Hayward and all, the -- the Obama administration has heard what's happening loud and clear. And you're going to have the full power of the administration going on the culpable parties.
All of these little articles start building up, the -- the one we talked about on the AP with the phony report about a -- they had their wildlife expert in 2009 for BP had actually died in 2005. Or, you know, it's just crazy stuff. It's all -- Markey and others are accumulating it.
Congress is going to go after BP, and they have now broken, as I said, Natural Resource Damage Act, Oil Spill Response Act. And in order to save the wetlands, which BP is responsible to, it's going to be -- the Army Corps of Engineers has directed it -- if you fly over, it's like a bird's foot. There are three channels.
We're now going to have to redirect Mississippi River sediment and flood the marshlands to try to save them. That will occur after this -- the well gets capped, the relief wells are built.
But, in the next year or two, this will be, for President Obama administration, I think something like a Tennessee Valley Authority or a Saint Lawrence Seaway under Dwight Eisenhower, a major public works act, with BP footing --
(CROSSTALK)
BRINKLEY: The bill.
COOPER: I got to say, I was -- I was -- it was kind of sad today being out with the governor and the National Guard folks who are out there with these rudimentary vacuums literally sucking up oil.
And they only have five of them. I mean and they've only taken this upon themselves. I mean, they're -- they're thinking outside the box.
CARVILLE: That's right.
COOPER: It doesn't seem like, on day 51, they should still be begging for nickels and dimes to be buying vacuum cleaners.
CARVILLE: But what it looks like is, we ought to just do things and then send them the bill, because if you say, can we do this, they are going to slow-walk him. Ok?
They say, oh, gee, it's like, you go ask your daddy, hey, can I go out there? Well, ask your mother. No, go ask your daddy.
They will slow-walk the thing to death. Come up with a way to have the administration and have people say, look, these guys are going to do this, and you're going to pay for it, because they got -- it's no doubt that they will slow -- well, oh, no, you can only have five, and you've got to go check with the Corps of Engineers, and you've got to go check with this person, and go -- go see the Interior Department, and go see the -- the Homeland Security.
And they've got to come up with a way to expedite this. And, by the way, if it takes an act of Congress, then do it. They went at 1:30 in the morning for Terri Schiavo. Well, then go in at 1:30 in the morning and change the act to save the entire Gulf Coast.
I mean, move. Get -- let's get this thing done.
And I -- I can't say enough good about Congressman Markey and Senator Boxer and Senator Nelson and others, who are really putting the heat to get this out. It's a shame we had to wait this long. But we got something now. And if -- if the President is doing the things that Doug is talking about, this is going to be -- this is something we need desperately in Louisiana.
(CROSSTALK)
COOPER: James Carville, I appreciate your time and Doug Brinkley as well. We'll talk to you again.
BP's claims process is more transparent, prompt and responsive to the unique needs of the communities and citizens that have been impacted by the oil spill.
BP provides clear public information on the entire life cycle of the claims process that they have produced, and ensure that we have greater accountability for the American people.
Businesses will not have to wait until the books have closed for each month to calculate losses for the month.
A more expedited claims process for larger-loss business claims that will basically take into account the ability to allow for those businesses to pay their expenses for the upcoming month as opposed to reflective to the last month.
Payment of claims concerning seasonal workers like shrimpers will be paid based upon their monthly earnings during the shrimping season (five months) and not based upon the their annual earnings divided by twelve.
A meeting with ESIS, the third party administrator for BP, to better explain to the American public what claims are being paid, what the status is of pending claims, and ensuring that they're being paid timely and fairly.
A series of meetings to discuss individual and small business claims process with each of the states and allow the states to bring their concerns forward to get greater clarity and understanding and ensure that individuals, families and small businesses in the communities are getting what they are due by the responsible party.
The United States Flow Rate Technical Group has used sonar equipment and video analysis to estimate the flow rate of the BP oil well to be about 50,000 barrels per day before the latest June 3rd attempt to partially cap the well. That's a rate of about one Exxon Valdez spill every eight days. The current flow rate has yet to be determined.
