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Federal judge rules BP oil spill victim fund not independent entity

By Daniel Makosky

[JURIST] A judge for the US District Court for the Eastern District of Louisiana [official website] on Wednesday ordered [opinion, PDF] the administrator for the Gulf Coast Claims Facility (GCCF) [official website] to refrain from characterizing himself as independent from British Petroleum (BP) [corporate website] in communications with victims of the Deepwater Horizon oil spill [BBC backgrounder; JURIST news archive] that occurred in the Gulf of Mexico. Citing an intention to facilitate transparency, District Judge Carl Barbier ruled that the GCCF, a $20 billion fund established by BP to aid victims of the spill, is a "hybrid entity" that is not completely independent from BP. As such, Kenneth Feinberg [WP profile], the fund's administrator, may not identify himself as a neutral third-party and must make clear that he represents BP in the company's efforts to satisfy its obligations as required by the Oil Pollution Act of 1990 (OPA) [materials]. Feinberg has previously asserted his neutrality to encourage claimants to accept lesser settlements, and it is believed that the ruling will lead to a rise in lawsuits [AP report] against the company by victims who are less inclined to settle. Barbier also ordered lawyers to prepare briefs by the end of next week on whether BP's actions to this point in processing claims and settling with victims are sufficient to meet its legal responsibilities.

On Tuesday, Mississippi Attorney General Jim Hood [official website] asked the same court to order the GCCF to fulfill its legal obligations to aid victims of the spill and to remedy inadequate claims mechanisms [JURIST report]. The GCCF began processing claims in August following the completion of negotiations [JURIST reports] between BP and the US Department of Justice [official website]. Alabama Attorney General Troy King [official website] filed a lawsuit [JURIST report] in August against BP for damages to the state's coast and economy, claiming that the oil giant has failed in its efforts to accept responsibility for the oil spill. In July, a class action lawsuit [JURIST report] was filed against the company in a Louisiana state court alleging that its negligent actions led to the spill and that BP was further negligent in its oversight of the cleanup effort, resulting in volunteers falling ill due to inadequate protective equipment. In June, two lawsuits were filed against BP [JURIST report] alleging violations of the Racketeer Influenced Corrupt Organizations (RICO) [18 USC § 1961 et seq.] statute. The lawsuits allege that BP purposefully defrauded the American public in order to increase company profits.

Full post as published by JURIST - The Paper Chase on February 03, 2011 (boomark / email).