BP (NYSE:BP) Surpasses $500 Million in Gulf Oil Spill Costs

According to reports from congressional auditors, BP Plc (NYSE:BP) has now paid out over $500 million for costs related to the cleanup of the Gulf of Mexico after the oil spill starting from the explosion on the Deepwater Horizon oil rig.

This shouldn't be confused with the Gulf Coast Claims Facility, which is the one run by Kenneth Feinberg and has paid out far more than the over $500 million paid from the federal oil spill fund. The Gulf Coast Claims Facility is the $20 billion fund BP has promised to pay claims out of over a four-year period.

The fund is question is called the Oil Spill Liability Trust Fund, where capital is raised through a tax of 8 cents a barrel of oil.

The Government Accountability Office said that fund is running out of money, and as it stands, can't extract more than $1 billion from any one company over any one incident.

As of the end of September, over $1.6 billion was still in the fund, but concerns are it'll very soon reach the $1 billion limit, and no more funds will be able to be dispersed.

This is the existing rule even if a company reimburses the government fund and there are funds available to pay out.

At this time Congress is thinking about removing the $1 billion cap and introducing legislation which would offer a more flexible cap where the money paid by an oil company over an accident wouldn't be included in the limits now constraining the fund.

BP (NYSE:BP) Paying Feinberg and Firm Cool $850,000 Monthly to Run Compensation Fund

In an effort to be more transparent, Kenneth Feinberg revealed the payment he and his firm - Feinberg Rozen LLP - are receiving from BP (NYSE:BP) to run the $20 billion compensation fund to pay victims of the Gulf of Mexico oil spill.

Feinberg said the firm is being paid $850,000 monthly to manage the claims portion of the fund, which started when he accepted the job in the middle of June.

At this time Feinberg hasn't disclosed what he personally is getting for running the fund, but that doesn't seem to be relevant; how could it be?

Someone has to run the fund. And unless someone is going to donate several years of their life for nothing to run it, they're going to get paid for it. Already there's heavy pressure on Feinberg and his team to make things run smoother and quicker, and he's taken a lot of abuse from meetings around the Gulf region with victims waiting for their money.

There's also the fraud factor, which has in fact been one of the major impediments to running the claims process quicker, and this is coming from those who have legitimate claims, but are inflating them to extraordinary levels, which all causes the need to examine documents more closely, if there are any documents at all.

In other words, a lot of the alleged public outcry is manufactured by many who are trying to game the system and are angry their attempts aren't successful.

The implication that Feinberg and his team work for BP means something negative simply makes no sense. It doesn't matter who would've been chosen to run the claims process, they were going to get paid. How is that an issue? How is it even a story?

As far as the compensation to the firm, the $850,000 monthly payment will continue through 2010, and then will be reviewed at that time to make decisions on a contract going forward.

The fund is scheduled to operational for four years.

BP (NYSE:BP) Compensation Fund Slowed by Fraud

The BP (NYSE:BP) compensation fund, which the claimant portion is administered by Kenneth Feinberg, has been demonized because of the alleged slow payments and amounts being handed out.

As the story emerges though, the frustration, while in many cases is legitimate, has been worsened by many who are attempting to game the system by getting paid much more than actual damages, and in many cases, some who don't qualify for damages at all.

That more than anything has been the reason for the slow process, and because there are legitimate claims suffering as a result, makes it hard for Feinberg to defend, because it gives the appearance of not paying out what is owed for legitimate claims.

Major problems in getting the fund to move faster, as mentioned, are outright fraud, requests for money far beyond damages, and absolutely no proof of suffering losses at all.

What would probably stem a lot of this is for the Justice Department or law enforcement to step in and arrest and charge some of those commiting the fraud in order to get the process moving forward.

There are some legitimate complaints related to the fund, but most of them come from those trying to get money they don't deserve, and worse, clogging up the system because of the time it takes to confirm one way or the other if they qualify.

The enormity of the fraud has caused Feinberg and his team to have to check closely in order to make determinations. That's a good thing in the sense of having enough money to pay for legitimate claims.

If Feinberg were to allow the outrageous claims to go forward, it would result in BP paying out damages to those who weren't harmed by the consequences of the oil spill, and also cause them to pay far more than they would have had to.

Someone needs to step in and let those making fraudulent claims know they are being watched and could go to jail for what amounts to theft.

