Gulf Residents, Businesses: BP Holding Up Damages Claims
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GRAND ISLE, La. (AP) � The financial toll of the oil spill disaster in the Gulf of Mexico escalated Wednesday as BP's stock plummeted to a 14-year low and fishermen, businesses and property owners who have filed damage claims with the company angrily complained of delays, excessive paperwork and skimpy payments that have put them on the verge of going under.
The oil company captured an ever larger-share of the crude gushing from the bottom of the sea and began bringing in more heavy equipment to help in the effort, including a production ship and a tanker from the North Sea that will allow the system to process larger quantities of oil and better withstand tropical storms.
The containment efforts played out as investors deserted BP amid fears that the company might be forced to suspend dividends, end up in bankruptcy and find itself overwhelmed by the cleanup costs, penalties, damage claims and lawsuits generated by the biggest oil spill in U.S. history.
Shrimpers, oystermen, seafood businesses, out-of-work drilling crews and the tourism industry all are lining up to get paid back the billions of dollars washed away by the disaster, and tempers have flared as locals direct outrage at BP over what they see as a tangle of red tape.
"Every day we call the adjuster eight or 10 times. There's no answer, no answering machine," said Regina Shipp, who has filed $33,000 in claims for lost business at her restaurant in Alabama. "If BP doesn't pay us within two months, we'll be out of business. We've got two kids."
An Alabama property owner who has lost vast sums of rental income angrily confronted a BP executive at a town meeting. The owner of a Mississippi seafood restaurant said she is desperately waiting for a check to come through because fewer customers come by for shrimp po-boys and oyster sandwiches.
Some locals see dark parallels to what happened after Hurricane Katrina, when they had to wait years to get reimbursed for losses.
"It really feels like we are getting a double whammy here. When does it end?" said Mark Glago, a New Orleans lawyer who is representing a fishing boat captain in a claim against BP.
BP spokesman Mark Proegler disputed any notion that the claims process is slow or that the company is dragging its feet.
Proegler said BP has cut the time to process claims and issue a check from 45 days to as little as 48 hours, provided the necessary documentation has been supplied. BP officials acknowledged that while no claims have been denied, thousands and thousands of claims had not been paid by late last week because the company required more documentation.
At the bottom of the sea, the containment cap on the ruptured well is capturing 630,000 gallons a day and pumping it to a ship at the surface, and the amount could nearly double by next week to roughly 1.17 million gallons, said Coast Guard Adm. Thad Allen, who is overseeing the crisis for the government.
A second drilling vessel that will arrive within days is expected to greatly boost capacity. BP also plans to bring in the tanker from the North Sea on Monday to help transport oil and an incinerator to burn off some of the crude. The tanker is currently used to shuttle oil from North Sea rigs to the shores of Scotland, and its deployment in the Gulf has been part of the broader plan to expand the amount of crude brought to the surface once a new and improved cap-and-collection system is installed over the leaking well.
The government has estimated 600,000 to 1.2 million gallons are leaking per day, but a scientist on a task force studying the flow said the actual rate may be between 798,000 gallons and 1.8 million.
Crews working at the site toiled under oppressive conditions as the heat index soared to 110 degrees and toxic vapors emanated from the depths. Fireboats were on hand to pour water on the surface to ease the fumes.
Allen also confronted BP over the complaints about the claims process, warning the company in a letter: "We need complete, ongoing transparency into BP's claims process including detailed information on how claims are being evaluated, how payment amounts are being calculated and how quickly claims are being processed."
The admiral this week created a team including officials from the Federal Emergency Management Agency to help with the damage claims. It will send workers into Gulf communities to provide information about the process. He also planned to discuss the complaints with BP officials Wednesday.
Under federal law, BP is required to pay for a range of damage, including property losses and lost earnings. Residents and businesses can call a telephone line to report losses, file a claim online and seek help at one of 25 claims offices around the Gulf. Deckhands and other fishermen generally need to show a photo ID and documentation such as a pay stub showing how much money they typically earn.
To jump-start the process, BP was initially offering an immediate $2,500 to deckhands and $5,000 to fishing boat owners. Workers can receive additional compensation once their paperwork and larger claims are approved. BP said it has paid 18,000 claims so far and has hired 600 adjusters and operators to handle the cases.
The oil giant said it expects to spend $84 million through June alone to compensate people for lost wages and profits. That number could grow as new claims are received. When it is all over, BP could be looking at total liabilities in the billions, perhaps tens of billions, according to analysts.
BP stock dropped $5.45, or 16 percent, Wednesday � easily its worst day since the April 20 rig explosion that set off the spill. In the seven weeks since then, the company has lost half its market value.
The latest slide came after Interior Secretary Ken Salazar promised a Senate energy panel to ask BP to compensate energy companies for losses if they have to lay off workers or suffer economically because of the Obama administration's six-month moratorium on deepwater drilling.
Calculating what is owed to victims of the spill has proved challenging.
David Walter owns an Alabama company that makes artificial reefs that anglers buy and drop in the Gulf to attract fish, but state regulators stopped issuing permits for the reefs on May 4 because of the oil spill � effectively killing off $350,000 in expected business.
When Walter called a claims adjuster working for BP, he was told to provide four years of invoices for May, June and July along with tax returns for those years. Walter said he sent the forms by overnight mail, but the adjuster assigned to his case changed offices and could not be found. The documents were lost.
After making more inquiries, Walter said, he was instructed to gather the same documents and this time go to a claims office. There, an adjuster told Walter he would be eligible for only a $5,000 payment since his tax returns showed a technical business loss when depreciation was factored in.
"I said that's not fair because if you say that, then I have to go out of business and I lose everything," Walter said. He is now working with an accounting firm to calculate his losses.
Not everyone had complaints about the claims process.
Bart Harrison of Clay, Ala., filed his first claim on Wednesday morning for lost rental income on his coastal property and expected to have a check for $1,010 within a few hours. The only documentation required was tax returns and rental histories for his units, which were both easy to provide.
"The guy I talked to was knowledgeable and respectful. It seemed like he really wanted to write a check and please me since it was my first time in," Harrison said.
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First Posted: 06/09/10 09:48 PM ET Updated: 05/25/11 05:45 PM ET