Head of oil spill claims fund heads back to Gulf

June 22, 2010 

NEW ORLEANS -- The man in charge of a $20 billion fund to compensate people whose livelihoods have been ruined by the Gulf of Mexico oil spill headed back to the coast Tuesday to talk with officials about the claims process.

Kenneth Feinberg, tapped by the White House to run the fund, has pledged to speed payments to fishermen, business owners and others who have lost money. He was set to meet with Alabama Gov. Bob Riley in Mobile on Tuesday afternoon.

"We want to get these claims out quicker," he said a day earlier. "We want to get these claims out with more transparency."

Feinberg is no stranger to disasters -- he ran the claim fund for victims of the Sept. 11, 2001, terrorist attacks. He said BP has already paid out more than $100 million to spill victims. Claims total about $600 million so far.

BP said this week it has spent $2 billion fighting the spill, with no end in sight. It's likely to be at least August before crews finish two relief wells that are the best chance of stopping the oil. Scientists estimate the blown-out well has gushed anywhere from 67 million to 127 millions gallons of oil into the Gulf.

In the meantime, a containment device is sucking up some of the oil gushing from the well. Coast Guard Adm. Thad Allen said Tuesday that it had collected nearly 1.1 million gallons in 24 hours, a new record.

No one knows exactly how much oil is spilling, but BP hopes to contain as much as 90 percent of it over the next few weeks. The current worst-case estimate is about 2.5 million gallons a day.

BP PLC was leasing the Deepwater Horizon rig from Transocean Ltd. when it exploded April 20, killing 11 workers. President Barack Obama's administration responded by imposing a six-month moratorium on deepwater drilling.

No new permits are being approved and drilling at 33 exploratory wells has been suspended.

Transocean president Steve Newman sharply criticized the ban at an oil industry conference in London on Tuesday. BP CEO Tony Hayward skipped the gathering to focus on the spill response after he was slammed for taking a break over the weekend to attend a yacht race in England.

Newman told reporters that there were things the Obama administration "could implement today that would allow the industry to go back to work tomorrow without an arbitrary six-month time limit."

Federal Judge Martin Feldman in New Orleans is considering whether to lift the moratorium and said he will decide by Wednesday.

Hornbeck Offshore Services of Covington, La., claims in a lawsuit that the government arbitrarily imposed the moratorium without any proof that the operations posed a threat. Hornbeck, which ferries people and supplies to offshore rigs, says it could cost Louisiana thousands of jobs and millions of dollars in lost wages.

"This is an unprecedented industrywide shutdown. Never before has the government done this," plaintiffs attorney Carl Rosenblum said during a two-hour hearing Monday.

Government lawyers said the Interior Department has demonstrated industry regulators need more time to study the risks of deepwater drilling and identify ways to make it safer.

"The safeguards and regulations in place on April 20 did not create a sufficient margin of safety," said Justice Department attorney Guillermo Montero.

Feldman asked a government lawyer why the Interior Department decided to suspend deepwater drilling after the rig explosion when it didn't bar oil tankers from Alaskan waters after the Exxon Valdez spill in 1989 or take similar actions in the wake of other industrial accidents.

"The Deepwater Horizon blowout was a game-changer," Montero said. "It really illustrates the risks that are inherent in deepwater drilling."

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Associated Press writers Robert Barr and Jane Wardell in London contributed to this report.

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