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FULL COMMITTEE HEARING ON 

RECOVERY IN THE GULF: WHAT 

THE $20 BILLION BP CLAIMS FUND 

MEANS FOR SMALL BUSINESSES 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JUNE 30, 2010 

Small Business Committee Document Number 111-071 

Available via the GPO Website: http://www.access.gpo.gov/congress/house 


Congress.#13
HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

DENNIS MOORE, Kansas 

HEATH SHULER, North Carolina 

KATHY DAHLKEMPER, Pennsylvania 

KURT SCHRADER, Oregon 

ANN KIRKPATRICK, Arizona 

GLENN NYE, Virginia 

MARK CRITZ, Pennsylvania 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

DAN LIPINSKI, Illinois 

JASON ALTMIRE, Pennsylvania 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

DEBORAH HALVORSON, Illinois 

SAM GRAVES, Missouri, Ranking Member 

ROSCOE G. BARTLETT, Maryland 

W. TODD AKIN, Missouri 

STEVE KING, Iowa 

LYNN A. WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

BLAINE LUETKEMEYER, Missouri 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KAREN HAAS, Minority Staff Director 

(II) 

STANDING SUBCOMMITTEES 

Subcommittee on Contracting and Technology 

GLENN NYE, Virginia, Chairman 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

KURT SCHRADER, Oregon 

DEBORAH HALVORSON, Illinois 

MELISSA BEAN, Illinois 

JOE SESTAK, Pennsylvania 

MARK CRITZ, Pennsylvania 

AARON SCHOCK, Illinois, Ranking 

ROSCOE BARTLETT, Maryland 

W. TODD AKIN, Missouri 

MARY FALLIN, Oklahoma 

GLENN THOMPSON, Pennsylvania 

Subcommittee on Finance and Tax 

KURT SCHRADER, Oregon, Chairman 

DENNIS MOORE, Kansas 

ANN KIRKPATRICK, Arizona 

MELISSA BEAN, Illinois 

JOE SESTAK, Pennsylvania 

DEBORAH HALVORSON, Illinois 

GLENN NYE, Virginia 

MICHAEL MICHAUD, Maine 

VERN BUCHANAN, Florida, Ranking 

STEVE KING, Iowa 

W. TODD AKIN, Missouri 

BLAINE LUETKEMEYER, Missouri 

MIKE COFFMAN, Colorado 

Subcommittee on Investigations and Oversight 

JASON ALTMIRE, Pennsylvania, Chairman 

HEATH SHULER, North Carolina 

BRAD ELLSWORTH, Indiana 

MARY FALLIN, Oklahoma, Ranking 

LOUIE GOHMERT, Texas 

(III) 

Subcommittee on Regulations and Healthcare 

KATHY DAHLKEMPER, Pennsylvania, Chairwoman 

DAN LIPINSKI, Illinois 

MELISSA BEAN, Illinois 

JASON ALTMIRE, Pennsylvania 

JOE SESTAK, Pennsylvania 

BOBBY BRIGHT, Alabama 

MARK CRITZ, Pennsylvania 

LYNN WESTMORELAND, Georgia, Ranking 

STEVE KING, Iowa 

VERN BUCHANAN, Florida 

GLENN THOMPSON, Pennsylvania 

MIKE COFFMAN, Colorado 

Subcommittee on Rural Development, Entrepreneurship and Trade 

HEATH SHULER, North Carolina, Chairman 

MICHAEL MICHAUD, Maine 

BOBBY BRIGHT, Alabama 

KATHY DAHLKEMPER, Pennsylvania 

ANN KIRKPATRICK, Arizona 

YVETTE CLARKE, New York 

BLAINE LUETKEMEYER, Missouri, Ranking 

STEVE KING, Iowa 

AARON SCHOCK, Illinois 

GLENN THOMPSON, Pennsylvania 

(IV) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 1 

Graves, Hon. Sam .................................................................................................... 2 

WITNESSES 

Feinberg, Mr. Kenneth, Administrator, Golf Coast Claims Facility ................... 4 

APPENDIX 

Prepared Statements: 

Vela ́zquez, Hon. Nydia M. ....................................................................................... 26 

Graves, Hon. Sam .................................................................................................... 28 

Feinberg, Mr. Kenneth, Administrator, Golf Coast Claims Facility ................... 30 

(V) 

(1) 

FULL COMMITTEE HEARING ON 

RECOVERY IN THE GULF: WHAT 

THE $20 BILLION BP CLAIMS FUND 

MEANS FOR SMALL BUSINESSES 

Wednesday, June 30, 2010 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Committee met, pursuant to call, at 10:03 a.m., in Room 

2360, Rayburn House Office Building, Hon. Nydia M. Vela ́zquez 

[Chair of the Committee] presiding. 

Present: Representatives Vela ́zquez, Moore, Shuler, Dahlkemper, 

Schrader, Kirkpatrick, Critz, Bean, Altmire, Clarke, Halvorson, 

Graves, Bartlett, Westmoreland, Buchanan, Luetkemeyer, and 

Thompson. 

Chairwoman VELA ́ ZQUEZ. Good morning. This hearing is now 

called to order. 

For the last 72 days, the Nation has watched anxiously as oil has 

spilled into the Gulf of Mexico. With estimates of up to 60,000 barrels per day, this spill has paralyzed the economy of this region 

during its normally most prosperous time of the year. In fact, 

economists estimate that over 7 million businesses will be impacted 

by the oil spill. Almost 6 million of them will be small businesses 

with less than 10 employees. For entrepreneurs, this is a catastrophe of an unthinkable size and scale. 

To compensate the small business owners and provide the local economies with the support they need, BP established a $20 billion 

Gulf Spill Independent Claims Fund. There is hope that the creation of this escrow account will avoid the situation created by the 

1989 Exxon Valdez oil spill in Alaska. That catastrophe took decades of litigation to assess damages. The roughly 32,000 claimants, 

primarily fishermen, received only about a quarter of the losses 

filed by each claimant after the Exxon Valdez spill. The hope is 

that at this time small businesses will be more fairly compensated 

for their losses. 

During today’s hearing, we will examine how the claims fund will 

meet the needs of small businesses. Today, 81,701 claims have 

been opened, from which more than $128.4 million has been disbursed since the fund began operating on June 16. We need to 

make sure that small businesses know how quickly they will receive payment and how these payment amounts are being calculated. 

2 

The Committee looks forward to hearing Mr. Feinberg’s thoughts 

on these matters today. This is important to all businesses but particularly those industries that have been directly affected by the 

spill and the resulting closure of nearly 40 percent of the Gulf. 

The commercial fishing industry, made up of independent 

shrimpers, crabbers, oyster farmers and fishermen, accounts for 

over 200,000 jobs and $5.5 billion in revenue. Not only has the closure of fishing areas limited their ability to operate, but many are 

finding that the public’s confidence in Gulf products has been eroded, creating another obstacle for the local economy. 

The problems faced by businesses in the fishing industry are 

matched by those in the tourism sector. Hotels and restaurants 

rely heavily on tourism, with some of New Orleans’s restaurants 

reporting that they rely on nonlocals for up to 70 percent of their 

business. Alabama, in the midst of what is normally its high season, has already experienced a 50 percent decline in tourism due 

to public fear of tarballs on local beaches. In Florida, economists 

predict a loss of 195,000 jobs and a cost of almost $11 billion if just 

half of their tourism and leisure income goes away. 

Unfortunately, it is clear that small firms across the Gulf are in 

for a tough summer. The claims fund that Mr. Feinberg administers is essential to the ongoing recovery and eventual restoration 

of the Gulf Coast economy. As we have seen in the past, a little 

assistance to these businesses will enable them to innovate and 

begin anew. 

With oil continuing to flow, however, no one can foresee what the 

future holds. But what we do know is that these Gulf Coast businesses have overcome similar challenges like they did after Hurricane Katrina. These entrepreneurs are resilient, and they should 

not be underestimated. 

It has been projected that over 40 percent of businesses fail to 

recover following a disaster. In many cases, these businesses go 

under simply because they lack financial resources necessary to restart their enterprises. 

In the case of the oil spill, however, it is different and much more 

complicated. It is not just about the money but making sure that 

the leak is stopped and the physical damage is mitigated. Then we 

will need to restore the public’s trust in the Gulf as a center for 

commerce and tourism. 

I think I can speak for all the Committee members here today 

in saying that we will do whatever it takes to help these small 

businesses overcome these challenges. Given this, I think it is appropriate that Mr. Feinberg’s first appearance before Congress is 

before this Committee, and I want to thank you for taking time out 

of your busy schedule to appear before our Committee today. 

With that, I will now yield to Ranking Member Graves for his 

opening statement. 

Mr. GRAVES. Thank you, Madam Chairman. 

