[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]






                  ENSURING JUSTICE FOR VICTIMS OF THE 
                        GULF COAST OIL DISASTER

=======================================================================

                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 21, 2010

                               __________

                           Serial No. 111-142

                               __________

         Printed for the use of the Committee on the Judiciary







      Available via the World Wide Web: http://judiciary.house.gov




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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee               STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr.,      TRENT FRANKS, Arizona
  Georgia                            LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               TED POE, Texas
JUDY CHU, California                 JASON CHAFFETZ, Utah
TED DEUTCH, Florida                  TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DANIEL MAFFEI, New York
JARED POLIS, Colorado

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel













                            C O N T E N T S

                              ----------                              

                             JULY 21, 2010

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     1

The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     2

The Honorable Jerrold Nadler, a Representative in Congress from 
  the State of New York, and Member, Committee on the Judiciary..     3

The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Member, Committee on the Judiciary..     5

The Honorable William D. Delahunt, a Representative in Congress 
  from the State of Massachusetts, and Member, Committee on the 
  Judiciary......................................................     5

The Honorable Howard C. Coble, a Representative in Congress from 
  the State of North Carolina, and Member, Committee on the 
  Judiciary......................................................     6

The Honorable Robert C. ``Bobby'' Scott, a Representative in 
  Congress from the State of Virginia, and Member, Committee on 
  the Judiciary..................................................     6

The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Member, Committee on the Judiciary.....     6

The Honorable Tom Rooney, a Representative in Congress from the 
  State of Florida, and Member, Committee on the Judiciary.......     7

                                WITNESS

Mr. Kenneth R. Feinberg, Administrator, Gulf Coast Claims 
  Facility
  Oral Testimony.................................................     8
  Prepared Statement.............................................    13