BP (NYSE:BP) Negotiating with Feds Over Oil Fines

BP (NYSE:BP) has entered into negotiations with the Obama administration over coming to some type of settlement over fines related to the Gulf of Mexico oil spill.

According to Rep. Steve Scalise, R-La., his staff got wind of the discussions when working on legislation related to the oil spill which would keep money from fines paid out by BP in the Gulf region.

Unsurprisingly, the real battle is over whether or not BP will be labeled as being grossly negligent in relationship to the spill.

The problem with that is no study, other than the one conducted by BP, has been conducted to find out the absolute reason behind the accident.

So how could the government be battling over something that there is no conclusion made yet? The only reason BP is in their sights is no company related to the spill has the capital to pay the fines other than them. Of course they also had the largest stake in the well, but that has nothing to do with culpability.

It may surprise people, but BP is in the driver's seat in regard to this issue. If the government doesn't come to an agreement with them, all BP has to do is litigate, and that would take years, essentially holding up any fines being paid out until then, and with no guarantee the government would win the case (in reference to BP being considered grossly negligent).

Just under the Clean Water Act, BP could pay out up to $21 billion. It's doubtful it will ever come to that, as that wouldn't include other fines and the money they'll have to pay out from the hundreds of lawsuits.

Even with the size of BP, they just aren't big enough to pay that kind of money out, which doesn't include the $20 billion escrow fund which has the claims part of the fund administered by Kenneth Feinberg.

There should be a settlement of some sort, but it will depend on how far the Department of Justice wants to take it. If they ask for too much, it may leave BP few options.

Again, the problem is there are no conclusions yet made as to the cause of the disaster, and until that is investigated and discovered, it's hard to see the government has to stand on; at least concerning the decision on whether or not BP was grossly negligent, which is the crux of this particular part of the fine process.

BP (NYSE:BP) Fund Administrator Feinberg Says Cleanup Wages Won't be Deducted

Kenneth Feinberg, administrator of the BP (NYSE:BP) compensation fund, said he'll waive the previous requirement for those making claims to the fund of deducting wages earned from BP by helping with the oil spill cleanup.

This has been a point of contention for some time, and it seemed at the beginning there would be no concession at all, but the growing antagonism toward Feinberg and the slow pace of the fund may have had a part in Feinberg's decision.

According to Feinberg, fisherman will be specifically helped by the decision, who helped with the cleanup when they weren't able to fish.

So far the fund has paid out over $240 million on 68,000 claims.

BP (NYSE:BP), Halliburton (NYSE:HAL), Transocean (NYSE:RIG) Say Gulf Victims Have No Right to Sue Yet

In a filing with the court, BP (NYSE:BP), Halliburton (NYSE:HAL) and Transocean (NYSE:RIG) say the numerous individuals and businesses may not have the right to sue the companies yet over the Gulf oil spill.

According to the court papers, BP and the others said they believe the alleged victims should have to take their claims to the $20 billion compensation fund before bringing a lawsuit against them.

Obviously the strategy of the oil companies is to push the lawsuits toward the escrow fund to deal with the matter in order to decrease the growing number of them.

Most of the types of lawsuits they're talking about are those where claims of economic losses are involved, especially workers and businesses.

The fund, administered by Kenneth Feinberg, would have 90 days to accept or reject a claim, which at that time the claimants could proceed with a lawsuit.

With things moving into the discovery stage and requests for documents and electronic communications being made, the oil companies said the question of the right to sue needs to be decided before they provide all the documentation to plaintiffs.

While the elimination of lawsuits looks like it's in the best interests of the oil companies, in truth, when you consider the fees by lawyers and amount of time it takes for many of these lawsuits to be played out, most of the alleged victims would be far better off taking the money from the escrow fund if they qualify, rather than pursuing lawsuits.

BP's (NYSE:BP) Bizarre Claims Czar Going to Cave in to Criticism?

It's one thing to attempt to improve the process to pay out claims to alleged victims of the BP (NYSE:BP) oil spill, it's another thing to pay compensation to people for money they've already received, which is what government claims czar Kenneth Feinberg is taking "under advisement."

This is the problem when someone from the government is appointed to oversee money.

The problem centers around claimants who say the money they were paid while working cleaning up the Gulf for BP shouldn't be subtracted from the claims they are seeking.

Feinberg responded, "I'm taking it under advisement. The last time I said, no way, I'm deducting it. Now, it's open for discussion."

