BP Oil Spill Claims Process Set Up

Claims Process Set Up For Gulf Oil Spill Victims

* Many claimants can recover 60 pct of money immediately

* BP sees $7.8 billion payout under new payout program

* New program replaces fund overseen by Kenneth Feinberg

* BP still faces large potential fines from US government

* April 2010 Gulf of Mexico disaster killed 11

By Andrew Longstreth and Jonathan Stempel

March 8 (Reuters) - The man who has paid out billions of dollars to victims of the massive 2010 Gulf of Mexico oil spill has been formally relieved of his duties, and a federal judge has set up a new process to let more people and businesses collect some of their money immediately.

Thursday's order by U.S. District Judge Carl Barbier in New Orleans follows a March 2 agreement in principle for BP Plc to pay claims by a group of plaintiffs estimated to total more than 100,000, at a cost of about $7.8 billion.

The order calls for a new administrator to handle claims from the $20 billion Gulf Coast Claims Facility (GCCF), replacing the lawyer Kenneth Feinberg.

That fund had been set up to compensate fishermen, hotel owners, property owners and others for losses from the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

The disaster killed 11 people and unleashed an estimated 4.9 million barrels of oil into the Gulf of Mexico.

Feinberg, who oversaw a compensation fund for victims of the Sept. 11, 2001, attacks, has received about 1.06 million claims from roughly 574,000 claimants under the GCCF, and paid out about $6.1 billion to roughly 221,000 claimants. He could not immediately be reached for comment.

According to Thursday's order, claimants with final offers from Feinberg can recover 60 percent of their money immediately. If they are deemed eligible under the new program, then they may receive the remaining 40 percent or wait for new awards, which may be higher but take months to determine.

Until the new program is set up, claims will be reviewed during a transition period, and successful claimants can also get 60 percent of their money. Remaining claims would be determined entirely under the new program.

Lawyers on the Plaintiffs' Steering Committee, which negotiated the settlement with BP, have said the new program will be fair and transparent, although some lawyers outside that process have questioned whether it will be an improvement.

"In the new deal, God knows when you're going to get your money," said Daniel Becnel, a Louisiana lawyer who has many clients that have been processing claims through the GCCF. "You don't know what to tell your client."

A spokesman for the PSC declined to comment.

Lynn Greer, a Richmond, Virginia, lawyer, will coordinate claims during the transition period.

Patrick Juneau, a lawyer in Lafayette, Louisiana, will administer claims during that period and would continue in that role under the proposed court-supervised program.

Through March 7, about 41 percent of the $6.1 billion GCCF payout has gone to people and businesses in Florida. Another 29 percent has gone to Louisiana, 16 percent to Alabama, 7 percent to Mississippi, 4 percent to Texas and the remainder elsewhere.

By industry, retail and other services; food, beverages and lodging; and fishing and seafood processing have comprised the bulk of the allowed claims.

BP said it has already paid out more than $8 billion to claimants. It still faces claims by the U.S. Department of Justice, Gulf Coast states, and its drilling partners Transocean Ltd and Halliburton Co over the spill.

Federal claims alone for Clean Water Act and other violations could exceed sums paid to individuals and businesses.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

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