New guidelines could rule out many oil claims

August 21, 2010 at 12:00a.m.

Associated Press

MIAMI

A flower shop in Florida that saw a drop-off in weddings this summer is probably out of luck. So is a restaurant in Idaho that had to switch seafood suppliers. A hardware store on the Mississippi coast may be left out, too.

The latest guidelines for BP’s $20 billion victims- compensation fund say the nearer you are geographically to the oil spill and the more closely you depend on the Gulf of Mexico’s natural resources, the better chance you have of getting a share of the money.

Also, a second set of rules expected this fall will require that businesses and individuals seeking compensation for long-term losses give up their right to sue BP and other spill-related companies — something that could save the oil giant billions.

The new rules for the claims process were released Friday by Washington lawyer Kenneth Feinberg, who was picked by President Barack Obama to run the fund and previously oversaw claims for Sept. 11 victims. Beginning Monday, the claims will be handled by Feinberg rather than BP, which is still footing the entire $20 billion bill.

Who gets paid and who doesn’t will depend largely on how much proof there is that losses were caused by the spill and not by something else, such as the recession. Feinberg’s guidelines say key factors include a claimant’s geographic proximity to the disaster and how much the business or property is linked to “injured natural resources.”

Feinberg elaborated on his reasoning during town meetings this week in Louisiana.

“How close are you to the beach? To the Gulf? BP got claims from restaurants in Idaho. Go figure,” he said. “How close are you? That’s a major factor. How dependent are you, as an individual or a business, on the resources of the Gulf?”

That worries business owners such as Susan Mitchell, who runs a flower shop about a mile from Pensacola Beach, Fla., where tar balls from the spill washed up. She said her business was down about $4,000 this year in July from the year before.

“But it is hard to prove exactly why that is, and everyone keeps telling us we have to prove that it was because of the oil,” she said.

Those seeking emergency payments will not have to give up their right to sue BP and other companies. But the rules for final, long-term settlements will include a waiver of that right.

That drew protests Friday from a leading trial- lawyers group, the American Association for Justice, which said the rule could force claimants to decide whether to accept a BP payment or go to court before the full extent of the damage is known.