Questions about exposure-related illnesses can be directed to the Louisiana Poison Center: 1-800-222-1222. The Poison Center is staffed 24-hours a day and can provide medical management advice. To report an exposure-related illness, call 1-888-293-7020.
DHH's Office of Public Health, Section of Environmental Epidemiology & Toxicology gathers and analyzes information provided by surveillance sites, including hospital emergency departments, outpatient clinics, physician's offices and the Louisiana Poison Center
Coast Guard Chief Adm. Thad Allen said the cap on the oil well is now collecting up to 462,000 gallons of oil a day. He also said clean-up plans will utilize small vessels to capture individual patches of oil now floating around the Gulf.
Because of the breadth and complexity of the disaggregation of the oil, it will take years to mitigate the impact of the spill on the marshes, beaches and wildlife on the Gulf Coast.
BP has opened 25 claims offices across the gulf and sent $46 million in checks so far to some 17,500 Gulf Coast residents for their lost income. Another 17,500 claims have not been paid because of problems with claimant documentation.
President Obama has warned BP was "nickel-and-diming fishermen or small businesses here in the gulf who are having a hard time," while spending billions of dollars on dividends and millions of dollars on advertising
Darryl Willis, a vice president of BP America who is in charge of the claims process, said the company would honor all legitimate claims. "We will make these payments for as long as it takes,"
Mr. Willis said that BP had initially decided to pay all captains $5,000 a month and all deckhands $2,500 to get the process moving, but that they would readjust and pay more to people who could show that they were losing more because of the spill. And he said claims adjusters were trying to work with people who lacked documentation, by accepting pay stubs or bank statements from some claimants who lacked tax forms.
20,000 workers are currently working to clean up the oil spill in the Gulf; 11 have gone to West Jefferson Medical Center for symptoms, and many others have described symptoms (nausea, headaches) often thought to be related to oil's noxious and chemical properties.
Burning of oil, or chemical dispersant, could contribute to symptoms, but there is a low level of pollutants in the Gulf. Moreover, carcinogens such as benzene, one of the worst chemicals found in oil, dissipate after several days exposed to air and sunlight. "Volatile chemicals" are not responsible for many health problems.
The biggest problem for workers is "heat stress;" with temperatures in the mid-90s, it is hazardous for workers to be engaged in physical labor outside for long periods of time. Also, higher temperatures may release toxins that may be locked inside tar balls.
Crowd sourcing is currently utilized by the company Inocentives, which has a network of 200,000 experts. Problems are presented this reserve of experts, who then attempt to come up with the best solutions, for no financial compensation.
Experts having been working to contribute to solutions for the oil spill, and have reflected on problems that have arisen with BP's efforts (such as known issues with chemical crystallization, etc. that should have been taken into account). Many of the offered solutions involve conventional technologies. Suggestions have been made that the continued oil spill can be plugged using magnets, pinching the pipes shut, and through other methods. Oil that has already spilled into the gulf, according to some experts, can be halted by using gel technologies dropped by barges, or by using a hi-tech canvas material to create a funnel that will divert spreading oil. Former oil workers are among these experts who are attempting to solve BP's disaster.
BP needs to "release" problem, in effect; it should utilize outlets of information outside of its network, to get a broader range of solutions. If BP starts to engage people elsewhere, it will be more likely to find comprehensive ways to combat the oil spill.
Dan Pickering, head of research at Houston based energy investment company Tudor Pickering Hold & Co, has indicated that the BP Oil Leak may not be plugged until Christmas, 2010.
By that time over 4 million barrels of oil would have spilled into the Gulf of Mexico based upon current estimates of 12,000 to 19,000 barrels leaking a day.
Harry Roberts, professor of Coastal Studies as LSU reports that would wipe out marine life deep at sea near the leak and elsewhere in the Gulf along hundreds of miles of coastline.