 
                  ENSURING JUSTICE FOR VICTIMS OF THE 
                        GULF COAST OIL DISASTER

                              ----------                              


                        WEDNESDAY, JULY 21, 2010

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:10 a.m., in 
room 2141, Rayburn House Office Building, the Honorable John 
Conyers, Jr. (Chairman of the Committee) presiding.
    Present: Representatives Conyers, Nadler, Scott, Lofgren, 
Jackson Lee, Waters, Delahunt, Quigley, Chu, Deutch, Gonzalez, 
Schiff, Sanchez, Maffei, Polis, Smith, Sensenbrenner, Coble, 
Gallegly, Goodlatte, Issa, Franks, Gohmert, Poe, and Rooney.
    Staff Present: (Majority) Stephanie Moore, Counsel; Eric 
Tamarkin, Counsel; Demeka Baer, Counsel; Susan Jensen, Counsel; 
Reuben Goetzl, Clerk; and Zachary Somers, Minority Counsel.
    Mr. Conyers. Good morning. The Commitee will come to order. 
Today's hearing is on ``Ensuring Justice for Victims of the 
Gulf Coast Oil Disaster.'' We are very pleased to have with us 
Ken Feinberg, who is no stranger to the Hill or to the 
government. We are very delighted that he has eagerly agreed to 
join us today and this discussion in terms of some of the many 
challenges that are before us.
    The British Petroleum claims process has been plagued by 
problems up until now, mostly concerning the inadequate 
compensation and the lack of the remedies being brought forth 
in a timely fashion. There are troubling issues about the 
details of the escrow account and the independent claims 
facility. British Petroleum has repeatedly stated the promise 
to pay all legitimate claims and to ignore statutory caps of 
$75 million, which this Commitee has already taken steps to 
remove. The process has not only been not transparent, but it 
does not seem to be fair, accessible or fast.
    For example, British Petroleum was slow to accommodate the 
large population of Vietnamese American fishermen in the Gulf 
Coast States who have lost their livelihoods because of the 
spill. In addition, they faced language barriers, as the forms 
were posted only in English, and translators were scarce. 
Minority Gulf Coast workers who have testified before this 
Commitee have been virtually ignored in the process of making 
them whole.
    So Attorney Ken Feinberg, with his long and distinguished 
record in government and in the private sector, has been 
mutually agreed by the parties to help adjudicate this process. 
We welcome you. We are glad that you are here.
    And I would like now to yield to the distinguished Ranking 
Member of this Commitee, Mr. Smith of Texas, for his opening 
comments.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Chairman, Americans have watched helplessly as more 
than 100 million gallons of oil spewed into the Gulf of Mexico 
over 90 protracted days. A sizable portion of that black 
pollution will make its way onto the beaches and into the 
Atlantic Ocean.
    Why did it take so long to stanch the open wound? Why 
didn't the Administration show more initiative and become more 
engaged early on?
    The oil that has spilled has created an environmental and 
economic disaster that has paralyzed local economies throughout 
the Gulf Coast region. The human, environmental, and economic 
cost of the spill will continue to increase until the cleanup 
is complete. BP and the other responsible parties must pay all 
costs associated with the spill. They must be held fully 
accountable for this catastrophe and for the 11 lives 
tragically lost in the explosion on the Deepwater Horizon.
    The creation of the independent Gulf Coast Claims Facility 
and the appointment of Mr. Feinberg to administer that facility 
are important steps toward ensuring that the victims of this 
tragedy are compensated for their losses. Hopefully, with Mr. 
Feinberg's leadership, those affected can get their claims paid 
without having to resort to litigation.
    As we learned with the Exxon Valdez spill, lawsuits 
involving oil spills take years to reach final resolution, and 
awards to the victims are significantly reduced by attorneys' 
fees.
    Also, steps must be taken to prevent waste, fraud and abuse 
from seeping into the claims process. Paying the fraudulent 
claims will not only destroy the credibility of the program, 
but also will take money away from legitimate claims. I am 
interested to hear the steps that the claims facility plans to 
take to prevent fraud.
    I would also like to know what can be done to maximize 
compensation to the victims rather than to the attorneys they 
may hire. For the 9/11 Fund, attorneys stepped up to offer 
their services pro bono. And Mr. Feinberg, I hope there would 
be an effective pro bono program for this claims process as 
well.
    However, I am concerned that the relief and compensation 
provided by the claims facility may be offset by the economic 
costs of the Administration's moratorium on offshore drilling.
    According to experts such as Louisiana State University 
economist Joseph Mason, the economic impact of the drilling 
moratorium could be much bigger than that of the oil spill 
itself. The energy industry contributes about $65 billion to 
Louisiana's $210 billion economy compared to about $10 billion 
from fishing and tourism. Dr. Mason projects that a 6-month 
moratorium will trigger a loss of thousands of jobs, $500 
million in wages, and over $2 billion in economic activity in 
the Gulf region alone.
    These numbers would be significantly higher if the 
moratorium becomes a permanent ban. The moratorium has already 
caused oil drillers to cancel contracts and move their rigs 
overseas, taking American jobs with them. While we need to 
ensure drilling safety, the moratorium appears to be another 
example of Obama administration policy costing American jobs 
rather than creating them. From cap-and-trade to the costly 
stimulus bill to the health care law that imposes higher taxes 
to this drilling moratorium, the Obama administration continues 
to push policies that harm American workers and the economy.
    Mr. Feinberg, I have mentioned a couple of questions in my 
opening statement and look forward to hearing your answers to 
those questions, and thank you for being here. Mr. Chairman, I 
yield back.
    Mr. Conyers. Thank you very much. I turn now to Jerry 
Nadler of New York, Chairman of the Constitution Subcommittee.
    Mr. Nadler. Thank you, Mr. Chairman. The leak resulting 
from the disaster on the Deepwater Horizon created the most 
massive environmental disaster in our Nation's history, killing 
wildlife, destroying critical wetlands and fisheries, and 
wreaking economic havoc in the Gulf of Mexico. Eleven people 
died, and the cost to human health will probably not be known 
for years. Even more disturbing, the response to the spill, 
including the use of toxic dispersants, and the secrecy and 
dissembling by BP may have compounded the damage of the spill 
itself.
    On May 27, the Judiciary Committee held a hearing on the 
legal liabilities issues surrounding the Gulf Coast oil 
disaster. At that hearing, the Commitee received testimony from 
victims, from the responsible companies, and from experts about 
the outdated and unfair maritime liability regime that is 
denying justice to the victims of the disaster.
    After the hearing, the distinguished Chairman of the full 
Commitee and I introduced H.R. 5503, the SPILL Act, to fix 
those laws so that the victims could be fairly compensated. The 
Commitee favorably reported the bill on June 23, and the bill 
passed the House on July 1 by voice vote. I hope the SPILL Act 
will soon become law so that BP and the other corporations 
responsible for the Deepwater Horizon explosion and the 
resulting oil spill will be held accountable under the law for 
all of the harm their reckless behavior has caused.
    Today, however, we turn our attention to ensuring justice 
for those trying to navigate the claims process set up by BP. 
The BP claims process so far has been plagued by problems, and 
many of those who have been harmed have not received adequate 
compensation in a timely fashion. Given the many problems with 
the BP claims process, it was very encouraging to hear on June 
16 that the Administration and BP had agreed to create the Gulf 
Coast Claims Facility, an independent claims process that will 
be administered by Ken Feinberg, our witness today. BP has 
promised that the new independent claims facility will be 
``fairer, faster and more transparent in paying damage claims 
by individuals and businesses.''
    Mr. Feinberg has distinguished himself as the administrator 
of the victims compensation fund set up by Congress to aid the 
victims of the 9/11 attacks. Thanks to his good work, many of 
my constituents were able to avail themselves of an 
administrative process that was fair and expeditious. Mr. 
Feinberg is an excellent choice.
    Furthermore, the Administration and BP announced that BP 
will establish a $20 billion escrow account which will be 
funded over a 4-year period at the rate of $5 billion a year. 
They also announced that BP will contribute $100 million to a 
foundation to support unemployed oil rig workers. While these 
announcements sound promising, there remain troubling issues 
about the details of the escrow account, the Gulf Coast Claims 
Facility, and the claims process.
    Despite the fact it that it has been over a month since the 
announcement of the $20 billion escrow account and the new 
claims facility, we have yet to see either the agreement 
setting up the escrow account or the final protocols that will 
be used to process claims.
    Among the concerns I have that I hope will be addressed in 
today's hearing are: To what extent will the escrow fund be 
bankruptcy remote, and what guarantee can we have that the fund 
pledge will also be protected from becoming a part of the 
bankruptcy estate should BP seek bankruptcy protection?
    Second, will the Gulf Coast Claims Facility recognize 
claims relating to use of dispersants, not of the original oil?
    Third, given that the long-term effect of the oil spill and 
use of dispersants could be at least a 10- or 20-year event, 
what provisions will be made for claimants who may, for 
example, seek compensation for economic loss but whose medical 
conditions resulting from exposure may not become manifest for 
5 or 10 or 20 years? Will claimants have to waive the 
opportunity to seek compensation for latent injuries from BP or 
from other parties in order to get initial damages for economic 
damages? Will injuries caused by dispersants be covered by the 
compensation fund? Will the Gulf Coast Claims Facility be 
willing to reopen the resolved claims in the event that, for 
example, nonpecuniary damages under the SPILL Act become 
available for the victims of the explosion and their families?
    As we pass the 3-month mark since this disaster began, the 
continuing efforts to stop the leak and clean the spill are 
paramount. But as the damage to natural resources, local 
economies and daily lives continues to grow, we must be sure 
that the victims of this disaster can be made whole. As Mr. 
Feinberg certainly knows, perhaps better than anyone else, the 
full impact of a catastrophe of this magnitude may not become 
evident for many years, and it is likely that these cases will 
have to be revisited at some point in the future.
    I do not want to see the taxpayers on the hook for this 
