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Red Tape Vexes Gulf Residents Seeking BP Payments

BP PlcCompanies and CorporationsBusinessFishingPetroleum Industry

The reefs that David Walter makes foranglers to drop into the Gulf of Mexico are fake, but hisfrustration as he tries to win compensation from BP for lost incomeis real.

State regulators stopped issuing permits for the reefs on May 4because of the oil spill, effectively killing off $350,000 inWalter's expected business. It sent him into a labyrinth ofarchived invoices and documents lost by BP. Finally, an offer came:$5,000.

"I said that's not fair because if you say that, then I have togo out of business and I lose everything," said Walter, whosecompany is based in Alabama.

Fishermen, property owners and businesspeople who have fileddamage claims with BP are angrily complaining of delays, excessivepaperwork and skimpy payments that have put them on the verge ofgoing under as the financial and environmental toll of theseven-week-old disaster grows.

Out in the Gulf, meanwhile, the oil company on Wednesdaycaptured more of the crude that's been gushing from the bottom ofthe sea since April and began bringing in more heavy equipment tohandle it.

The containment effort played out as BP stock plunged to itslowest level in 14 years amid fears that the company might beforced to suspend dividends and find itself overwhelmed by thecleanup costs, penalties, damage claims and lawsuits generated bythe biggest oil spill in U.S. history.

Shrimpers, oystermen, seafood businesses, out-of-work drillingcrews and the tourism industry all are lining up to get paid backthe billions of dollars washed away by the slick, and tempers haveflared as locals direct outrage at BP over what they see as atangle of red tape.

"Every day we call the adjuster eight or 10 times. There's noanswer, 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."

BP spokesman Mark Proegler disputed any notion that the claimsprocess is slow or that the company is dragging its feet.

Proegler said BP has cut the time to process claims and issue acheck from 45 days to as little as 48 hours, if the necessarydocumentation has been supplied. BP officials acknowledged thatwhile no claims have been denied, thousands and thousands had notbeen paid by late last week because the company required moredocumentation.

At the bottom of the sea, the containment cap on the rupturedwell is capturing 630,000 gallons a day and pumping it to a ship atthe surface, and the amount could nearly double by next week toroughly 1.17 million gallons, said Coast Guard Adm. Thad Allen, whois overseeing the crisis for the government.

A second vessel expected to arrive within days should greatlyboost capacity. BP also plans to bring in a tanker from the NorthSea to help transport oil and an incinerator to burn off some ofthe crude.

The government has estimated 600,000 to 1.2 million gallons areleaking per day, but a scientist on a task force studying the flowsaid the actual rate may be between 798,000 gallons and 1.8million. A task force member said an estimate come come Thursday orFriday.

Crews working at the site toiled under oppressive conditions asthe heat index soared to 110 degrees and toxic vapors emanated fromthe depths. Fireboats were on hand to pour water on the surface toease the fumes.

Allen also confronted BP over the complaints about the claimsprocess, warning the company in a letter: "We need complete,ongoing transparency into BP's claims process including detailedinformation on how claims are being evaluated, how payment amountsare being calculated and how quickly claims are being processed."

The admiral this week created a team including officials fromthe Federal Emergency Management Agency to help with the damageclaims. It will send workers into Gulf communities to provideinformation about the process. He also planned to discuss thecomplaints with BP officials Wednesday.

Under federal law, BP is required to pay for a range of losses,including property damage and lost earnings. Residents andbusinesses can call a telephone line to report losses, file a claimonline and seek help at one of 25 claims offices around the Gulf.Deckhands and other fishermen generally need to show a photo ID anddocumentation such as a pay stub showing how much money theytypically earn.

To jump-start the process, BP was initially offering animmediate $2,500 to deckhands and $5,000 to fishing boat owners.Workers can receive additional compensation once their paperworkand larger claims are approved. BP said it has paid 18,000 claimsso far and has hired 600 adjusters and operators to handle thecases.

The oil giant said it expects to spend $84 million through Junealone to compensate people for lost wages and profits. That numberwill grow as new claims are received. When it is all over, BP couldbe looking at total liabilities in the billions, perhaps tens ofbillions, according to analysts.

BP stock dropped $5.45, or 16 percent, Wednesday - easily itsworst day since the April 20 rig explosion that set off the spilland killed 11 workers. In the seven weeks since then, the companyhas lost half its market value.

The latest slide came after Interior Secretary Ken Salazarpromised a Senate energy panel to ask BP to compensate energycompanies for losses if they have to lay off workers or suffereconomically because of the Obama administration's six-monthmoratorium on deep-water drilling.

Not everyone had complaints about the claims process.

Bart Harrison of Clay, Ala., filed his first claim on Wednesdaymorning for lost rental income on his coastal property and expectedto have a check for $1,010 within a few hours. The onlydocumentation required was tax returns and rental histories for hisunits, which were both easy to provide.

"The guy I talked to was knowledgeable and respectful,"Harrison said. "It seemed like he really wanted to write a checkand please me since it was my first time in."

Copyright © 2014, The Baltimore Sun
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