Thank you for holding this hearing, a very timely hearing, I 

think. 

My thanks go out to Mr. Feinberg for joining us today, and I am 

looking forward to hearing your plans for managing BP’s $20 billion compensation fund. 

3 

The Deepwater Horizon oil rig explosion, which cost 11 workers 

their lives on April 20, was a tragedy of enormous proportions; and 

the seemingly unstoppable leak of millions of gallons of oil created 

an environmental and economic disaster of unimaginable proportions. 

Let us all remember that this catastrophe is not first to befall 

this region in recent years. Hurricanes Katrina and Ike, the 2008 

energy crisis and recession each brought new layers of devastation 

to the Gulf, devastation that families and businesses are still working to overcome. Just as the people in the Gulf region begin to recover, they have now been hit with a new disaster, one that has 

leveraged even more trauma on an already delicate economy. 

The oil spill has put a halt on nearly every component of the 

economy in the Gulf region. Right now, Louisiana has been hit 

hardest by the oil spill. The State’s economy relies heavily on oil 

and natural gas production, chemical and petrochemical production, commercial fishing, and tourism. Louisiana contains about 10 

percent of all the known U.S. oil reserves. It is the country’s thirdlargest producer of petroleum and has impressive reserves in natural gas, producing approximately one-quarter of all the U.S. supply of natural gas. 

The State’s commercial fishing industries are responsible for 

about 25 percent of all the seafood landed in America, and its tourism industry employs over 80,000 workers. Travelers spend an estimated $5.2 billion in the State each year; and, sadly, the oil spill 

has effectively shut down each of these segments of the State’s 

economy. 

As the spill spreads east, the economies in Alabama, Mississippi, 

and Florida are soon going to be under siege. Florida’s tourism industry, which is responsible for 80 million visitors each year, could 

be particularly devastated by the oil spill; as this industry brings 

more than $60 billion in taxable sales revenue and employs in excess of one million Floridians. 

The widespread implications of the spill become clearer every 

day. We must work together to minimize the environmental and 

economic impact of this spill and determine how we can help rebuild the Gulf region. 

On June 16, BP agreed to create a $20 billion escrow account to 

compensate affected businesses, business owners, and other victims 

of this spill. As the independent authority on processing and administering payment of the hundreds, if not thousands, of claims 

that are soon going to come from the businesses, Mr. Feinberg will 

be responsible for keeping the economy and small businesses in the 

Gulf region intact as we all work to recover from the spill’s destruction. 

Mr. Feinberg, I look forward to your testimony today with a special interest in how you are going to ensure the claims processes 

are orchestrated efficiently and fairly for small business. I am sure 

you are already well aware of the critical role such entrepreneurs 

play in America’s economy, and I expect that they will receive adequate compensation so they can survive yet another disaster in the 

Gulf and come out stronger on the other side. 

Madam Chair, I appreciate, again, you calling this hearing. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

4 

It now is my great honor to welcome Mr. Kenneth Feinberg. He 

is the founder and managing partner of the law firm Feinberg 

Rozen. He is a renowned expert in arbitration and was recently 

named the independent administrator of a $20 billion fund to compensate victims of the oil spill in the Gulf of Mexico. He is currently setting up an independent claims facility to process business 

and individual claims against BP. 

Mr. Feinberg’s experience includes managing the September 11 

victims’ fund, the Virginia Tech victims’ fund, and serving as chief 

of staff to the late Senator Ted Kennedy. 

Thank you, Mr. Feinberg, and welcome. 

STATEMENT OF KENNETH R. FEINBERG, ADMINISTRATOR, 

GULF COAST CLAIMS FACILITY 

Mr. FEINBERG. Thank you, Madam Chairwoman. 

You are absolutely right. This is the first opportunity I have had 

to meet here in Congress by the House or the Senate to discuss the 

plans for the design, implementation, and administration of this 

Gulf Coast claims facility. 

It is very, very difficult to say ′′no′′ to the chairwoman, who was 

so helpful to me during the administration of the 9/11 victims’ compensation fund, which impacted her district tremendously. This is 

one opportunity for me to thank the chairwoman publicly for all 

she did in helping me with the administration of that program. 

I am accompanied today by the Deputy Administrator of the 

fund, Camille Biros, who is also here if there are particular questions where I need to consult with her. 

But let me say that if I do nothing else in the next few minutes, 

I want to clarify and emphasize certain points about this Gulf 

Coast claims facility. 

First, by agreement, between the administration and BP, this is 

an entirely independent facility. It is not beholden to the administration. It is not beholden to BP. By agreement, they decided, let’s 

establish and fund a truly credible independent facility that will 

process eligible claims and pay them promptly. 

Second, understand, please, that I am not the administrator of 

the $20 billion escrow fund. I am the administrator of the Gulf 

Coast claims facility which will draw on part of that $20 billion 

fund. That $20 billion fund may also be used for government claims 

against BP, for cleanup costs brought by States, local government, 

Federal Government. Those costs come out of the $20 billion escrow, but it is not part of my obligation or mandate. 

So please make the distinction between my responsibility in processing private claims of all types arising out of that $20 billion and 

other claims that might be brought by government against BP, part 

of that $20 billion, that are not on my watch. 

This is a purely private facility. It is not a facility of the Federal 

Government or a subfacility of an agency. It is a private compact 

creating this independent facility which I will design and administer. 

Next, in addition to the $20 billion, the administration and BP 

agree to set aside $100 million for so-called moratorium claims involving laid-off rig workers who may be out of work because of the 

imposed moratorium on other drilling in the Gulf. That $100 milVerDate Aug 31 2005 15:36 Sep 03, 2010 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\57283.TXT DARIEN
5 

lion is not part of the $20 billion; it is in addition. Whether or not 

I will administer that $100 million moratorium fund is up to the 

administration and BP. I don’t think that has been finally resolved 

yet. It may be that the $100 million limited to moratorium rig worker 

claims—moratorium rig worker claims, not small business moratorium claims—wage loss, whether that fund will be a separate segregated account in the facility or whether it will be parked and administered somewhere else, it remains to be seen. Whether those 

rig workers subject to the moratorium will file claims with me or 

file claims with some other administrator implementing the $100 

million distribution, it remains to be seen. 

That is not on my watch. It has to be resolved between the administration and particularly BP; and I think BP is going to have 

to decide in the next few days whether that $100 million should be 

part of the facility, separate from the $20 billion, but administered 

by me or whether it should be administered by somebody else. 

So I want to make that clear, because there has been some confusion generated by some of my earlier comments and others. Because I am trying to figure out myself exactly how that $100 million for moratorium workers will be designed and administered. 

Next, I welcome and urge all eligible claimants to file a claim 

with this facility that has been established under my direction. I 

want to emphasize that those claimants include, as the chairwoman and Congressman Graves pointed out, not just individuals, 

small businesses, large businesses. Anybody, any private individual 

or company who feels that they have a valid claim to draw out of 

this facility should file a claim. 

There is no obligation to filing a claim with this facility. You do 

not give up any rights. You do not have to make any decisions at 

this time. You are seeking emergency financial assistance, which 

this facility is recognizing, and only later, if you decide to remain 

in the facility and seek a lump-sum settlement down the road, 

would you then have to decide whether to surrender your rights to 

sue in return for a lump-sum payment. But that is down the road. 

Right now, if you file a claim, we will give you a number, we will 

process your emergency application, and, if you are eligible, we will 

pay you promptly within a matter of days. 

So I would urge everybody in the Gulf who believes they may 

have a claim to file a claim, because there is no obligation in so 

doing. 

Now, to date, even before this facility was established, BP set up 

on its own a claims process that has so far, as the chairwoman 

pointed out, paid about $130 million to claimants. It is not as if— 

unlike the 9/11 fund or Virginia Tech or Agent Orange, when I got 

involved, it is not as if I am building from scratch. There is a program in place that is, as we speak, accepting, processing, and paying claims. 

Now, unfortunately, that program could work better. It is not 

sufficiently efficient. It is not paying all that many small business 

claims. It needs to pay more small business claims and large business claims. 

It is not sufficiently transparent. I am getting a lot of objection 

from State and local governments that they are having trouble 

6 

processing how—monitoring how BP is doing in accepting claims, 

considering them, and then approving or disapproving claims. 

So I think one task I have got to do quickly is develop a much 

more transparent sunlight so that Congress, as part of its oversight 

function, as well as local governments—Governor Jindal has been 

very strong on this point. We have got to do a much better job— 

as has Homeland Security been very strong on this point. We have 

got to do a much better job as this facility begins to make sure that 

the data that can demonstrate the efficiency and success of the facility—or its shortcomings—is made available to this Committee 

and other similar Committees, and that is one objective that I will 

undertake. 