damage, and I do not want to see people with serious but not 
yet evident injuries have their rights and legitimate claims 
nullified in the future. How will this process account for 
latent claims so that the injured will not be left high and dry 
or have to resort to the Federal Government to pay costs that 
rightly should be paid by BP?
    I am especially concerned because the information we have 
received from BP and, quite frankly, from some of the Federal 
and State agencies charged with protecting the environment and 
public health has not flowed as freely as the oil has flowed 
from this rupture. We now know that some of the information, 
such as the purported safety of the dispersants being used, was 
demonstrably false. It is deja vu all over again.
    Less than a decade ago, EPA Administrator Christine Todd 
Whitman falsely assured the public that the air near Ground 
Zero was safe. We are still paying the price for that 
deception. Some people are paying with their lives.
    I hope today's hearing will guide the creation of an 
independent, fair and transparent victims' compensation 
program. I look forward to hearing from our witness today as he 
helps us understand these important issues.
    I thank you, Mr. Chairman. I yield back.
    Mr. Conyers. Thank you, sir. I now turn to a senior Member 
of the Committee and the former Chair of the Agriculture 
Committee, Bob Goodlatte of Virginia.
    Mr. Goodlatte. Well, thank you, Mr. Chairman. Mr. Feinberg, 
we welcome you. You come with a track record and a reputation 
for addressing difficult issues like this, and we know this is 
going to be a significant challenge for you.
    I share the concerns raised by my colleagues in making sure 
that justice is done expeditiously. I am also concerned, as the 
Ranking Member is, that it be done efficiently and that it be 
done in a way that we don't feel that people are defrauding 
this process, because while we hope that the private entity, 
British Petroleum, will be able to carry all this burden, it is 
still nonetheless important that we do it in a fair and 
efficient manner. I also want to make sure that British 
Petroleum is held fully accountable, and you are going to be in 
a key position to make sure that anybody who has a valid claim 
against them does receive the compensation that they deserve, 
and hopefully the American taxpayers won't be liable for any of 
this cost.
    So I look very much forward to your testimony and you 
telling us how you envision this will work. Thank you, Mr. 
Chairman.
    Mr. Conyers. Thank you. Bill Delahunt, a former State 
prosecutor, a Member of the Foreign Affairs Committee, and a 
distinguished Member of this Commitee, is recognized now.
    Mr. Delahunt. Well, thank you, Mr. Chairman. First, let me 
congratulate the President for such an outstanding appointment 
and welcome Mr. Feinberg. Not only does he have a spectacular 
record in terms of addressing issues such as this, but he also 
comes from a community that I once represented. That is the 
City of Brockton in Massachusetts. And for those of you that 
are unaware, Brockton is the city of champions. Brockton was 
the home of the Rock; that is, Rocky Marciano, undefeated 
heavyweight champion of the world. And then of course there was 
Marvelous Marvin Hagler, and now we have another champion in 
Ken Feinberg whose success is extraordinary. It is a great 
community.
    As I said, this is an outstanding appointment. The 
President should be congratulated. He has a litany of 
accomplishments in addressing issues ranging from 9/11 
compensation to overseeing executive compensation pursuant to 
the TARP legislation. And I am confident that, given his 
leadership and his talent, that the concerns that have been 
expressed by members of the panel will be addressed by this 
young man from that hardscrabble community in Massachusetts, 
the City of Brockton.
    And with that, I yield back.
    Mr. Conyers. I thank you. Mr. Coble is recognized.
    Mr. Coble. Thank you, Mr. Chairman. Mr. Delahunt, I am 
advanced in age far enough that I remember the heavyweight 
champion from Massachusetts.
    Mr. Feinberg, it is good to have you with us. Mr. Feinberg, 
as you know, BP's oil spill has affected all aspects of the 
Gulf economy, and this morning I was contacted by my colleague, 
Mr. Spencer Bachus, who is the Ranking Member of the Financial 
Services Committee, and he is concerned about an issue that you 
may want to address in your comments. If not, we will get to it 
later.
    But according to Mr. Bachus, when the oil reached the 
beaches in Alabama, it resulted in lost sales for many realtors 
in Alabama. And he asked me if I would ask you what the status 
of these Alabama real estate claims are and for those in 
greatest financial need regarding emergency payments that may 
be forthcoming.
    He furthermore indicated that there may be a hold on the 
real estate claims resulting from the spill; and if so, what 
will the decision involved in implementing that hold and when 
do you anticipate that those claims will be paid? If you could 
address that in your statement.
    I thank you for being here with us, and I yield back, Mr. 
Chairman.
    Mr. Nadler. [Presiding.] I thank you. I will now recognize 
the distinguished gentleman from Virginia, Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman. And thank you, Mr. 
Feinberg, for being with us again. You have stepped up to the 
plate again, and we appreciate your hard work.
    I just had a couple of questions that I had hoped you would 
address. And that is whether you think you have enough money to 
respond to the claims and whether you have enough staff to 
respond in a timely fashion.
    Second, as the gentleman from North Carolina mentioned, 
part of the damage done by the oil spill is a general collapse 
in the economy. He mentioned real estate. But you have also got 
other department stores, tourism and everything else where 
people are losing money as a result--not a direct result but an 
indirect result of the spill.
    And third, how do you deal with people who, as we say, work 
off the books and may not have the appropriate records? They 
are suffering significant losses, and how do you deal with 
that?
    With that, Mr. Chairman, I thank Mr. Feinberg for being 
with us again, and I yield back.
    Mr. Nadler. I thank you. And the final opening statement, I 
gather, is Mr. Cohen.
    Mr. Cohen. Thank you, Mr. Chair. I am still trying to 
figure out--Marvelous Marvin, I always thought it was Hagler. I 
think it was. But Delahunt doesn't know much about sports, 
among other things.
    It is good to have you in this position. I think it gives 
the entire American public confidence that it will be done in 
an appropriate manner. You have a very difficult job. And I 
don't know the parameters in which you are operating. But the 
damages go to several different levels. And how do you 
determine, you know, the effect on a restaurant in some city or 
a restaurant worker or tourist businesses? But I would like to 
hear how you are going to determine that and how far you think 
you can go. I presume--and I think that your responsibility is 
only to individuals or businesses filing claims, not to State 
governments. Because State governments obviously suffer greatly 
from losses to revenues. And if that is at all within your 
purview.
    Well, I don't know how $20 billion, as large a sum as it 
is, could cover the entire damages caused by BP. I had 
recommended that we put them into receivership to make sure 
that their assets were sufficient to cover all the damages. I 
would like your thoughts from this perspective, if you could 
make such. While $20 billion is commendable, and the President 
did a good job getting the commitment, assuming it comes in 
these $5 billion increments, if that is going to be adequate to 
compensate all the different losses. They are somewhat remote 
sometimes. You have to cut them off somewhere, but there are 
losses that go a long way and all through the Gulf.
    So I thank you for being here and being the third great 
champion that Mr. Delahunt recognizes. And it is nice to know 
that you have got Marvelous Marvin's hairstyle, and I get 
closer to it as I get older, and hopefully you have got Rocky 
Marciano's endurance and ability to take a punch. Thank you.
    Mr. Nadler. Thank you. I was incorrect. I will now 
recognize Mr. Rooney.
    Mr. Rooney. Thank you, Mr. Chairman. I would just like to 
remind Mr. Delahunt that Sports Illustrated named the City of 
Pittsburgh the City of Champions. I don't know if Sports 
Illustrated ever did that for anywhere out in Massachusetts. 
But anyway.
    Mr. Delahunt. We will have that conversation later, Mr. 
Rooney.
    Mr. Rooney. Okay. Mr. Chairman, and to our guest speaker, I 
just want to--as Mr. Coble sort of alluded to--and I apologize 
for having my opening statement sort of being in the broad 
sense of a question. But just generally speaking, I too am 
interested in the State of Florida and how it pertains to the 
realtors, specifically with how you subjectively or objectively 
look at claimants with regard to loss and, you know, this idea 
of what is a loss, whether it is one block or how many blocks 
from the beach and from the spill. And if you look at it in the 
context of specifically with the State of Florida, the real 
estate industry, whether it be rentals or sales or resales, is 
a huge part of our economy, obviously. And just to sort of, if 
possible, give some focus to how realtors will be able to 
assess what they can look forward to expecting from this claims 
process.
    So with that, I yield back, and thank you very much.
    Mr. Nadler. I thank you. I am now pleased to introduce the 
witness for today's hearing. Kenneth Feinberg is the Claims 
Administrator for the Gulf Coast Claims Facility. He is the 
managing partner of Feinberg Rozen LLP, where he has served as 
one of the Nation's leading experts in mediation and 
alternative dispute resolution.
    Previously, Mr. Feinberg was appointed by the Secretary of 
the Treasury to serve as the Special Master for TARP executive 
compensation for 2009 to 2010. Mr. Feinberg seems to get 
appointed to one thankless job after another. He was 
responsible for reviewing annual compensation packages for 
senior corporate officials at companies that receive the most 
taxpayer financial assistance.
    Earlier he was appointed by the Attorney General to serve 
as a Special Master of the Federal September 11 Victim 
Compensation Fund of 2001.
    He was also responsible for the design, implementation, and 
administration of the claims process for the Hokie Spirit 
Memorial Fund following the tragic shootings at Virginia Tech 
University.
    Mr. Feinberg has also worked on an alternative dispute 
resolution program for insurance claims arising out of 
Hurricane Katrina and other hurricanes in the Gulf region.
    Mr. Feinberg received his BA cum laude from the University 
of Massachusetts in 1967 and his JD from New York University 
School of Law in 1970.
    Without objection, your written statement will be placed in 
the record. We would ask that you limit your oral marks to more 
or less 5 minutes. You will note that we have a lighting system 
that starts with a green light. At 4 minutes it turns yellow 
and red at 5 minutes.
    Mr. Feinberg, we are glad to have you here, and please 
proceed with your testimony.

