Friday, February 18, 2011

BP and Feinberg at Odds Over Final Payment Formula

BP argues that Feinberg's final payment formulation is far to generous.  In a 36 page letter to the Gulf Coast Claims Facility, BP breaks down the entire claims process including suggestions on how final payments should be calculated.  The claims facility is currently using a formula that factors in a loss of 70% in 2011 and 30% in 2012.  These percentages will be multiplied by actual demonstrated 2010 losses.  According to BP these projected loss figures are too high, and will result in overly generous final payments.

There is no reason that they shouldn't be overly generous.  No one made them drill in the gulf, and no one made them run there rig recklessly.  But when it comes to compensating residents of the gulf, BP should be required to go above and beyond.  Think about it like this: BP is trying to make this a very exact quantitative process, but there proposal neglects to factor in diminished quality of living.  Gulf coast residents lives have been impacted in some many more ways than lost income, and they should all be included in payments.  It appears that this letter is already backfiring on BP.  Media and politicians are tearing them apart and this should lead to some loosening of the purse strings by the claims facility in hopes of saving face.


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