Finally, as a summary point, it is very important that I provide 

appropriate compensation to all eligible claimants. Every claimant 

is not eligible. There are going to be two important prerequisites 

to securing compensation under this facility: 

One, is the claim eligible? Is it appropriate to even file a claim? 

How will I decide that? 

Well, Congress gave me some guidance that I think may prove 

very, very valuable when it enacted the 9/11 Victims Compensation 

Fund back in 2001. Congress said, in that legislation, in deciding 

whether a claim, a 9/11 claim, is appropriate, valid, legitimate, look 

to the law of the State of the victim. 

Look to, in this case, the facility, say, let’s look at the law of Louisiana, Florida, Mississippi, Alabama, Texas. Maritime law under 

OPA, the Pollution Control Act, may be the way to decide eligibility 

is to say to a claimant, look, you can file a claim with me, and I 

will process that claim. If your claim is legally sufficient under 

your own State law, I will recognize it. If not, I won’t, or maybe 

I have to exercise some discretion in that regard. 

But there has to be some way to categorize and define what is 

an eligible claim and what is not an eligible claim. There is not 

enough money in the world to pay everybody who would like some 

money. You have got to decide in a principled way, as we have in 

all of these other claims facilities like 9/11. These claims under 

your own law are not eligible and work out some definition in that 

regard. 

Secondly, even if you have an eligible claim corroborated, you 

have to corroborate your claim. You can’t come in and say. I am 

out of work. I am losing $5,000 a month. Pay me. Well, show me 

that you are out of work. Show me something that corroborates the 

amount that you seek in order to justify a prompt emergency payment. 

So I want to emphasize that this fund established just less than 

2 weeks ago, I am determined, as I have in the past, bipartisan, 

apolitical, I am determined to pay every eligible claim, pay it as 

promptly as I can, get the money out. 

Governor Barbour of Mississippi, last week when I met with him, 

gave me some very valuable advice. He said, Ken, I just want you 

to know, time is the enemy. Time is the enemy. You have got to 

get this money out the door. 

I learned that 25 years ago in the Agent Orange Vietnam veterans case when Judge Jack Weinstein, Federal judge who had 

that case, said, Ken, when it comes to the Vietnam veterans, get 

7 

these settlement monies out to them ASAP, and that is what I will 

try and do. 

My final point, this program cannot be administered by me from 

Washington. The only way this program works, you have to go 

down to the Gulf and meet the people down there, hear what they 

say, hear their concerns, why they are worried about their financial 

future, why they are angry, why they are dispirited, why they are 

frustrated. 

I have—from the moment I was given this assignment, I have 

constantly been down in the Gulf, in Alabama, Mississippi, Louisiana, tomorrow, back to Alabama and to see Governor Crist in 

Florida; and I will continue to go back there every week. Because 

unless you are down there, listening in town hall meetings to what 

all of your constituents are saying about the problems, you can’t 

really get a feel for the need for this facility to work and to work 

effectively. 

So that is sort of a very brief summary, but I anticipate a fair 

number of questions, and that is why I am here. 

Madam Chairwoman and Congressman Graves, I thank you both 

for the opportunity to be here. I am honored to be here today. 

[The statement of Mr. Feinberg is included in the appendix.] 

Chairwoman VELA ́ ZQUEZ. Thank you, Mr. Feinberg. 

Let me just say that the lessons that we learned from 9/11 and 

other funds that you have been able to manage is a test of your 

integrity, your expertise, your human understanding of the suffering that is required to make a facility like this an effective vehicle to help the people of the Gulf to recover. So thank you for your 

service. 

Mr. Feinberg, studies have shown that businesses who get cash 

assistance shortly after they are impacted by a natural disaster or 

any kind of disaster are much more likely to succeed than those 

who have to go to through a prolonged wait for financial assistance. 

Early payments by BP to small businesses have been limited to one 

month’s worth of lost profits. Small businesses say these payments 

are too little to cover operating expenses and payroll. Are you considering modifying these methods to allow businesses to secure upfront payments beyond a month’s profits? 

Mr. FEINBERG. Yes. 

Governor Riley of Alabama and Senator Landrieu of Louisiana 

both suggested to me that when it comes to small businesses, instead of month-to-month-to-month emergency payments, Mr. 

Feinberg, how about a 6-month lump-sum payment or something 

like that to give small businesses more certainty? Absolutely. We 

plan to do something like that. 

Chairwoman VELA ́ ZQUEZ. Very good. 

For many small businesses, compensation received from the 

claims fund is going to be tied to economic losses. Similarly, the 

Small Business Administration is now making loans for economic 

damages as well. Depending on how the claims fund classifies its 

assistance, the Small Business Administration could recognize assistance from the claims fund as duplicative and reduce its loans 

amounts to affected business owners. Are you going to take steps 

to ensure that the BP fund assistance is not classified as duplicaVerDate Aug 31 2005 15:36 Sep 03, 2010 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\57283.TXT DARIEN
8 

tive or other assistance like SBA disaster loans, which will then result in a reduction of loans to businesses? 

Mr. FEINBERG. This is the first I have heard of this problem. I 

will look into this problem. 

Under the program that I am establishing—I want to note the 

flip side of that. I will look into that issue, Madam Chairwoman, 

but under the program I am deciding, like the 9/11 fund, if a small 

business receives insurance or other collateral sources of payment 

tied to the spill, that money would be—we would offset that 

amount—it has already been received—against whatever ultimate, 

long-term award we would give. But I will look into that issue for 

you. 

Chairwoman VELA ́ ZQUEZ. The Small Business Administration 

has approved less than 20 percent of the disaster loans it has received from the Gulf’s small businesses, very low. Given this low 

percentage, Louisiana’s economic development secretary, Stephen 

Moret, requested that the Small Business Administration consider 

the promise of future BP payments in assessing loans requests. So 

it is very important that you have a process in place to get this information to the Small Business Administration so that they can 

fully understand the financial standing of loan applicants. 

Mr. FEINBERG. I completely agree with that. 

One of the hurdles I confront—and I must say Governor Jindal, 

when I met with him in Baton Rouge, made this point repeatedly— 

that the data that is available to date is so inadequate in advising 

other governmental agencies and State officials that that is one of 

my top priorities, to make sure that credible data is made available 

to regulators at the Federal and State level for precisely those reasons. 

Chairwoman VELA ́ ZQUEZ. Very good. 

Many of the claims coming from Florida may relate to lost tourism dollars. In some cases, the decline in value could be based on 

the public misperception of tarballs on beaches. Will these claims 

be considered valid even if there is no physical damage to real estate or surrounding beaches? 

Mr. FEINBERG. Now that is a tough question. 

Chairwoman VELA ́ ZQUEZ. I know. 

Mr. FEINBERG. Clearly, under Florida law, I think it is fair to say 

it is not compensable. If there is no physical damage to the beaches 

and it is public perception, I venture to say that it is not compensable. 

How we deal with that problem is something I have got to address. That is in this area where some discretion is going to have 

to be exercised, but, at the same time, I have to appreciate what 

the governing law of Florida and the other States is in that regard. 

But it is a fair question, and you posed it, so we will look into it. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Graves. 

Mr. GRAVES. Thank you, Madam Chair. 

One of our members has another obligation, so I am going to let 

Mr. Buchanan go. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. Buchanan. 

Mr. BUCHANAN. Thank you, Madam Chair. 

9 

Mr. Feinberg, I appreciate you being here today. It is nice that 

this is first Committee that you are coming to. 

I have also read and talked to colleagues that you are outstanding, that you get on this quick, and there is a lot of people 

hurting. 

But I also just want to mention, when we talk about jobs, let’s 

make sure we can focus big time on small businesses, because they 

create the jobs, and the more we can help with them—but let me 

go right back to the one point. 

We had a briefing—I represent Sarasota-Bradenton, which is 

about a—and this is where I think things are going to get complicated and there is a lot of confusion—we have 60, 70 miles of 

pristine beaches, additional water lines. We probably have, you 

know, another 70, 80 miles. So we have got a lot of frontage, a big 

part of who we are. And our business is tourism. Maybe it is a 

third. 

So what are we going to do about—they are saying that where 

the tarballs roll up on the beaches, let’s say in Pensacola, the business is off 70, 80 percent. This is a briefing we had last week, our 

staff. In our area, they are claiming where you don’t have tarballs 

but you are on the Gulf, because of the press, it is going to be as 

much as 50 percent. And then you are talking about Florida law 

and all of these other things. 

What are we going to do for these motel, restaurant owners? We 

have all of these barrier islands that come down there. They count 

on tourism in the summer. What are we going to do with them because of the perception? We might get the tarballs for a year, but, 

in the meantime, a lot of these people are going to go out of business. 

I get phone calls every day talking about, oh, god, we have got 

a $20 billion fund. But we have to clearly define that. 