It doesn't matter what the actual damage was to the claimants, since when do people get paid for work by a company and then not have it subtracted from claims? It's outrageous.

In other words, when they were getting paid to work, they weren't suffering from being victims of the situation. why would BP have to pay them, or why would Feinberg even say he's going to take it under advisement.

This isn't his money. And while he has authority to pay out legitimate claims, it's improbable he has a right to make these types of decisions, even though he seems to say he does.

Problems with the BP compensation fund aren't whether or not BP is going to have to pay without subtracting money they've already paid, the problem is the process is taking too slow, and alleged discrepancies in what is perceived as similar circumstances are what are making people the most angry.

What about the victims who didn't work for BP and are going to receive the same as those who did work for BP under similar circumstances. How could Feinberg justify paying more to those who already got paid and received compensation?

Hopefully Feinberg won't cave on this, and will hold to his guns. People aren't victims while they were getting paid. Any payment already made should be subtracted from the claims being made.

If they aren't, it's doubtful it would be even legal. That would be like someone getting paid to work, but then collecting unemployment at the same time, while others on unemployment only get the unemployment. This doesn't make any sense, and doing it to placate those attempting to game the system shouldn't be allowed, no matter how hard they scream.

They're playing the victim card too far here, as they weren't victims while they were getting paid to work. How hard is that to understand?

BP (NYSE:BP) Gulf Costs Skyrocket to $8 Billion

The costs associated with the BP (NYSE:BP) oil spill have soared to $8 billion in a few short months, and that doesn't include the $20 billion set aside for the escrow fund now being administered by Kenneth Feinberg.

At this pace they'll pay out far more from these costs than the escrow fund, although it has to be taken into consideration they won't be paying out claims any longer because they've transferred to the fund completely.

BP said in a press release, "The cost of the response to date amounts to approximately $8 billion, including the cost of the spill response, containment, relief well drilling, static kill and cementing, grants to the Gulf states, claims paid and federal costs."

Questions are being raised by BP as to whether or not they can continue paying out if they are banned from further drilling in the Gulf of Mexico, which would be the case of legislation is passed which would prohibit them from doing so.

Feinberg Say $10 Million Paid in BP (NYSE:BP) Claims

In the first week since launching the BP (NYSE:BP) compensation fund, claims administrator Kenneth Feinberg said almost $10 million was paid out in emergency payments to residents of the Gulf Coast region.

So far, 1,935 emergency claims have been made, primarily for lost profits or earnings to individuals and businesses. The majority of payments were no higher than $5,000, and some dropping as low as a penny.

For those wanting to finalize their claims and bypass litigation, there are over a 1,000 people, according to the Gulf Coast Claims Facility, where the individuals or businesses will have to waive the right to sue BP if they are to receive the payment. At this time no final claims have been paid.

Over 29,000 claims are now under review, and the agency said only one has been denied so far.

Louisiana residents are leading the list for emergency claims, as they took the heaviest hit from the oil spill. They collectively have received close to $4 million, while Florida is next with $2.4 million.

BP (NYSE:BP) Compensation Fund Launches Today, Feinberg Ready

The new compensation or escrow fund, now officially named the Gulf Coast Claims Facility, has launched today, and parameters are in place for claimants to make a decision on whether to accept or decline what is offered them.

Fund administrator Kenneth Feinberg said, "These guidelines are the result of many town hall meetings throughout the Gulf, listening to the people affected by this disaster."

The only ones really making any significant noise about the fund going forward are trial lawyers who see their 30 percent of the money going to the claimants instead of them.

President of the American Association for Justice, Gibson Vance said on Friday, "...it would be detrimental to claimants if they are forced to accept final payments before the full impact of the spill is realized."

In reality, they would come out ahead. Take away the 30 percent the lawyers would get, and why would claimants extend things out to make BP pay the utmost (assuming that even happens) when they can get their payment now when they need it.

The only people it would really be detrimental to would be the lawyers who have had their greedy eyes lowered because the majority of businesses and people will realize it makes little sense to wait longer to get a higher payment that will only benefit the lawyers and not them.

There could possibly be a few cases which that would be different, but it would have to be unique for it to overcome the 30 percent fee the lawyers will enjoy.

Feinberg has already said he's going to be generous with the fund, and probably will be, so there's very little incentive for victims of the oil spill to wait for a bigger pay day that in the vast majority of cases will never come, and if it does, will make the wallets of the lawyers fatter, not theirs.