  TESTIMONY OF KENNETH R. FEINBERG, ADMINISTRATOR, GULF COAST 
                        CLAIMS FACILITY

    Mr. Feinberg. Thank you very much, Congressman Nadler. I 
appreciate the opportunity to testify once again before this 
Commitee. As expected, the opening statement questions that 
have been raised are what I expected in appearing before this 
Commitee over and over again over the years, and I will try to 
address briefly in summary fashion what I am doing and answer 
some of these questions, and then whatever the Commitee's 
pleasure, I will respond.
    I am in charge of an independent Gulf Coast Claims 
Facility. Under the arrangement entered into between the 
Administration and BP, I am designing and administering an 
independent facility. I am beholden to neither the 
Administration nor BP. I am really beholden to the people who 
live in the Gulf and who are in desperate straits and seek 
financial assistance from this facility.
    The facility will be up and running next month, in August. 
It will transition from BP--I give BP some credit. They have 
paid out already over $200 million in claims. We can do better, 
the facility, quicker, more efficiently. But unlike 9/11 or 
some of these other tragedies, there is an infrastructure in 
place which I will modify.
    I am accompanied by the people helping me modify this, 
Camille Biros, Deputy Administrator, Jackie Zins, Deputy 
Administrator, Amy Weiss, all from my staff who are working 
with me in transitioning from BP to this new facility which 
will completely replace BP in terms of the processing of 
claims. There are already 36 regional offices around the Gulf 
that are accepting claims, processing claims. Again, we can do 
it better. But there is an infrastructure in place to help deal 
with this issue, this tragedy.
    Now I drafted and circulated a draft protocol--merely a 
draft--and received comments from State attorney generals, from 
the Department of Justice, from interested individuals. I 
received especially some very, very valuable input from the 
staff of this Commitee. And over the last week, I have been 
reviewing and evaluating the very comments raised by some 
Members which were sent to me by staff in reviewing the draft 
protocol that I circulated. I will have a new draft in the next 
few days which I will again send to the staff of this Commitee 
and urge input from this Commitee as we move forward.
    The questions posed by the Commitee Members today track in 
some degree the very questions--not surprisingly--posed by the 
staff in my ongoing communications with staff of this Commitee. 
No staff of any Commitee in the Congress has been more active 
in advising me than the House Judiciary Committee staff, and I 
am very grateful to Perry and the other members of the staff in 
that regard.
    Finally, in summary fashion, a response to the questions 
posed by the Commitee Members. Yes, the process has to be much 
quicker. We will accelerate it. It must be more transparent. 
The data that has been provided to date to the Members of this 
Commitee is inadequate, does not provide sufficient sunshine on 
how BP has been processing claims. We will do a much better 
job.
    I agree with the Chairman. I guarantee this Commitee, we 
will have at every location in the Gulf interpreters, 
translators in Vietnamese, Cambodian, whatever is necessary, to 
make sure that eligible claimants understand their rights and 
their obligations if they decide voluntarily to file with the 
protocol.
    We will, Congressman, guarantee to deal with the problem of 
fraud. In the 9/11 Fund--as Chairman Nadler will recall, in the 
9/11 Fund, we had 7,300 applications; 35 were fraudulent. That 
is how careful we were in processing claims. The Department of 
Justice Criminal Fraud Division is working with us in this Gulf 
Coast Claims Facility to minimize the likelihood of fraud. We 
will have internally, the facility, a fraud consultant, a fraud 
audit, a fraud expertise. Nothing will undercut the credibility 
of this program more than fraud, and I am very mindful of that 
concern, and we will deal with it.
    Attorneys, we had an unparalleled pro bono program of 
attorneys in 9/11. I am now working with the ABA, with the 
American Association of Trial Lawyers, with the attorneys 
general. The Attorney General of Florida, Attorney General 
McCollum, has been particularly interested in this pro bono 
program. We will--I assure this Commitee--have a pro bono 
program up and running to help any claimant who believes that 
the claimant needs an attorney. That is up to the claimant. We 
will be able to help process claims without an attorney, but if 
they want an attorney or an accountant or a relative, anybody 
they want to help them access this program, we will help them 
and work with them. If they want a private attorney, that is up 
to them.
    My calculations of the awards that are rendered will be for 
economic loss or for physical injury or loss of national 
resources. There will be no additional amount for attorneys. 
That is between the claimant and the attorney. That will not be 
part of my calculation, I assure this Commitee.
    On the moratorium, I have no jurisdiction over the 
moratorium. BP set aside $100 million to deal just with rig 
worker lost employment arising out of the Administration's 
moratorium. That $100 million, which is in addition to the $20 
billion, is not on my watch. BP and the Administration will 
decide where that $100 million should be--what the custody of 
that, where the custody should be held. And right now at least 
I have no jurisdiction over the processing of rig worker claims 
arising out of the moratorium. Nor, as a Member raised earlier, 
do I have any jurisdiction yet over any government claims 
against BP. Federal, State, local government claims, lost 
taxes, lost real estate, sales taxes, cleanup costs, other 
extended costs brought by local government, State and Federal 
Government are not part of my jurisdiction by agreement between 
the Administration and BP. At least for the present, I am 
dealing only with individual and private business claims. No 
government claims. That may change. But right now, that is the 
limit of my jurisdiction.
    The escrow account raised by, as I expected, some Members, 
I urge you to read the submitted written statement of Tom 
Milch, who represents BP, where he details in summary degree 
the status of the escrow account. I am not responsible for that 
escrow account. I am not administering that escrow account. I 
am drawing out of the escrow account to pay claims. I think the 
details of the escrow account--as one Member pointed out, there 
is not much detail available yet on the terms and conditions of 
that escrow account, where it will be deposited, how it will be 
guaranteed, who will administer the escrow account. I have got 
enough problems. That is not on my watch. And I think Mr. Milch 
has provided some answers. I think that the terms and 
conditions of that escrow account will be made more available 
in the next few weeks--certainly in the month of August--as the 
escrow account is finalized, as this Commitee has a comfort 
level that is protected, that it is safe and secure.
    Somebody raised the possibility of bankruptcy or 
receivership. I think it would be a monumental tragedy if BP 
was forced into bankruptcy as a result of this spill. It would 
help nobody. It would not help claimants. It would not help the 
payment of legitimate claims. It would delay everything. It 
would put a sizable workforce out of work in that region 
already suffering from unemployment.
    So just an editorial comment by me, I will do what I can to 
make sure that that escrow account pays claims promptly, 
safely, without the necessity of a horrendous bankruptcy 
option, which I hope and trust will not be at all imminent.
    As to Congressman Nadler's questions about dispersants and 
latent claims, he knows I think better than anybody the problem 
of latent physical injury claims. He is addressing it now in 
the 9/11 Fund 8 years later. I do believe that the final 
protocol that I will administer will cover physical injury 
claims. Fortunately so far--thank goodness--there are a modest 
number of physical injury claims, but nothing like what we 
confronted in 9/11. But the very definition of a latent claim 
means we may not know for a while.
    But dispersants--this is a point raised by the Judiciary 
Committee staff--yes, I do believe that the final protocol, 
unlike the current draft, will include physical injuries caused 
by the cleanup, not caused simply by the spill. We are working 
on that. Right now at least I am of the view that we need to 
get some expertise on the likelihood of latent claims.
    As with the 9/11 Fund, my current thinking is that 
ultimately, although physical injuries can be paid immediately 
as emergency payments without any type of release whatsoever, 
the question posed by Chairman Nadler is a tough one. If 2 or 3 
years from now there is an opportunity to settle once and for 
all a physical injury claim for respiratory injury, right now 
my current thinking is that we should get the best advice 
possible and require that claimant to voluntarily decide, as 
the 9/11 Fund, whether to take a lump sum settlement in full 
satisfaction of present and potential future illness, injury, 
or give that claimant an opportunity for physical injury to 
return to the fund later on, seeking additional money if the 
latent claim deteriorates.
    I am inclined not to do that. There are strong reasons not 
to do it in terms of finality. But I must say Chairman Nadler 
has raised a very important public policy question about 
physical injuries and latent claims which we will have to 
address.
    Now as to the realtors, we have got to do something about 
the realtors. The realtors and the real estate brokers are a 
major political force in Louisiana, Alabama, Mississippi, and 
Florida. I am hearing from them constantly. I am not sure 
whether or not legally they have a valid claim under my 
facility or, frankly, under existing law. My facility is purely 
voluntary. The realtors have every right, if they so desire, 
not to opt in and litigate. I am not sure that they can win if 
they litigate in terms of their perceived injury. Maybe, maybe 
not.
    But I do think, Congressman Cohen and others, the more I 
visit the Gulf and listen to real estate owners, renters, 
homeowners, brokers, the more I become convinced that if I 
really am going to do justice here, we have got to do 
something. We have got to do something, and I will have a 
better handle on this in the next week, I think. But I am very 
cognizant of the concerns expressed by realtors and real estate 
brokers about the injuries they are suffering as a result of 
lost contracts, lost commissions, inability to sell a home, 
inability to rent. I am working for the people in the Gulf. I 
am not working for the Administration or BP. And those realtors 
and brokers make a credible argument that something ought to be 
done to help them. And I am aware of that.
    Is $20 billion enough? We will see. I hope so. It certainly 
is helpful that the oil has stopped so we can get a better 
handle on the pervasiveness of the spill and so we can start to 
sort of corral the likely number of claims. And I am hoping 
that $20 billion will be enough. Fortunately, as you know, if 
$20 billion proves insufficient, BP has agreed with the 
Administration to step up and pay any additional valid 
financial obligations that it may have. And that is a very, 
very important point to make.
    We have the staff. Ms. Biros is here. She is in charge of 
the infrastructure, setting up the staff. BP has 1,500 people 
working in the Gulf right now on claims. We will supplement, we 
will reorganize, we will restructure, as necessary. I assure 
this Commitee, we will have the staff to deliver the goods 
under this facility.
    Two other final points. What about Congressman Scott's 
point? What about the number of people in the Gulf that work, 
as Chairman Scott put it or Chairman Nadler--I forget who--off 
the books? How are we going to deal with all cash lost wages, 
for example? This is tough. I am told that everybody in the 
Gulf--you know, a cash business, there is nothing illegal about 
cash. And I have suggested--you have to corroborate, you have 
to prove your loss. I can't just take your word for it. So how 
are we going to demonstrate, corroborate, prove lost cash 
emergency payments? Well, I said, Well, show me your tax 
return. Well, some of the people in the Gulf say they lost 
their tax return. Okay. What about a profit-loss statement? 
What about a document? What about a letter from your ship 
captain vouching for the payments? I will bend over backwards 
to prove and help anybody who claims lost wages or lost 
business in an all-cash business. I have got to work out some 
criteria. They must receive a 1099 from the facility. I can't 
violate the Federal law. How we will work with that? I am very 
cognizant of that problem.
    Finally, I am very cognizant of the problem raised by 
various Members about what constitutes an eligible claim. It is 
easy if you are a beach front restaurant. There is oil on the 
beach, and you have lost business. It is easy if you are a 
fisherman and you can't fish. There is oil there. You can't 
harvest shrimp. You can't harvest oysters. Those cases are easy 
cases. It is the tough case.
    I own a motel 20 miles from the beach. Am I eligible? I 
have lost 30 percent of my guests because of the spill. I don't 
use the beach. I don't fish. But my tourism is down. Is that an 
eligible claim? I sell T-shirts on the beach. That is my job. I 
sell T-shirts to tourists. The beach is fine. The swimming is 
great. Nobody is coming to the beach. I can't sell T-shirts. 
Mr. Feinberg, I live in Knoxville, Tennessee, and I make the T-
shirts that he sells to tourists on the beach. I mean, at some 
point you have to decide. It is a judgment call. This side of 
the line, eligible. This side of the line, ineligible. It is 
not rocket science. At some point, I must say, Well, if you are 
on this side of the line, you are eligible because if you 
brought a lawsuit in Alabama or Louisiana or Virginia or 
Florida, you would win. Well, I don't want you to have to 
litigate for 5 years. Come on in, and we will settle the case, 
and we will pay you.
    On this side of the line, if you litigate, even under the 
Federal law, which is more lenient than State law, I don't 
think you are going to win. I think you are on a fool's mission 
if you litigate. But I want to do something. Various Members 
talk about justice and the right thing to do. How I draw that 
line between a valid claim, a maybe valid claim, an invalid 
claim--I mean, I am open to suggestions. At some point, this 
draft protocol will become a final protocol. And I am going to 
have to make some tough decisions. It goes with the territory. 
I am prepared to do it. The base point for me to make that 
determination is not just the starting point. If I wasn't 
around and there was no facility and people litigated 
causation, how far down the chain would it go before the courts 
would say as a matter of public policy, ``Your claim cannot be 
recognized''? How much beyond that will I go in the interest of 
justice and fairness? Those are the questions I am grappling 
with right now.
    So there is my extended opening statement. I tried to 
answer as many of the questions as I could. And now I am 
available for further questions, Mr. Chairman.
    [The prepared statement of Mr. Feinberg follows:]
               Prepared Statement of Kenneth R. Feinberg