Before you answer that question, I do want to invite you down 

to our community. I would love to host you there—we have a little 

town hall—because it is nice to go to Pensacola, and you need to 

do that, but also Tampa Bay, which we are part of that community. 

We need to talk about what’s going on there and figure out what 

we are going to do. 

Because I don’t want to just keep telling people that, you know, 

I don’t know. I am not sure. Check with Florida law. We need answers to these questions because people aren’t going to survive long 

enough to ever get a check. 

So let me maybe let you comment on that initially, just in terms 

of we are going to have to somehow define what we are going to 

do with these—where there is not tarballs, there might be someday, but it is affecting their business 50 percent. What are we 

going to do? 

Mr. FEINBERG. First, I can answer the easy part of your question. 

If you invite me down to your district to have a few town hall meetings, I accept. It is the only way to do this job. I invite you—I 

would welcome that invitation. I will be there. 

Mr. BUCHANAN. You are invited, and I will have you down as 

soon as I can get you. I want you to come down. But it will be a 

very positive thing, and I am sure people want to hear from you. 

10 

So count on that. And if the Governor wants to come, he can join 

us. So as soon as you have got some time, we want you down. 

Go ahead. 

Mr. FEINBERG. Now you are posing, as the chairwoman posed— 

this is a very tough issue. I mean, there is not enough money in 

the world to pay every single small business that claims injury, no 

matter where or when. I use that famous example of a restaurant 

in Boston that says I can’t get shrimp from Louisiana and my 

menu suffers and my business is off. Well, no law is going to recognize that claim. 

On the other hand, you pose the problematic, not hypo, the realworld problem of beach-front small businesses that, even though 

the water is pristine, nevertheless, the public fear or concern or 

misinformation leads to a drop in customers, in guests. We have 

got to deal with this. 

Now, 9/11, 9/11 dealt with it in an interesting way. 9/11 carved 

out a small geographic area where the 9/11 fund said, if you claim 

that you have physical injury, respiratory problems because of the 

World Trade Center dust and debris, well, we will recognize that 

claim but only in the immediate vicinity of the World Trade Center. If you are uptown or over across the Hudson in Jersey City, 

we can’t recognize that claim. 

Maybe, maybe—I am just throwing out some ideas. Maybe, even 

though Florida law would never recognize that claim, maybe beachfront property or some sort of delineation of special situation or 

what have you, maybe. Because you are absolutely right. People 

are suffering. 

Mr. BUCHANAN. Well, let me go back. Madam Chair is going to 

cut me off in 5 minutes. I want to get a couple of questions. 

Mr. FEINBERG. Go ahead. 

Mr. BUCHANAN. It is one thing to say a restaurant can’t get 

shrimp in the Northeast. It’s another thing where people are losing 

50 percent of their business. 

But, regardless of what Florida law is, I hear what you are saying. But we have never had anything like this. We have got 2.5 

million gallons of oil pouring out into the Gulf every day, 60,000 

barrels. 

With all of this coverage worldwide—people come from around 

the world, different parts of the country, come to our beaches. They 

are not coming. So it is different. This is a completely different 

thing. 

So, regardless of what the Florida law is, we have to clearly take 

a look at communities. I think Tampa Bay and south, what we are 

going to do about it? Because we are on the Gulf. Again, it is one 

thing for the tarballs to roll on the beach. It is another thing if the 

business is down half. 

And we have to get to that answer fairly quickly, because people 

are making mortgage payments, I can tell you, and they are getting 

cancellations, and they are going to have to give the properties 

back to the bank. They need to know that we are either going to 

step up and do something or give some kind of SBA preferred loan 

or something. But I have got to be able to tell them something. 

Just to say we will check on it, we will let you know—we have got 

to define these issues early on. 

11 

Mr. FEINBERG. And I have every intention of defining these 

issues in the next few weeks, not months. 

One thing BP has done, as I understand it, not on my watch, 

they have funded some major public relations effort to convince 

people that the water is pristine and you should come back in 

areas where it is perfectly okay, promoting commerce and promoting, you know, positive signs that the tourism shouldn’t suffer. 

But, again, you are raising an absolutely legitimate, real question which we have got to address promptly. 

Chairwoman VELA ́ ZQUEZ. Time is expired. 

Mr. BUCHANAN. Thank you, Madam Chair. 

Mr. FEINBERG. Thank you. 

Chairwoman VELA ́ ZQUEZ. Mr. Schrader. 

Mr. SCHRADER. Thank you, Mr. Feinberg, for being here. I really 

appreciate it. You have got your work cut out for you here, I am 

afraid, so good luck. And this Committee hopefully will be a resource. If you have issues and problems, legislation you need to 

make your job a little easier, I think the chair— 

Mr. FEINBERG. Anything that will make my job easier, I welcome 

any and all resources. 

Mr. SCHRADER. Thank you. 

The Deepwater business impact analysis indicated that possibly 

7 million businesses, 6 million small businesses with 10 or fewer 

employees might be affected here by what is going on in the Gulf. 

Do you have the resources to take care of those businesses? 

Mr. FEINBERG. We certainly will have the resources necessary to 

process any and all business claims, individual claims, small business, large business. We will have those resources, yes. 

Mr. SCHRADER. And how do you anticipate calculating the lost 

profits or earning power and over what timeframe, to your comment a moment ago, that there is not enough money in the world 

to take care of all the likely claims coming in? What geography do 

you anticipate taking claims from and consider them legitimate 

and, you know, up to what level of reimbursement can people expect? 

Mr. FEINBERG. Again, you are raising the critical—the critical 

true questions. What constitutes an eligible claim? Who is eligible 

to even file? Congressman Buchanan points out the Boston restaurant can’t file, but beach-front properties will file. 

So the first issue is going to be under your question. The first 

issue is going to be, how will you determine what is an eligible 

claim for compensation? And there I am inclined to begin with the 

same analysis I did in 9/11. Well, what does local law say about 

the eligibility of that claim? How attenuated can a claim be and 

still be subject to compensation, proximate cause, as they say in 

the law? That is one question. 

Your other question you pose, Congressman, is, well, even if a 

business is eligible, it has had a loss. How do you calculate the economic loss? Now there, there are time-honored methodologies from, 

let’s say, the date the spill began, up until a projected—a projected—oh, it will take you, we estimate, 2 years to recover, 3 years 

to recover, 4 years to recover. So we will— 

Mr. SCHRADER. Which of those years are you going to use? 

12 

Mr. FEINBERG. I don’t know, and it may vary. It may vary whether you are a motel, a fisherman, a shrimper, an oyster harvester. 

It may vary from profession to profession how long it would take 

fishing charters or sight boats. 

Mr. SCHRADER. The real world will be that some of these will actually—some of these claims, frankly, won’t be for the total 

amount. The reimbursement won’t be for the total amount of the 

loss. Some of these fishermen may be out of work for a decade. 

I am worried about the floor of the ocean, and it is going to be— 

you know, the shrimp are going to be in big trouble. I have fishermen in my coast. I am from Oregon, and my coastal fishermen are 

very concerned about our friends in the Gulf. 

We actually have researchers from Oregon State University 

checking the migratory patterns of a lot of the species down there 

to see what sort of effects they are going to have on Congressman 

Buchanan’s area. So we are very concerned. We want to make sure 

that there is adequate compensation, that this industry continues 

to persist in the Gulf of Mexico. 

Mr. FEINBERG. Let me respond. Here is what I think we will do, 

as with the 9/11 fund. Here is what I think we will do this time. 

Oyster harvester, in your business, we think, once the oil starts, 

so we know how pervasive it is, we think that your oyster harvesting will only be impacted for—and I am just giving this as an 

example—2 years. 

First, you are getting emergency payments without any obligation just to get you by. And as the chairwoman has suggested, it 

won’t be month to month. It will be more of a lump sum. 

Now, let’s sit down, oyster harvester. We anticipate that for 2 

years, another profession 3 years, another profession 8 years, whatever it might be, we think, based on our internal review, that you 

will suffer total loss over that period of X dollars. Here, here is a 

check. Now, that check—not emergency payment, that is long-term, 

lump-sum payment. That check is in full satisfaction of your claim. 

You have two choices, accept the check and release BP and everybody else from any future litigation. This is a check designed to 

make you whole and to end your uncertainty about going forward. 

You don’t have to take it. 

If you think that our analysis is faulty, if you think it is incorrect, we have shortchanged you, you think it is a trick, don’t take 

it. You can leave the facility and go litigate or do whatever else you 

would otherwise do in an effort to be made whole. 

My goal is to minimize the number of people who won’t take the 

check. Because that is the whole point of this fund. 

Chairwoman VELA ́ ZQUEZ. Time has expired. 

Mr. Graves. 

