NEW YORK (TheStreet) -- BP (BP) is taking aim at the Gulf Coast oil spill claims fund, arguing that the method being used by the government claims chief, Kenneth Feinberg, overstates the actual damages to claimants. On Thursday morning, a 25-page letter was posted on the web site of the claims funds, laying out BP's case.
BP set up the $20 billion claims funds as part of its agreement with the U.S. government in response to the Gulf of Mexico oil spill. BP asks the Gulf Coast Claims Fund (GCCF) to revise its methodology for calculating damages.
The major thrust of the BP letter regards the lack of a credible methodology for determining future losses of oil spill claimants, and the total amount of damages implied by the future loss calculations, up to $500,000 per claimant.
"The GCCF's Proposed Methodology adopts a future loss factor for most claims of 1.0 times actual demonstrated 2010 losses, assuming future losses in 2011 equal to 70% of actual demonstrated 2010 losses and future losses in 2012 equal to 30% of actual demonstrated 2010 losses. Thus, the proposed methodology assumes both (1) that full economic recovery will not occur until the end of 2012, and (2) that the GCCF's proposed future loss factor is a reasonable measure of the likely future loss to claimants. But the available economic data do not support either of these assumptions," BP writes in its letter.BP also says in its letter that fishing, shrimping and tourism have already show signs of recovery, and notes that GCCF's own data supports this, and that overall tax receipts for the Gulf Coast are not at a lower level in 2010 than in 2009. BP writes in its letter, "GCCF's own expert reports supports the GCCF's finding that "[there] is evidence of a strong recovery underway." It does not support the GCCF's view that the risk of potential future loss is great enough to support a future loss factor of 1.0. Currently available data suggest that most claimants will not continue to incur spill-related loss. For example, nearly all fishing grounds are open, and December 2010 shrimping data show a successful industry with high landings and high prices.... Similarly, hotel data show that, on both a beachfront and countywide basis, the Gulf hospitality industry is strong."
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