                               __________

    Mr. Nadler. I thank you, sir. I will now recognize myself 
for the first round of questioning. And you have addressed many 
of the questions I was going to ask you. You haven't answered 
them but you have listed them. So I want to explore in a little 
greater depth. And obviously where you draw the line--the first 
question is causation. Where you draw the line, this reminds me 
of my first week in tort class. I am sure the lawyers here will 
remember that. But this is a very serious question obviously. 
And obviously to some extent, there is going to be an arbitrary 
line. You can't avoid that.
    But for example, I hope you are not going to do what BP did 
initially--and obviously you are not, I assume--and say that 
people only within a block of the beach can be damaged, which 
is absurd. But for example, a small business in Waveland, 
Mississippi, Steve's Burlap Sacks, has been devastated because 
so many oystermen are out of work and are not buying sacks to 
transport the oysters. Would the owner and his recently laid 
off employees qualify under the causation standard? What is 
your current thinking about how far to draw the line?
    Mr. Feinberg. First of all, in Mississippi that claimant 
who makes burlap bags would be well advised to rely on the 
Federal Oil Pollution Act and not Tort I in Mississippi. I 
think the Federal Pollution Control Act would extend liability 
under Federal law proximate causation, as you know, well beyond 
the law of Mississippi. That is point number one.
    Whether or not I would recognize burlap bag manufacturing 
in Waveland, Mississippi, based on your hypothetical where that 
burlap bag manufacturer is dependent on fishing or shrimping in 
the Gulf, yes. Now whether that burlap bag manufacturer should 
get 100 percent of his loss or 80 percent of his loss or 30 
percent of his loss, I would want to sort of look at that, 
figure out what would the law likely be under the Federal law? 
Would it extend to him? Is he a direct victim of the spill or 
an indirect victim? And come up with some way, under your 
hypothetical, to compensate him.
    Mr. Nadler. Let me ask you this: You raised an intriguing 
question right now. Let's assume you decide that he was a 
direct victim, that in fact all the oystermen were not 
gathering the oysters. The facts show they all bought his 
burlap bags, and they are no longer buying his burlap bags. So 
he is victimized, and the causation is fairly direct. Why would 
you question whether he should get a recovery of 100 percent of 
the damage or 50 percent?
    Mr. Feinberg. If his causation is fairly direct, as you put 
it, he should get 100 percent. He may be in an industry totally 
dependent--burlap bags and fishing in the Gulf 100 percent. If 
he comes to me and says, You know, I do some work in the Gulf 
on fishing and I do some burlap for Greenwich Village, and I do 
some burlap bags--then it is a different question.
    Mr. Nadler. Okay. Now let me go on to the question of 
latent industries. Now the big problem that you have, 
obviously, is someone comes to you and says, My beach was 
damaged. My beach front house was damaged X dollars, and I lost 
my job. I got it back but it has been 6 months of lost wages, 
and I want it covered. You figure it out and grant the 
recovery. Five years later, he comes down with a disease that 
is directly related--let's assume the facts are clear--directly 
related to his having inhaled--and he worked somewhat on the 
cleanup and he inhaled whatever he inhaled. And a few years 
later, he comes down with a disease directly related to that. 
Is he going to be foreclosed at that point for sicknesses which 
cannot possibly be diagnosed or known initially, but we know 
from experience that some number of people are going to come 
down with this later. Is he going to be foreclosed from seeking 
recovery for that if he already got a recovery for the obvious 
immediate injuries, such as property injury, his broken arm, 
his lost wages? And if so, why?
    Mr. Feinberg. Right now he would be. In other words, right 
now, I would say--it is a tough call. You have given me a 
hypothetical which I haven't thought of. I was thinking you 
were getting ready for a hypothetical where someone knows they 
are sick at the time but they may get sicker. That is a 
different one. We will get to that next. But what you are 
saying is somebody settles under the fund and receives a check 
for the damage to their property arising out of oil on the 
beach.
    Mr. Nadler. And lost wages or whatever else.
    Mr. Feinberg. But right now as a condition of taking that 
check, that individual would release the facility--would 
release BP, in effect, for any and all future injuries.
    Mr. Nadler. Let me suggest that that is one point, as you 
finalize the protocol, that should be reconsidered because we 
have no idea how prevalent or common this is going to be. This 
may be rare, God willing, here. In 9/11, it wasn't rare. Here 
it may be much less. But certainly we know from experience that 
there are going to be people who have no symptom or passing 
symptoms. They didn't feel well. They went to the doctor. They 
gave him Pepto-Bismol. He was okay. But a few years later, they 
are going to come down with something which is going to be 
directly traceable, and we know that a certain number of people 
are going to get that. We don't know how many. There is no way 
that that person can anticipate it now. I cannot think of a 
reason, equity, why in order to get the recovery that he needs 
to get on with his life or her life right away because of lost 
wages, monetary or whatever, why they should have to sign away 
things that may become for some people extraordinarily, not 
just dangerous but difficult and even life threatening and very 
expensive. It seems to me that there ought to be some provision 
so that if a sickness that can be traced--I mean, the evidence 
is another question obviously. But assuming the evidence is 
there that can be traced back, becomes evident later, that that 
could be looked at then.
    Mr. Feinberg. Now, you pose a tough hypothetical. The other 
hypothetical you posited in your opening comments is a tough 
one but not as tough.
    If somebody comes to the facility now with a respiratory 
injury, I am 20 percent disabled. And I offer a total release 
so that if you become 60 percent disabled you can't come back 
to the facility.
    Now, that poses a difficult equitable argument on both 
sides, not just one side, because I found in the 9/11 file----
    Mr. Nadler. Yeah, but then you say on that one, with proper 
guidance, the victim and the deciders can have some idea over 
what the likelihood is of a 20 percent disability becoming a 60 
percent disability. When you have a latent claim, which no one 
has any idea is going to occur, you know statistically, let's 
say, that 15 percent of people are going to come down, but you 
don't know who. It is a very different question.
    Mr. Feinberg. You anticipated my answer. That is exactly 
the difference. The first hypo is a tough--I understand the 
equities there.
    Mr. Nadler. And let me make it even worse. Let's assume 
that Joe Blow presents himself and has some sort of respiratory 
disease, and whatever settlement is made. Five years later, he 
comes down with blood cancer, having nothing to do with his 
respiratory disease, but that blood cancer is traceable back to 
this.
    Mr. Feinberg. That is nowhere near as difficult for me as 
your first hypothetical involving business damage with no 
symptoms at all. That last hypothetical, blood cancer or 
whatever, is a medical issue that--at least his physical health 
has at least been flagged by the respiratory injury. Your first 
hypo is a horror, because there I am settling an economic claim 
and getting a release from the facility and later on I get a 
physical injury. That one is the toughest of all. That is the 
toughest of all.
    Mr. Nadler. Well, my time has expired, so I will just leave 
you with my adjuration to allow some leeway for these kinds of 
claims to be considered later as they arise.
    I thank you.
    And I recognize the distinguished gentleman from Virginia, 
Mr. Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Feinberg, welcome. I very much appreciate your 
exposition on how you are tackling this.
    This is quite different. This is maybe the mother of all 
claim funds, compared to your earlier ones, because the 
universe is so much greater. In fact, it is really unknown. 
With 9/11, you had a limited universe. With the Hokie Spirit 
Fund--which, by the way, I represent southwest Virginia, 
adjoining Virginia Tech, and we very much appreciated the work 
that you did there to help the victims of that tragedy. And, 
again, with the TARP compensation issues, a limited number of 
people you have to deal with.
    Here, BP already has in excess of 100,000 claims, and that 
may just be the beginning. That generates a lot of questions, 
but let me start with one.
    Given that it will take a large number of claims evaluators 