Mr. GRAVES. Thank you, Madam Chair. 

And you answered the biggest part of my question, which is kind 

of the timeline and, you know, how long are businesses—how are 

they going to know how much they are impacted? 

But as kind of a follow-up to that, when does a business, I guess, 

waive the right to claim? How long does it go? I mean, in some 

cases, they may not realize they may be trying to make it work and 

don’t realize the impact until some time later. I mean, when do 

they have to waive their right to be able to come back? 

13 

Mr. FEINBERG. They don’t have to waive their rights, Congressman, when they take any emergency assistance. We are going to 

get that money out right away to these companies and these small 

businesses. 

There will come a time, probably in the next year or 18 months 

or 2 years, when I will present them an opportunity. We have examined your individual business. We think that you will be impacted by the spill for X period of time. Here is a check in full satisfaction of your loss. 

Now, if you don’t think that the check accurately corroborates 

the loss, if you think that your loss is going to be much greater, 

well, we will listen to you. But, ultimately, here is a check. And you 

have to make a voluntary choice. Take the check and release your 

right to sue; or, Mr. Feinberg, thank you very much. I think you 

are being unfair. You are short-changing my business. I don’t know 

how long it is going to take, and I don’t think your check is adequate. I am going to go to court to try and get more. 

And I will say to that claimant, that is entirely your right. But 

I warn you, if you go to court, you will litigate for years. You may 

not win. I think my analysis is accurate. I am trying to help you. 

I think it is right. You may not win in court. You will litigate for 

years. You will have to pay a lawyer and wait and wait. Are you 

sure that this check isn’t adequate? 

That is going to be the challenge. That is going to be the challenge, ultimately. 

Mr. GRAVES. And kind of to follow up on top of that, too, when— 

I am sure there is going to be folks out there that are going to 

make, how long into the future is it before they can come back and 

make a claim? Because some may not realize just how much the 

impact is until some time later. I mean, I guess there has to be a 

point that they need to have made a claim sometime before then. 

Mr. FEINBERG. Right now, with the 9/11 fund, Congress kept the 

facility open for 33 months. Maybe with this facility we better keep 

it open the same time, longer, or whatever. That will be up to BP 

and the administration as to how long they think the facility 

should remain in place. 

I do think that it is important at some point to announce to the 

world that the facility is going to end. It is an amazing thing, Congressman. You see it all the time. Until people know that there is 

an end date, they procrastinate. They wait. They are not sure. I am 

uncertain. Meanwhile, the clock is ticking; and they need help. 

So I would hope that there would be some end date. We haven’t 

yet decided what that date will be. But I agree with you that there 

has got to be sufficient time for people to get a handle on what they 

think is the ultimate loss that they suffer. 

Mr. GRAVES. Thanks. 

Thanks, Madam Chair. 

Chairwoman VELA ́ ZQUEZ. Mr. Critz. 

Mr. CRITZ. Thank you, Madam Chair, and thank you, Mr. 

Feinberg. 

This is a huge undertaking. Do you feel comfortable with the 

staffing and the infrastructure that you have in place to be able to 

handle what you said was an emergency turnaround of 2 weeks for 

14 

someone to get a check? That is pretty incredible. Are you in a position where you feel comfortable right now? 

Mr. FEINBERG. Yes. Let me just say the Deputy Administrator of 

the program, Camille Biros, is here today who is working on those 

very issues concerning staffing. I can say that we will supplement 

the existing staff that is already on the ground in the Gulf. It is 

about a thousand people. We will increase that staff. We will increase that staff with local people. 

This cannot be administered from here. I have learned from 9/ 

11 and other similar tragedies. I mean, you have got to have local 

people who are trusted in the Gulf. And if this Committee has 

ideas as to who some of those local people might be, I would appreciate names. But we think we will be able to do it. 

Now, the 2-week turnaround, the emergency payments, already BP has distributed over $130 million. I think the emergency payments will continue. We will accelerate them. We will make it even 

more efficient and transparent. 

The longer-term, lump-sum payments that Congressman 

Graves—that have been raised by the Member from Oregon, that 

is going to take a little bit longer, but we want to get in place as 

soon as we can a facility to pay lump sum as well. 

It sure would help if the oil would stop. It is very hard to come 

up with lump-sum payments in total satisfaction of your loss when 

you don’t know if the oil is going to continue to spread and reach 

your business. So once the lump sum—the lump-sum payment program can’t work until the oil stops. 

Mr. CRITZ. I appreciate that, and you had mentioned keeping the 

facility open 33 months after 9/11. Obviously, we don’t have an end 

date when the oil is going to stop, so it is impossible to predict. 

I saw you on TV the other day, and you mentioned that a lot of 

the small businesses and folks don’t even know how to file a claim, 

or even know if they are eligible. What’s being done proactively to 

reach out to these people to let them know what the claims process 

is and how easy is the claims process? Will you tell us what the 

claims process actually is? 

Mr. FEINBERG. That is a fundamental question, making sure people file. I can’t help them if they don’t file. I have got tremendous 

help from Governor Barbour, Governor Riley, Governor Jindal, and 

Governor Crist. All of them are working to spread the word, get it 

out on the Internet. Electronic filing is going to be permitted, including corroborating documents, all online, if you want to do it 

that way. 

The Postal Service called me. They are willing to put claims 

forms in every post office in the Gulf. I heard from the Postmaster 

General on that. 

We are going to reach out every way we can in community town 

hall meetings, various other ways to disseminate the news. 

The claim form itself is relatively simple. It is not complicated. 

If you will go to one of 35 claims offices that are already set up 

in the Gulf, 14 alone in Louisiana, there are people there who will 

help you fill out a claim. If you want to make an appointment to 

come in when you are not working, there will be somebody there 

to help you fill out a claim. It is not that difficult, especially the 

emergency payments, when we will require much less corroboration 

15 

than we would otherwise require for a long-term, lump-sum payment. So we are working on that. 

Mr. CRITZ. Good. Thank you. 

With the 9/11 experience that you have, I am sure you are putting into place, or have put in place protections against fraud. 

Going beyond that, you have industries that may be completely 

impacted and the people who are working in that industry aren’t 

able to come back at all. Are there going to be opportunities for retraining and using funds to help people go into new industries? 

Mr. FEINBERG. Not on my watch. I mean, it is a wonderful idea. 

Whether or not there will be opportunities for retraining or shift 

in job opportunity, I have got enough challenges with this claimant 

fund, as you have heard, without getting into that. But I think it 

is a fabulous idea if there are other State and Federal Government 

agencies interested in that. 

Chairwoman VELA ́ ZQUEZ. Time has expired. 

Mr. Westmoreland. 

Mr. WESTMORELAND. Thank you, Madam Chair. 

Mr. Feinberg, I really appreciate you. I have listened to you on 

TV, also, and hearing you here today gives me a little confidence 

in the ability to answer some of these questions. 

Mr. FEINBERG. Thank you. 

Mr. WESTMORELAND. But, Mr. Feinberg, I know in 9/11 you probably had to deal with the real estate issue or property values and 

especially of some of the surrounding real estate that may have 

been damaged in the attack and possibly rental income or whatever 

from apartments or whatever. 

If you are familiar with the Gulf Coast, you know that the real 

estate market down there has been depressed because of the economy that we have. I have a real estate background. In the case of 

the real estate, with this oil coming up, the real estate values are 

going to be diminished. 

Now, how do you compensate for something like that? That has 

got to be a very difficult thing to do. Because, you know, there are 

different values depending on—you know, real estate is location, location and location. How are you going to go about—and is that an 

eligible claim for someone? 

Mr. FEINBERG. You are the real estate expert. 

Here, I am not sure. But let me give some guiding principles. 

If your real estate is devalued because of physical injury to the 

real estate, that the oils on your property are contiguous, that is 

easy. That is an easy claim. You are obviously, I think—I am getting ahead of myself, but you will tell me. But I think you are obviously eligible. 

The problem is going to be, just as you imply, what about the 

real estate—the condo or the co-op or the house—that is 5 blocks 

from the beach? That is why it is of less value than a house right 

on the beach. It is 5 blocks, so it is a 5-minute walk to the beach. 

Now, two problems. One, what if the beach does have degradation, tarballs or what have you, oil balls? That is problem number 

one. It is not on your property, but it is 5 blocks away, and the 

beach is diminished, and your home value is diminished because it 

is right there, 5 blocks away. That is one problem. 

16 

I am less worried about that problem than the second problem, 

which Congressman Buchanan raises. I am on the beach, but there 

is no oil at all there. It is just the public perception that drives the 

values down. 

I mean, on the one hand, those people are suffering. They deserve some help. On the other hand, there is not enough money in 

the world to pay every homeowner, wherever they live in the Gulf 

Coast, who says my property is down because of the oil spill. 

