Spill puts Obama's oil fund chief on hostile turf

Mon Jul 26, 2010 2:51pm EDT

* Feinberg to decide compensation from oil spill

* Gulf residents still reeling from hurricanes

*

By Leigh Coleman and Rachelle Younglai

BAYOU LA BATRE, Ala., July 26 (Reuters) - The man who acquired a solid gold reputation for fixing sticky situations for the U.S. government is facing one of his toughest challenges yet: running BP Plc's (BP.N) (BP.L) $20 billion compensation fund.

Kenneth Feinberg, lawyer extraordinaire, was in charge of compensating victims' families after the Sept. 11, 2001 attacks and presided over executive pay at bailed-out Wall Street firms.

But the job President Barack Obama has asked him to do -- deciding who will be compensated from BP's catastrophic oil spill in the Gulf of Mexico -- is placing Feinberg in hostile territory where residents are still reeling from the federal government's bungled response to Hurricane Katrina.

Many areas in Louisiana and Mississippi never recovered from the 2005 hurricane. Buildings are gutted. Broken boats lie in marshes.

Now many of the same residents who were left to fend for themselves after Katrina are seeing their fishing and tourism industries fall apart from the oil spill.

"Feinberg is full of baloney. He is a lawyer and that is how lawyers talk. I do not believe a word he says," Delane Seaman said after attending one of Feinberg's town hall meetings in Bayou La Batre on Sunday.

"BP is telling us we will be compensated for 100 percent loss of our oyster processing business, too. It will not happen," Seaman said.

'I AM YOUR LAWYER'

In Bayou La Batre, a small fishing community in south Alabama, Feinberg convened an early-morning session on Saturday to listen to residents' concerns and answer questions on the claims process.

"I learned today the depth of frustration in people here on the coast," a visibly-tired looking Feinberg said. "I am your lawyer. I do not work for BP. I do not work for the White House. I work and answer to the residents of the Gulf."

Feinberg's compensation for running the fund -- which has not been disclosed -- is being paid by BP.

BP's blown-out well is capped. The energy giant had been expected to permanently stop the leak by mid-August, but a storm in the region slowed efforts. [ID:nN25157641]

Thousands of fishermen, oyster processors and other seafood industry workers have lost work because of the oil spill.

Feinberg must decide how much they get paid as well as how to compensate businesses related to the fishing and tourism industries and whether real estate brokers and bankers should be included.

As of mid-July $201 million was dispensed to workers and businesses in the region from the fund that so far has been run by BP. Feinberg expects to assume complete control of the fund by Aug. 10.

He has said claims can be filed over lost wages and profits, business interruption as well as personal injuries.

Coastal tourism from Louisiana to Miami accounts for $100 billion per year, according to the New Orleans Metropolitan Convention and Visitors Bureau. The fishing industry accounts for $2.4 billion a year in Louisiana.

If most of the waters remain closed, the fishing industry could be wiped out. Tourism losses are just as dire. One study suggests that the tourism industry in the Gulf of Mexico could lose $22.7 billion in revenues over the next three years.

DEEP ANGER

In Venice, Louisiana, home to a popular North American fishing destination, workers had little faith in the Obama administration and Feinberg.

"Look at what happened with Katrina," said Bill Butler, co-owner of the Venice Marina, which was ravaged by the 2005 hurricane.

Butler's marina has been rebuilt. But the oil spill has transformed it from a haven for commercial and sports fishing to a staging area for the cleanup.

In the fishing town of Lafitte, Louisiana, locals cast sideways glances at each other when asked about Feinberg and refused to comment.

Instead they talked about help they had received from BP, which residents say has hired a good bulk of the small community. "Overall there is trust in BP," said Lafitte resident Barbara Martin. "At least they've done more than the federal government."

Residents in Mississippi and Alabama were similarly dubious about the fund's chief.

"Feinberg says he is thinking about some issues but I just want to know who is paying him. That is where the truth will be concerning the fairness of claims being paid," said Wu Lin, an out of work fisherman from Biloxi, Mississippi.

Another Biloxi resident, Curtis Fournier, said: "Can I trust him? He is a lawyer. What do you think?"

(Younglai reported from Venice, Louisiana, editing by Chris Baltimore and Vicki Allen)






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