to evaluate all these claims, what will be done to ensure that 
there is consistency in the evaluation and payment of claims, 
so that the guy in one village says, ``Well, my compensation 
from my fishing loss is nothing compared to what they did in 
the adjoining State where you got a whole bunch more money than 
I did''?
    Mr. Feinberg. Ms. Biros is here. She is the expert in 
dealing with that question for the last month.
    The fact is, we are going to set up--we are setting up, not 
going to--we are currently setting up a centralized system that 
will have local claims evaluators submitting their claims to a 
centralized system. We are going to go down there in the next 
weeks, train our local people in each of 35 offices.
    Congressman, you are on to something here. Nothing will 
undercut the credibility of the system more than inconsistent 
determinations. ``My neighbor got a claim valid; I didn't.'' 
``He got X thousand; I didn't.''
    We have to make sure--and we are confident of this--that 
throughout the gulf we will have local people trained to apply 
the same standards of eligibility and calculation, standardized 
methodologies, if you are a shrimper or an oyster harvester or 
whatever, so that nobody will say there was bias or 
inconsistency or fraud, your other concern. We will address 
those problems.
    Mr. Goodlatte. For the 9/11 fund, you were able to prevent 
fraud, but that fund was less susceptible to fraud than this 
claim fund because the affected population was narrow and 
easier to determine.
    What steps are you going to take to prevent fraudulent 
claims from being paid while, at the same time, quickly and 
fully compensating the legitimate claimants?
    Mr. Feinberg. Two steps. Summary: One, thank goodness for 
the Department of Justice career people in the Criminal Fraud 
Division. We are talking with them. We are coordinating with 
them as to how to highlight fraud: 1-800 whistleblower numbers 
if somebody suspects somebody of fraud; the Department has 
invited the facility to send any suspicious claim immediately 
to the Department for review. So we will have some very 
effective deterrents from the Criminal Division, the real 
experts downtown, on fraud.
    We will also internally have a fraud audit. We will retain 
fraud experts to check the claims as they come in, verify them, 
make sure there aren't duplicate addresses, duplicate names, 
false information, the same description that we see time after 
time, which will immediately trigger segregating that claim.
    We will do what is necessary to make sure that this 
Commitee doesn't become a critic of the facility in terms of 
fraud.
    Mr. Goodlatte. With regard to your role, you mentioned that 
BP already has a lot of claims--I don't know if they are 
adjusters, but they are receiving claims. Are you going to 
fulfill the role of claims adjuster, or will you be a mediator? 
Will BP, in any instance, make any payments, or are they going 
to refer them all to you?
    Mr. Feinberg. BP, in another few weeks, is out of the 
claims business in terms of private, individual, and business 
claims.
    Mr. Goodlatte. Gotcha.
    Mr. Feinberg. It is all getting transitioned to me.
    Mr. Goodlatte. And one more question. The Wall Street 
Journal has reported that many affected businesses are 
concerned that it will be difficult, if not impossible, to 
forecast long-term recovery for some of the aquatic life that 
they are dependent upon--crabs and shrimp and fish populations.
    What assurances can you give fishermen that you will be 
able to properly estimate what these damages are going to be as 
a part of the claims process?
    Mr. Feinberg. I have two, I think, definitive answers to 
those businesses.
    One, we have done our best to estimate, before we make the 
offer, the long-term damage that you will suffer. We have done 
our best. We have talked to the experts. Here is a check, if 
you want it, that will compensate you for your long-term loss.
    If you believe that that check is insufficient, don't 
accept it. It is a purely voluntary program. We have done our 
best to exercise sound judgment as to what your ultimate loss 
will be. If you think we are incorrect, you are under no 
obligation whatsoever to accept that check. You can go about 
your business. You can go litigate. You can do whatever else 
you want.
    But I suspect that that business, if I have done my job 
right, Congressman, will agree that it is a generous check that 
accurately reflects the likely long-term damage and then some. 
And here is the check, and I am hoping they will take that 
check. That is the challenge--one of the challenges.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Nadler. Thank you.
    The gentlelady from California is recognized.
    Ms. Lofgren. Thank you, Mr. Chairman.
    And thank you, Mr. Feinberg.
    I want to start by saying how glad I am that you were 
willing to take this assignment and how grateful I am to the 
President for asking you to do this. It is a tough job, but we 
know from your work in New York that you are up to tough jobs. 
And, as you know, nothing can be perfect when you have a 
disaster of this magnitude, but I have tremendous confidence in 
your diligence, your intelligence, your fairness, your ability 
to administer complex matters. And so, thank you for your 
service to our country and also for being here today.
    I want to just touch on two quick things. I know other 
Members have questions, but I want to make sure I am 
understanding the framework here correctly, and I think I am.
    This fund that you are administering really is the 
alternative to tort litigation. It is not a contract claim; 
really, it is tort litigation. Is that correct?
    Mr. Feinberg. That is correct.
    Ms. Lofgren. And so, really, when people come in, it is a 
way to avoid complex tort litigation for damages in this way.
    Mr. Feinberg. Exactly.
    Ms. Lofgren. And that is helpful. And I think if people 
know that who have been damaged, that will help them understand 
what is claimable and what isn't claimable.
    I want to go to a second issue and just go back to--35 
years ago, the United States withdrew from Vietnam. And after 
that, about a million refugees left the country of Vietnam. I 
am lucky that a substantial number of those refugees came and 
settled in San Jose, California. As a matter of fact, I think 
the largest Vietnamese-American population in the country is in 
San Jose.
    And I was pleased to talk with a group of Vietnamese-
American lawyers recently, and they heightened their concern 
about what is happening to fishermen in the gulf who are 
Vietnamese-American. It is interesting how developments 
occurred. The Vietnamese-American population in my district is 
so successful. You know, I was talking recently to the school 
district. There is no ESL for Vietnamese students because 
everybody speaks English. But I think there are slightly 
different development patterns in the gulf, because the 
refugees who came to the gulf are fishermen. They didn't become 
lawyers, for the most part. They are fishermen. And many don't 
speak English well.
    What the lawyers have told me is that some of these 
fishermen--hardworking, simple people--have been already taken 
advantage of by lawyers who have misled them. As a matter of 
fact, a group of volunteers from the Vietnamese American Bar 
Association went down to the gulf to try and volunteer their 
services to the fishermen, but there was suspicion.
    So I am looking to you. What efforts can we make in the 
Vietnamese language for these refugee fishermen, first to let 
them know about their claims, but also, if possible, to undo 
some of the damage that has already been done to them by people 
who have taken advantage of their limited English skills and 
extorted money from them and hurt them further after this 
disaster?
    Mr. Feinberg. Congresswoman, you are highlighting something 
we are well aware of. We are in the process, as we speak, of 
making sure that we have Vietnamese and Cambodian and other 
necessary translators. I have been going down to the Gulf Coast 
and holding meetings. We have already made sure that we have 
interpreters and that we are meeting privately with Vietnamese 
organizations. Some have come to see me already, at your 
urging.
    And I am confident, as with the 9/11 fund, that we will 
make sure that language barriers, cultural barriers, you know, 
uncertainty--we will make sure that access to this facility is 
guaranteed through multilingual interpreters. We will help 
needed claimants fill out the forms.
    We are fully aware of what you are highlighting. And no one 
is going to be misled or fail to file because they don't 
understand their rights under the program or what the benefits 
are. I assure you of that.
    Ms. Lofgren. Well, that is good news, indeed. And I thank 
you for that.
    And let me say just say that the Vietnamese American Bar 
Association in California has already volunteered. They sent 
people out there. If they can help in any way, I know that they 