Anyone seeking to file a claim with BP for damages resulting from the April 20, 2010 oil spill must first call BP's claim center at 800-440-0858 or fill out a claims form online at to register their claim and receive a claim number. When filing a claim, the following information must be provided: the type of loss (e.g. wages, boat, home etc.) the location of the loss, a mailing address, occupation, social security number and date of birth.
Approximately seven to ten days after filing a claim with BP, an adjuster will contact the claim holder. After being contacted by an adjuster, the claim holder may then go to the BP claims center to discuss their claim and damages. Claim holders must bring the following information with them to the claims center: a valid driver's license and fishing license, and any financial information or documentation including W-2s, trip tickets, receipts, or a letter of income from the ship's captain (if applicable;)Also See BP Oil Spill Claims Process Manual of May_26_2010.pdf ; .
The following is a list of claims centers as of May 18, 2010, which are all open seven days a week from 8:00am - 7:00pm:
Claim holders who are experiencing difficulty with the claims center are encouraged to call their attorney, the Saint Bernard Emergency Operating Center at 504-278-4268 or Senator David Vitter's office at 866-345-0931.
If the claim holder is unable to resolve their claim with BP's claim center, the National Pollution Funds Center (NPFC) is available as an alternative at 800-280-7118. The claim holder must try and resolve their claim with BP before contacting the NPFC or attempting to file suit.
Other helpful numbers and websites regarding the April 20, 2010 BP oil spill include:
BP Claims Center: 800-440-0858
Environmental Hotline and Community Information: 866-448-5816
If you spot oil or oil sheen contact the Department of Health and Hospitals' Molluscan Shellfish Program: 800-256-2775
National Pollution Funds Center: 800-280-7118
Questions about the removal of oil: 504-565-5089
Registering your professional services: 281-366-5511
Saint Bernard Emergency Operations Center: 504-278-4268
Senator David Vitter: 866-345-4268
United States Coast Guard Joint Information: 985-902-5231
United States Small Business Association: 800-659-2955
Vietnamese American Oil Spill Victims Hotline: 504-814-0195
Those Responsible Parties will clean up the mess and will restore or replace natural resources.
U.S. will prosecute anyone who has violated the law including under the Clean Water Act (Both Civil & Criminal Penalties), Oil Pollution Act of 1990 (for government cleanup costs), Migratory Bird Treaty Act and Endangered Species Act (penalties for injury and death to birds and wildlife species) and Other Criminal Statues.
Documents ordered preserved.
U.S. will not rest until justice is done.
§ 1321 of The Clean Water Act (CWA) of 1990 (33 USC § 1251 et seq.) is the main section of the Act outlining the liability of offshore facilities. This section provides, among other things, that there should be no discharge of oil and also sets forth the owner/ operator's liability including penalties for discharge of up to $1,000 per barrel of oil discharged ($3,000 per barrel of oil discharged in the event of gross negligence).
Under the CWA alone, gross negligence penaltes based upon a discharge rate of 19,000 barrels per day would total to $57 Million Per Day.
In BP's 582 page oil-spill response plan, filed with the U.S. Minerals Management Service in 2008, BP indicated it was prepared to handle an oil spill of as many as 250,000 barrels per day.
"Proper execution of the procedures detailed in this manual will help to limit environmental and ecological damage to sensitive areas as well as minimizing loss or damage to BP facilities in the event of a petroleum release," BP said in its oil-spill response plan, filed with the U.S. Minerals Management Service in 2008.
"I am a small business owner and my landscaping, fence building, drainage and concrete work business was directly affected by the BP Oil Spill. I
filed my Oil Pollution Act claim directly with BP early on and got no
response. I became discouraged from all of the talk and news stories of
people who had lots of difficulty with the claims process.
I hired Mr. Lavis on March 28, 2011. About a week later, Mr Lavis finished preparing the claim with all of the necessary paperwork and presented the claim to the Gulf Coast Claims Facility. Just two months after hiring Mr. Lavis, BP made me a fair and final settlement offer.
I would recommend Mr. Lavis to anyone who has a BP Oil Spill Claim."
Michael Darsam Slidell, Louisiana
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