How we—maybe you have an answer—how we define eligible, ineligible, I venture to say, if there is no physical damage, probably, 

I venture to say, the law of Florida doesn’t give any of them compensation. But I am not sure. That is not the end of the discussion. 

Mr. WESTMORELAND. Yes, and I can’t help but agree with you. 

Because if you just go down and spend time with us in Mississippi, 

Alabama, Orange Beach, Florida, whatever, there are a number of 

listings there for sale. I promise you that people are not down there 

looking for vacation property right now with the oil spill. 

There were probably a lot of people that were buying due to a 

depressed market, looking for a good deal. But finding a good deal 

and buying a piece of property that has got tarballs and oil in the 

Gulf is a different story. 

So I hope that you will take that under consideration when you 

start looking at what’s eligible and—with the real estate market. 

Mr. FEINBERG. I mean, one way to look at it is to say, make an 

assumption, there is no question—I am making an assumption 

now—there is no question that the property value has diminished 

as a result of the spill. RPTS WALKERDCMN BURRELL[11:00 

a.m.] 

Mr. FEINBERG. [Continuing.] Let’s assume that is right. That 

doesn’t mean that every property is entitled to compensation. So 

various Members have raised this issue and we are going to have 

to sort it out in a way that will challenge my expertise and certainly challenge yours. 

Mr. WESTMORELAND. I know you will do a good job. Thank you. 

I yield back. 

Chairwoman VELA ́ ZQUEZ. Thank you. Mr. Shuler. 

Mr. SHULER. Thank you, Madam Chair. As Mr. Westmoreland 

has said, you have given all of us, I think, as we sat and listened 

to you give your testimony, a sense of confidence. Sometimes given 

the difficult tasks that you are in I might ask why on earth would 

anyone accept this responsibility, but I am so glad it is you--for 

what you have given us, the confidence here that things can be 

done. It is a very difficult task though. 

Mr. FEINBERG. Thank you. 

Mr. SHULER. One concern regarding the $20 Billion fund is 

whether there will be enough money in the fund to cover small 

business claims, since federal, state and local claims are coming 

out of this same pool of money. What percentage do you feel is 

small business money of that $20 billion versus the Federal, State, 

and the local government claims. 

Mr. FEINBERG. Don’t know yet. Don’t know yet. I can give you 

two answers. So far loss of income, about 45—49 percent so far of 

the $130 million that has been paid out roughly has gone to other 

than wage loss, loss of income—now that is individual small busiVerDate Aug 31 2005 15:36 Sep 03, 2010 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\57283.TXT DARIEN
17 

ness—loss of income, individual property, loss of profits, miscellaneous. So I don’t know for sure how much will be small business, 

Congressman, but I can say this, which is important, very important. Under the arrangement entered into between the administration and BP in setting up this facility, if the $20 billion proves to 

be insufficient, BP has agreed as part of this arrangement to replenish the fund. So it is not as if BP’s responsibility ends with $20 billion. I hope, I hope $20 billion is enough. But if it isn’t, my understanding is 

that $20 billion, that there be additional funds as needed. 

Mr. SHULER. Regarding the $20 billion currently set aside for 

emergency claims funds for the hold harmless agreement and the 

settlement come out of this pool of money, or are separate funds 

set aside? 

Mr. FEINBERG. It is all within the $20 billion so far, and then if 

that is insufficient then there will be additional funding provided. 

So all part of the $20 billion. I think the $130 million that has been 

paid out so far is not part of the $20 billion. That has been paid 

by BP separately, independent of the escrow account. I think that 

is right. I think that is right. 

Mr. SHULER. Madam Chair, I have one more question. Let’s look 

at after claims are filed. When everything is finished, 5, 10, 15 

years down the road, what are the lessons learned regarding filing 

claims. What are you hoping to get out of it so that if this ever happens again we can expedite it even more quickly than is presently 

being done? 

Mr. FEINBERG. The lessons you learn from each of these disasters 

start with the answer to the following question: How many claimants decided to enter this program, this independent facility rather 

than litigate. There is no better test of the success of this program 

or other programs like it, like 9/11. In looking at the consumers 

who you are trying to help, have they trusted the system, the facility, have they entered it voluntarily, have they accepted the judgment of the Administrator. In the 9/11 fund, as the chairwoman 

knows, 97 percent of all eligible claimants entered the fund voluntarily. If we can do something like that here to avoid the lawsuits 

being filed and protracted litigation in the Gulf, I suspect that is 

the best litmus test of the success of the program. 

Mr. SHULER. Thank you so much, and I yield back my time. Best 

of luck to you. 

Chairwoman VELA ́ ZQUEZ. Mr. Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Madam Chair. 

Mr. Feinberg, thank you for your testimony. I have heard you 

speak before. You are a very impressive individual, and I thank 

you for the hard work you are doing and the job you are doing. You 

are doing very well. 

Congressman Shuler asked a number of questions I was going to 

ask, so I won’t follow up on those. I was just kind of curious about 

the problems with BP because while they have obligated $20 billion, my understanding is the company is worth about 9. If that is 

the case they have committed themselves to more than the value 

of the company, and I am concerned that while this is a nice settlement they won’t be able to pay this in time. Have you looked at 

that at all? Is that a concern of yours? Are my figures wrong? 

18 

Mr. FEINBERG. I don’t know if your figures are right or wrong. 

I trust your figures. All I know is I have got a claims process to 

design to administer and there is going to be $20 billion available, 

in whole or in part, from EDUs in administering this program. I 

am confident from what I have read that BP is prepared. It has 

told the administration that if needed it will supplement the $20 

billion. So I would like to think that BP is prepared to pay what 

it takes to pay valid claims. 

Mr. LUETKEMEYER. Okay. That is fine I yield back the balance 

of my time. Thank you, Mr. Feinberg. 

Chairwoman VELA ́ ZQUEZ. The committee will stand in recess subject to the call of the chair. We have four votes, so we will be back 

in 15 minutes. Thank you. 

[Recess.] 

Chairwoman VELA ́ ZQUEZ. The committee is called back to order. 

And I will recognize the gentlelady from New York, Ms. Clarke. 

Ms. CLARKE. Thank you very much, Madam Chair, and thank 

you, Mr. Feinberg, for your testimony here today. I concur with my 

colleagues in saying that you have brought a real uplifting moment 

to what has been such a downer for so many Americans, just 

watching this whole event unfold, and having you at the head of 

this brings a lot of comfort to those of us who have been on pins 

and needles about the livelihoods of those in the Gulf region. 

As you know, there are a growing number of health complaints 

related to this spill and the cleanup. My New York colleagues and 

I think that this evokes memories of the health concerns faced by 

Ground Zero workers. In the weeks after 9/11 officials underestimated the negative health impact of the cleanup effort resulting in 

inadequate responses to citizens’ health concerns. This is pertinent 

because small businesses could be on the hook for costs associated 

with health problems of their employees who may have been involved with this. 

How is the independent claims fund taking into account the likely high levels of health incidents related to those working on this 

spill, and is the fund taking into account the impact on the longterm health and economy of those associated with the cleanup? 

Mr. FEINBERG. Physical injury claims are subject to my jurisdiction in the facility. Anybody with a physical injury claim, mostly 

respiratory claims, but also germinological claims from handling 

the oil and the detergents, et cetera, should file a claim with the 

fund. They will have to corroborate their claim with sufficient medical documentation. They will have to corroborate their degree of 

disability and those claims are eligible. 

You are absolutely right. The 9/11 fund processed about 5,000 

physical injury claims. We paid about 2,300 that were eligible, and 

I suspect that we will see in this fund a fair number of physical 

injury claim, medical claims, which you know, assuming they are 

valid, all compensable, yes. 

Ms. CLARKE. Very well. You said in your testimony that you anticipate a diverse number of claims, that each will be judged on 

their individual merits. I am pleased that you are committed to 

transparency and efficiency in the claims process, but I wonder will 

small businesses and families be able to make claims without a lot 

of red tape? Will they need to lawyer up simply to provide an acVerDate Aug 31 2005 15:36 Sep 03, 2010 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\57283.TXT DARIEN
19 

ceptable claim that can receive prompt attention? I am concerned 

that more well to do businesses, business owners will have the 

means to furnish a claim that results from consulting with outside 

professionals, such as lawyers or accountants, will mom and pop be 

able to file timely and sufficient claims and will your staff be able 

to assist individuals who are having trouble filing or preparing a 

claim? 

Mr. FEINBERG. Yes. We will make the claims process for small 

businesses relatively simple and straightforward. They will not 

need a lawyer. They are entitled to a lawyer if they would like one 

or an accountant or a statistician or whoever they would like to 

bring with them. That is perfectly okay. My goal is to make the 

process so transparent and simple that it will be efficient and that 

mom and pop will not be adversely impacted. 