would like to.
    Mr. Feinberg. I would love to hear from them at your 
urging. I will meet with them. We can get on a conference call. 
We have already heard from various other Vietnamese 
associations who have offered their help pro bono.
    Ms. Lofgren. Very good.
    Mr. Feinberg. And I would welcome that opportunity.
    Ms. Lofgren. Thank you very much. And thank you for your 
efforts.
    Mr. Nadler. Thank you.
    I now recognize Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman.
    Mr. Feinberg, good to have you with us.
    Sir, you touched on this, but I want to revisit it. While 
many have been devastated by this crisis--and it is, indeed, a 
crisis--and are relying upon Federal benefits, do you foresee 
the claims process reimbursing the Federal Government for these 
said benefits?
    Mr. Feinberg. If I understand the question, I suppose the 
Federal Government will have a claim, just like a State 
government may have a claim for benefits that it has paid to--
if I understand your question. That is a government claim. And 
it is not on my watch, but I think the Federal Government, 
State governments, local governments will have a claim against 
BP.
    Mr. Coble. Now, you are in process, Mr. Feinberg, of 
formulating a final protocol as to how this is going to be 
done. Will the Administration and/or BP have to sign off on 
that, or will that be your sole decision?
    Mr. Feinberg. My total decision.
    Mr. Coble. That is what I figured. I think that is probably 
good. There is much to be said for independence in a situation 
like this.
    Mr. Feinberg. Thank you.
    Mr. Coble. Mr. Feinberg, when you agree with a claimant on 
his or her claim and he or she accepts the check, I assume at 
that point a release is effected, and that would bar that 
recipient from subsequent activity?
    Mr. Feinberg. Two answers. First, under the protocol, very, 
very generous, we will pay an eligible claimant up to 6 months' 
emergency payment--wage loss, business loss--without any 
release, up to 6 months, a lump-sum payment up to 6 months. You 
don't give up any right you may have.
    After that, we will offer, if the person is eligible and 
can prove their claim, a lump-sum payment for any additional 
present or future injury. In return, yes, we want a release 
that will prevent that claimant, in return for receiving this 
lump-sum check, litigating later against BP.
    Mr. Coble. And during the formulation of this protocol, Mr. 
Feinberg, any idea when that will be finalized?
    Mr. Feinberg. Yes. I am confident that the protocol will be 
finalized in August. We are nearing the end of July.
    Mr. Coble. Oh, I believe you said that earlier.
    Mr. Feinberg. Yes. In August. And we will be up and running 
in August.
    So the transition from BP, based on a final protocol, which 
this Commitee staff has been very helpful with, will be 
finalized, up and running next month.
    Mr. Coble. Thank you, Mr. Feinberg.
    I yield back, Mr. Chairman.
    Mr. Nadler. Thank you.
    Let me just follow up on what you said to Mr. Coble with 
one question. In the 9/11 situation, you offered the claimants 
the option of structured settlements instead of lump-sum checks 
to avoid very high taxes. Are you going to do the same thing 
here?
    Mr. Feinberg. I haven't thought about it. Why not? I 
suppose. I haven't really thought--once again, you are raising 
an issue, Chairman, as you usually do--I haven't thought of all 
these questions, but that is a very good one.
    Mr. Nadler. If someone gets a very large lump-sum check for 
the next 5 years of lost earnings, the tax consequence would 
be----
    Mr. Feinberg. And it was amazing in 9/11 how few people 
took advantage of that offer--amazing.
    Mr. Nadler. Well, but some people should be able to.
    Mr. Feinberg. I agree.
    Mr. Nadler. Thank you.
    I now recognize the gentlelady from California, Ms. 
Sanchez.
    Ms. Sanchez. Thank you, Mr. Chairman.
    Mr. Nadler. I am sorry. I am told I went in the wrong 
order. The gentleman from Illinois, Mr. Quigley.
    Ms. Sanchez. I thought it was a little soon, Mr. Chairman. 
I will defer to Mr. Quiqley.
    Mr. Quigley. Thank you.
    And thank you, Mr. Chairman.
    I know this is new territory, and I know you have touched 
upon the issue of people--the finality so that BP can have this 
and so forth. But--now, I think two Members, three Members may 
have touched upon it--when does one claim stop and another 
start?
    If this is conceivably a 20-year event, a person who has 
ocean property--we are discussing now and scientists are 
disputing are there plumes elsewhere--things could take years 
to appear. Is that a new claim? Are we now going to create a 
whole new series of court cases in which people decide, well, 
you signed a waiver for getting wiped out the first month; when 
did the first month end and when did that damage get cleaned 
up?
    What if, 16 years from now, they have lost what they had, 
just because this goes on longer? We have already seen so many 
unintended circumstances. We didn't know that they would 
happen. How do you take that into consideration and give 
finality?
    Mr. Feinberg. That is a tough question. I would make the 
following point. First, if I have done my job right, I will be 
able, the facility will be able to predict with some degree of 
certainty the long-term impact of the spill, so that when 
compensation is tendered, it will have some basis in fact as to 
the likely long-term impact.
    Secondly, it is important, I think, to point out that 
finality is often important not only for the facility in BP but 
for the claimant. I have learned over the years that if you say 
to a claimant, ``Mr. or Ms. Claimant, you have a choice: You 
can take money now for your current injury and come back later 
when the future is more known, or we can agree that the future 
damage is likely to be this and here is a much larger check--
your call,'' very, very often the claimant wants the larger 
check.
    So, in other words, ``Mr. Feinberg, you are telling me, 
based on Mr. Quigley's valid question, I have a choice. I can 
either take a check now for $1,000 or, based on your sound 
judgment, can take a check for $30,000 but I can't come back 
later. Mr. Feinberg, I will take that $30,000 check. I think 
that you have explained to me what you think is the likely 
outcome. I want finality, and I want the larger check.''
    I think it is important--I do not assume that finality only 
benefits BP. I am trying to help claimants who are trying to 
plan their future. And when you say to a claimant, ``Well, you 
know, you can come back in 3 years from now, and depending on 
how it works and the oil samples and the water samples, you may 
get more; or, based on my judgment, talking to people at LSU 
and the University of Alabama or the University of Mississippi, 
I think that it is going to be 3 years, and it is up to you, 
but here is a check for $30,000,'' in my judgment, trying to 
help individual claimants, more likely than not, they will see 
the wisdom of taking the $30,000 as long as it is grounded in 
some degree of certainty.
    No one knows for sure. But I am trying to help claimants, 
and helping claimants doesn't always mean ``come back later.''
    Mr. Quigley. And I appreciate what you are trying to do and 
how difficult it is. And I wish you the best for all involved. 
If it is ever tested, the ability to do this, this is the one.
    Thank you. I yield back.
    Mr. Nadler. I thank the gentleman.
    And I now recognize the gentleman from California, Mr. 
Gallegly.
    Mr. Gallegly. Thank you, Mr. Chairman.
    And thank you for being here, Mr. Feinberg. I have been 
very impressed with the answers so far--very thorough and 
comprehensive. I have even been able to understand some of 
them. In any event, just a couple quick things.
    Clearly, your job is to ensure that people that have been 
harmed have every opportunity to be dealt with fairly and made 
whole. In that process, is there any type of a safeguard that 
would ensure, through the claims facility, that payments made 
to claimants would not be reduced significantly as a result of 
attorney fees? Is there any kind of a cap, so they have kind of 
a free reign?
    Mr. Feinberg. This facility is not going to--as we did in 
9/11, this facility is not going to get into this issue of 
attorneys' fees. Whatever the claimant's relationship to his or 
her attorney is a private, contractual relationship which is, 
frankly, not a priority for this facility.
    Now, I have said, Congressman, over and over again, I do 
not believe it necessary for a claimant to this facility to 
even have an attorney. I can work with these claimants, as we 
did in 9/11, A; and, B, I am fully confident we will set up a 
pro bono program where claimants can come to the facility and 
we will offer them a free attorney.
    Mr. Gallegly. Well, that being the case, Mr. Feinberg, I 
think it is reasonable to assume that many of these folks went 
out and retained an attorney for class action or whatever very 