Let me say one other thing on that, which you will recall from 

the 9/11 fund. A rising tide raises all ships. If a very sophisticated 

business comes in to the fund and uses a lot of accountants and 

highly skilled experts to develop an award that is justifiable but is 

based on a lot of expertise, we will take that principal, that award 

and make sure we pass that principal through to everybody, including small businesses, like you say mom and pop. So if a large business benefits from expertise, we will see to it that small businesses 

also benefit from that result flowing from that expertise. 

Ms. CLARKE. Well, thank you very much, Madam Chair. I yield 

back the balance of my time, but I just wanted to share with Mr. 

Feinberg, my colleagues and I have been remarking about the 

unique blend of Brooklyn and Boston you have in your accent. 

Thank you. 

Mr. FEINBERG. Neither of which is particularly helpful south of 

the Mason-Dixon line. 

Chairwoman VELA ́ ZQUEZ. Mrs. Halvorson. 

Mrs. HALVORSON. Thank you, Madam Chairman, and Mr. 

Feinberg, thank you for being here. This has been a major concern, 

as you know, for everybody and especially those of us on Small 

Business. You know, with unemployment the way it is and with 

things that are going on, we are very concerned about the cleanup 

and I have got a couple of questions. First of all, there are people 

that are unemployed all over the country. Are there opportunities 

for people to show up and help, because I am telling you we could 

hand everybody a skimmer, a shovel, just about anything to help 

cleanup? What are we doing for small businesses and people to 

help because obviously there is work to be done? 

Mr. FEINBERG. I can say this, although that is a very good question which isn’t part of my mandate in processing claims. It is my 

understanding that BP is hiring those workers laid off as a result 

of the spill and putting them back to work as part of cleanup, as 

part of special programs. 

So I think your question is better directed at BP. My understanding is an effort is being made to hire those very local Gulf 

workers impacted by the spill. 

Mrs. HALVORSON. Right, and obviously that isn’t your issue, but 

my constituents, just that is all I hear from and they said next 

time you got anybody in front of you that you can bring that up 

too. But my concern for you is what kind of safeguards or what are 

20 

we doing with regard to safeguards or putting something in place 

for fraudulent claims or something that—what can we do to make 

sure that people aren’t applying for help or doing something that 

may be fraudulent? 

Mr. FEINBERG. Great question. Nothing will undercut the credibility of this program more than fraud. You have to expect it. 

Human nature, you just have to expect it. 

Now, in the 9/11 fund we had 7,300 applications, only 35 fraudulent. The Department of Justice, Civil Fraud Division, second to 

none, second to none, enormously helpful to us in that Federal public program involving taxpayer money. I have asked the Department of Justice, Civil Fraud Division, to once again weigh in here 

and help monitor this program to avoid fraud. I am also considering hiring a private vendor with expertise in fraud investigation 

and audit to make sure that claims that are filed are legitimate 

claims because fraud could really undercut the credibility of this 

program, and we will be ever vigilant in that regard. 

Mrs. HALVORSON. Absolutely, because if one person gets away 

with it everybody else will be at the trough, and so I am glad to 

hear that you might be hiring somebody because every dollar you 

spend in looking at how for fraud will be a dollar seventy-five or 

so saved. 

So thank you and thank you for being here and doing this because this is something that is very important, but we also don’t 

want to undercut the program for what we are doing. Thank you 

and, Madam Chair, I yield back. 

Chairwoman VELA ́ ZQUEZ. Mr. Altmire. 

Mr. ALTMIRE. Thank you, Mr. Feinberg, for being here. I was 

wondering about the final decisions rest with the IFC but BP has 

the right to appeal claims above $500,000 and if BP appeals an 

award for a small business in particular, will the funds be distributed while the award is being appealed or does the business have 

to wait for that to be done? 

Mr. FEINBERG. The business would have to wait. But let me say 

that that $500,000 rule is under advisement now. It may be modified, it may be eliminated. I also think that if there is one appeal 

from either a claimant or BP, I am not doing something right, because the whole purpose of this program is to get money out fast, 

get it out final, get it out efficiently, with people satisfied that they 

have been treated fairly, and every appeal that is taken from my 

decision is I failed. 

So I think it is very, very important to state that I hope that 

whatever the appeals process ultimately is in the protocol, I hope 

that appeals will be de minimis, that we would have very few, if 

any, and that I will work to minimize those appeals because I 

think a small business that is not satisfied with my treatment of 

that business, I have failed and I would hope that that small business would get an efficient appeal, even under the protocol as I am 

thinking it is currently, we are working on it, the appeal process 

would only take 10 days. But 10 days is 10 days too long, I understand, and we will work on that. It is a very good point. 

Mr. ALTMIRE. Are there any circumstances where you pay out 

some of the claims? 

21 

Mr. FEINBERG. We pay out all of the claims in an emergency 

way. 

Mr. ALTMIRE. But if it is under the appeal challenge. 

Mr. FEINBERG. Oh, yes. If a small business has filed a various 

types of claims, here is a loss profit claim, here is a business interruption claim, here is a third claim, and they are only appealing 

one of the three, let’s say, the other two ought to be paid immediately. Absolutely. Absolutely. 

Mr. ALTMIRE. When you oversaw the 9/11 victim compensation 

fund you offered the option of in-person claim submission for victims. Are you going to be offering a similar option for small businesses this time? 

Mr. FEINBERG. I think we should. I think we should, yes. We 

have already said anybody can, any small business or individual 

can go into one of those claims offices and meet face-to-face with 

one of our local people. Yes. 

Mr. ALTMIRE. You had a discussion with Mr. Buchanan earlier 

about visiting his district, and I know you just gotten back from 

the Gulf. I was wondering about the ongoing forums that you 

might have, what your plan is to get the word out with updates on 

the funds being available. 

Mr. FEINBERG. My current plan is every week to go to the Gulf 

at least once or twice. You have to, you got to be there to get the 

word out, town hall meetings. We have got to—I think we have already got up the Internet. Do we have our Web site up yet? It will 

be up fairly soon. Within a couple of weeks we will have our own 

Web site up. We are maximizing every way we can to get the word 

out. There is no better way than to go down and meet with people 

word of mouth. 

Mr. ALTMIRE. You mentioned earlier that the location of the 

claimant will be one of the bases for determining the rights and the 

damages. According to press reports, the tort laws of their State 

will be used in weighing the rights of action but what about when 

some small businesses operate in more than one State? How does 

that factor in? 

Mr. FEINBERG. A couple of answers. First, the press is accurate 

that the tort laws of a State are a factor. I want to emphasize that 

I have made no decision yet on whether or not local law should 

govern in every case. There are examples of inequity and injustice 

where the local law may not be the best barometer of what to do. 

But I suppose if a company or a small business has residents or 

operates in several States, we ought to be looking at the State that 

is most convenient and helpful for that company. 

Frankly, I am not sure there is going to be wide variations in 

local law when it comes to proximate cause. There are variations 

in local law, but I think when it comes to the question of the scope 

of recovery, based on an attenuated claim where there is no oil, I 

think the law is fairly consistent and the question is how do we improve on that. That is going to be the issue more than differences 

in local law. 

Mr. ALTMIRE. Thank you, Mr. Feinberg. 

Chairwoman VELA ́ ZQUEZ. Mr. Thompson. 

22 

Mr. THOMPSON. Thank you, Madam Chairwoman, and thank you, 

Mr. Feinberg, for being here in front of the committee. I appreciate 

your testimony and your responses to our questions. 

My first question is, can you explain, in a little more detail, how 

the oil spill liability trust fund fits into the independent claims facility? 

Mr. FEINBERG. You mean the $20 billion? The $20 billion that 

has been set aside. 

Mr. THOMPSON. Yes. 

Mr. FEINBERG. There, as I understand it, because I am not—I 

was not one of the negotiators of that $20 billion, but my understanding is that $20 billion has been agreed upon between the administration and BP, that BP will put in an escrow account, requiring signatures from both BP and the administration, $20 billion. 

That $20 billion will encompass any and all claims arising out of 

the spill, not just my claims, not just my claims. Government 

claims, State claims, claims that are not part of my facility jurisdiction. In addition, BP has set aside, by agreement with the administration, $100 million to recover rig worker moratorium claims, 

claims of rig workers put out of work as a result of the Gulf moratorium. That is separate from the $20 billion and that is $100 million reserved for rig workers. Whether I will process those claims 

or some charity or foundation will process those claims I don’t 

think that has been finalized but hopefully that be finalized in the 

next day or two. 

Mr. THOMPSON. All right. How about the role of private insurers 

in the process? Can you explain a little bit about how that dovetails 

and how this actually work? 

Mr. FEINBERG. It dovetails two ways. Again, I don’t know about 

any private insurers in this spill. My understanding is BP is selfinsured. My understanding is there may be of course insurance 

among some of the claimants, small businesses have insurance. 

The way that insurance will most likely dovetail is that if a claimant files a claim with me for business interruption, lost profits, 

physical damage, and that claimant has some insurance, that insurance will be offset against any award that I would issue. 

Now we haven’t finalized this. That was the 9/11 fund of course. 

All 9/11 claims were paid, but we deducted before making those 

claims other sources of collateral sources of income. We would likely do that here as well. 

Mr. THOMPSON. How many folks do you have working with you 

to process this massive amount of claims? 

Mr. FEINBERG. Right now as we get ready to transition from 

what BP is doing to this Gulf Coast claims facility there are about 

a thousand people, roughly a thousand people already in the Gulf 

at roughly 35 different claims offices working to process claims. We 

will undoubtedly increase that number. We will streamline the 

process. We will go online and allow electronic processing of claims. 

We will increase our capacity with a 1-800 number. We will make 

sure that we have enough people to make sure that nobody is disadvantaged by delay or inefficiency. 

Mr. THOMPSON. The judges who hear these appeals are obviously 

an important part of the workforce. Is there a specific set of qualiVerDate Aug 31 2005 15:36 Sep 03, 2010 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 G:\CLERKS~1\HEARINGS\TRANSC~1\57283.TXT DARIEN
23 

fications that are sought in the individuals who have been designated to hear those appeals? 

Mr. FEINBERG. No judges have yet been designated by me. I have 

authority to designate those judges. We have not yet begun the 

process of examining qualifications. I do think that one critical 

qualification is that those judges, whoever they may be, be local, 

that they be from the Gulf, that they have credibility with Gulf 

residents, that it be a diverse number. I think we will probably 

want five or six, that it be diverse in terms of gender and race, et 

cetera, and that they be recommended as of outstanding capability 

and integrity. I don’t think they have to be judges frankly. Exjudges are welcome, but there may be some very wise people living 

in the Gulf who everybody would agree that person should be one 

of those appellate judges. 

Mr. THOMPSON. Thank you. Thank you, Madam Chairwoman. 

Chairwoman VELA ́ ZQUEZ. The gentleman’s time has expired Ms. 

Bean. 

Ms. BEAN. Thank you, Madam Chairwoman, and thank you, Mr. 

Feinberg, for being here today. It is very important to hear from 

you because this affects so many of our business communities 

around the country. My question has to do with how you are going 

to make sure that you can maintain independence? Given that you 

may be using BP claims personnel or field office, how do you then 

make sure that it is independent from the fund and will BP have 

an incentive to continue administering the claims process outside 

of the independent claims fund in an effort to minimize how much 

they ultimately pay out? 

Mr. FEINBERG. No. BP is transitioning as we speak to get out of 

the claims business and turn all of that over to the Gulf Coast 

claims facility which I have been assured by both the administration and BP will be absolutely 100 percent independent from BP, 

or the administration for that point. The administration has made 

it very clear they want it independent. They do not want to be 

micromanaging this. 

So I am not concerned about that. To the extent that the existing 

subcontractors who have been working in the claims offices are 

qualified and know the issues and can help process claims expeditiously, great. To the extent that we make an independent judgment that changes should be made or supplementing the existing 

workforce, we will do that. But clearly, this program will be independent and will not be beholden to either the administration or 

BP. 

Ms. BEAN. Let me also ask since property values are the easiest 

to measure relative to, say, business claims, how are you going to 

balance the distribution of limited resources across different types 

of claims? 

Mr. FEINBERG. I don’t think there are limited resources, first of 

all. BP has made it clear in its agreement with the administration 

that if $20 billion is insufficient it will replenish what is needed to 

pay all eligible claims. 

The problem with the property claims is going to be eligibility, 

not compensation. How will we go about deciding when diminished 

property values are compensable and when they are not. That to 

me is more of a challenge than assuring adequate compensation. 

24 

Ms. BEAN. Okay. My final question has to do with sort of the recent reports that have indicated that the SBA has denied roughly 

70 percent of claims, insurers have already paid out some $400 million in claims. 

How do you envision that this independent claims fund will 

interact with those both the insurance industry and the SBA and 

if an entity receives or is denied funding from either the insurance 

company or the SBA, how will that factor into your assessment of 

a claim? 

Mr. FEINBERG. That is a very good question. I don’t know the answer other than to say that we will make an independent judgment 

as to the legitimacy and eligibility of any claim quite apart from 

what SBA or an insurance company certainly has done. An insurance company’s denial of a claim will be contractual. I mean it may 

not be that—it may be that the insured is very eligible. The reason 

that the insured was denied insurance is probably related to what 

the contract says between the insured and the insurer rather than 

any particular reason that I would deny the claim. 

Ms. BEAN. I said it was my last question. I have one more since 

I have a little bit of time left. Given that you have already been 

paying 100 percent of claims up to now and that it is unlikely that 

all claims are legitimate, what will you do to weed out fraud? 

Mr. FEINBERG. As I said earlier, we plan to get the—we hope— 

of the best fraud weeder outer there is, the Department of Justice, 

Civil Fraud Division, and to the extent that they will help us wonderful, to the extent that we also have to retain some private investigative company to assist us in that task, we will do that as well. 

Ms. BEAN. Thank you so much. I yield back. 

Chairwoman VELA ́ ZQUEZ. Mr. Feinberg, I still have some questions that I would like to ask. I know that I posed a number of 

questions on the relationship between the Small Business Administration—between claims and Small Business Administration assistance, many of which may be new to you. However, because of the 

problems that we saw with Katrina, I want to ensure that SBA is 

taking steps to coordinate their relief efforts and to this point have 

you been contacted by the Small Business Administration? 

Mr. FEINBERG. I have not. I don’t think my people have. I think 

to the extent that, Madam Chairwoman, that you can help facilitate that open line of communication with a letter to the SBA or 

to us or whatever and follow up, we will do that. 

Chairwoman VELA ́ ZQUEZ. Definitely. Mr. Feinberg, we are all 

watching the path of Hurricane Alex, wondering what its impact 

will be on the spill and containment efforts. I understand that the 

claims fund is not responsible for damages caused by natural disaster but the hurricane may affect certain claims against BP. Are 

you currently looking at ways to address the potential impact of a 

hurricane on claims? 

Mr. FEINBERG. Yes. We are looking at what the law would say 

if as a result of a hurricane the oil is more pervasive and spreads 

to beaches or other areas where it might not otherwise have landed 

or come ashore but for the hurricane, and we will be able to handle 

those claims as well. 

Chairwoman VELA ́ ZQUEZ. My final question to you, Mr. Feinberg, 

is many Americans in the Gulf who fulfilled their dream of owning 

25 

a business are watching oil coming out of that area and simply do 

not know what the future holds. What would be your message to 

them? 

Mr. FEINBERG. I would give the same message I think that I 

have given when I was asked to do a similar task in Agent Orange 

in Brooklyn and the 9/11 fund and the horrible massacre at Virginia Tech, the program I administered after Katrina in the Gulf 

in New Orleans. I would urge all of those people, take heart, take 

heart. I can’t help in other areas, personal areas, other problems 

that you may have, but when it comes to financial uncertainty, 

take heart, there is a program in place. We are gearing up, and I 

would urge anybody in that region who is worried about the future, 

financial uncertainty, file a claim, at least get the ball rolling, so 

that we can evaluate your claim, provide what emergency assistance we can give, and try and help you through this difficult time. 

I wish I had the power to help you with nonfinancial issues. That 

I can’t do. But on the financial side, if we can at least get your 

claim in and evaluate it, hopefully, at least as to that problem, we 

can come to your aid and provide you some certainty and relief. 

Chairwoman VELA ́ ZQUEZ. Mr. Graves, Mr. Thompson, do you 

have any other questions? 

Well, I just want to take this opportunity on behalf of the members of the committee to really thank you for providing so much insight into this equation of the Gulf Coast. One of the biggest challenges that we face is how to restore the public trust, and I believe, 

truly believe based on past experiences with you that you are going 

to play a major role in that effort. 

Mr. FEINBERG. Thank you, Madam Chairwoman. I will always be 

in your debt for what you did 7 or 8 years ago and I am at your 

beck and call at any time with this committee. If you would like 

me to come back, I will be back as often as you think it is necessary. 

Chairwoman VELA ́ ZQUEZ. Thank you. 

Mr. FEINBERG. Thank you. 

Chairwoman VELA ́ ZQUEZ. I ask unanimous consent that members 

will have 5 days to submit a statement and supporting materials 

for the record. Without objection, so ordered. 

This hearing is now adjourned. 

[Whereupon, at 12:05 p.m., the committee was adjourned.] 

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