early on before they knew of Mr. Feinberg, and now they are in 
a contract. And, you know, I have my own opinions about this, 
but I think it is nothing short of criminal that somebody that 
is really harmed ends up with 40 or 50 percent of what he is 
harmed for, and someone that comes in with their legal 
expertise--and you do all of the work and they get 50 percent 
of the action. That is an editorial comment.
    Mr. Nadler, I just came in as he was asking a question, and 
I don't want to ask it again. But was there any clarification 
as to the settlement amount? For instance, if the settlement is 
for the purpose of compensating someone for loss of income, is 
that subject to Federal income tax?
    Mr. Feinberg. I am sure it is. I am not an income tax 
lawyer, but if you are compensated for lost income by 
substituting a check from the facility, I am confident it is 
subject to income tax.
    Mr. Gallegly. The other last question I have, Mr. 
Chairman--and this may not really be something that you can 
answer directly. But I was involved years ago in the Exxon 
Valdez incident up in Alaska, so I saw firsthand many of the 
same issues that we are dealing with here, with fishermen and 
with the issues that have impacted their livelihood up there.
    One of the things we found up there was many of the 
fishermen got jobs working in the cleanup process. We are 
seeing that happen, of course, in the gulf, which is, I guess, 
a good thing.
    Have you been involved in any of the process whereby folks 
have been compensated in the way of working in the cleanup? And 
has there been any comparison with what their income is as it 
related to fishing, and does that have an effect on the claim?
    Mr. Feinberg. It certainly has an effect on the claim. 
Right now, under the protocol, if somebody was earning $5,000 a 
month as a fisherman and now can't fish but BP has put them to 
work on a ``Vessel of Opportunity'' to help clean up the oil at 
$3,000 a month, then there is a $2,000 difference in what they 
were earning before as to what they are earning now. I would 
deduct that $3,000 from the $5,000 and give them a check for 
$2,000.
    So I am not involved in the ``Vessel of Opportunity'' 
program or any effort by BP to hire these folks that are out of 
work. But I do say in the protocol that that separate wage that 
they are earning would be collaterally offset from my award.
    Mr. Gallegly. In other words, there would be an offset for 
real damage?
    Mr. Feinberg. Yes.
    Mr. Gallegly. You are really focusing on what real damage 
is, with a percentage factor in there for whatever as an 
incentive to settle?
    Mr. Feinberg. Exactly.
    Mr. Gallegly. Thank you, Mr. Chairman.
    Mr. Nadler. I thank the gentleman.
    I will now recognize the gentlelady from California, Ms. 
Chu.
    Ms. Chu. Thank you, Mr. Chair.
    I wanted to give you some feedback with regard to the 
Vietnamese fishermen in the Gulf Coast. I have been in touch 
with them, and they have some specific feedback with regard to 
how the process is going so far.
    First of all, I mean, as you know, they represent a very 
significant part of the shrimping community there. The 
Vietnamese fishermen are about one-third of the shrimping 
community in the Gulf Coast. But they have raised very, very 
significant concerns.
    First of all, in terms of the interpreter selection, it 
needs great improvement. At one of the initial safety trainings 
held by BP, they sent trainers who spoke communist diction to 
refugees who live in the gulf. So there are cultural subtleties 
that really have to be paid attention to.
    Not every interpreter is competent, necessarily, or is 
sensitive to the particular population that is there in the 
Gulf Coast. And, for instance, an interpreter would need to be 
very specific about the language needed, particular vocabulary 
words pertaining to maritime claims and legal issues.
    So my first question would have to do with how you are 
selecting the interpreters.
    The second piece of feedback that I have gotten has been 
about the supporting documents that are required to submit a 
claim. Many of the fishermen have stated that they were denied 
claims or turned away because the requirement for supporting 
documents has never been sufficiently defined.
    Will you ensure that the requirements are clear so that all 
members of the community are able to access the claims process? 
And, more importantly, could you ensure that sample documents 
are given to provide individuals with the clarity about what is 
needed to complete the paperwork?
    And then, thirdly, many of them have complained about the 
complicated process for filing claims involving a hotline, and 
they get a claim number before visiting a claims office, but 
even though they have followed these initial steps, they have 
never received any follow-up. And how could you ensure that 
they are able to get that kind of follow-up?
    Mr. Feinberg. Three questions.
    Ms. Chu. Uh-huh.
    Mr. Feinberg. First, we are relying on the public interest, 
the Vietnamese organizations, to assist us--we have met with a 
couple of them already--in terms of providing us the best 
interpreters locally in the gulf that will guarantee 
qualification and making sure that they are qualified to act on 
behalf of the claimant. So we are working with those 
organizations. If there is an organization that we should be 
talking with that you are aware of, Congresswoman, by all 
means, let me know.
    Secondly, the documentation issue--we will provide sample 
documentation. It is important that the claimant document the 
claim. But I don't care; I have told claimants in the gulf that 
if you don't have the one type of document, give us another 
document. Especially for the emergency payments, where people 
are desperate to receive this compensation. If you don't have 
any official documentation, give me a written letter from your 
ship captain or your priest or your mayor, so that we can at 
least get you these emergency payments.
    And, finally, in terms of 1-800 numbers and more efficiency 
and less delay, as I said in my opening statement, that is 
absolutely essential. We are working on that now. I am 
confident that next month when we are up and running, we will 
have an accelerated program.
    Ms. Chu. But will there be follow-up for these folks? That 
is what they are asking about.
    Mr. Feinberg. Absolutely. I assure you, Congresswoman, we 
will be processing emergency payments within 24 hours. We will 
be cutting checks within 2 days thereafter. We will make sure 
that the process is much more efficient and accelerated.
    Ms. Chu. Now, you know, there are local leaders that are 
very much in touch with the community and know about these 
cultural sensitivities. I am wondering if you can have an 
advisor committee of those local leaders, the trusted leaders. 
Already you have said that people are skeptical, angry, 
dispirited, worried, and that it is going to be your job to 
sell this program. And so, I am wondering if you can have a 
group that can continuously give you this sort of feedback on 
an ongoing basis.
    Mr. Feinberg. We do. I agree 100 percent with you that this 
program can only be effective and successful by relying on 
local people. This can't be done from Washington. I am spending 
a great deal of time in the gulf.
    And relying on credible people--officials, neighbors, 
people that are trusted--is the only surefire way to get people 
to access this facility and take advantage of it. I can't help 
people if they don't sign up. And I think the only way to get 
people signed up who are inherently suspicious and skeptical is 
by relying on local leaders, yes.
    Ms. Chu. Thank you.
    Mr. Nadler. The gentlelady's time has expired.
    I now recognize the gentleman from California, Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Mr. Feinberg, it is good to see you, as always. You know, 
when we have go-to people that can be well-regarded by the 
press, well-regarded by both sides of the aisle, and then go to 
a very difficult area with a reputation for fairness, honesty, 
integrity, and competence--some of those are available in all 
the people we send, but that last one is seldom the one that 
has such a history as you have of competence.
    You have done a good job of laying out, as you did in your 
opening statement, a lot of the parameters. Let me just go 
through a couple that I am particularly interested in.
    One, I am going to ask you a question not in the form of a 
question. You said, ``No lawyers are needed to file a claim. No 
one need share one penny of their loss with an outside lawyer, 
outside accountant, or outside preparation person.''Is that 
correct?
    Mr. Feinberg. That is correct.
    Mr. Issa. And you said that you anticipate hiring attorneys 
and, I assume, some other clerical people to assist people in 
preparing their claims.
    Mr. Feinberg. Correct.
    Mr. Issa. That is great news, and I hope that that will be 
well-covered from today.
    I have a couple of questions that are, sort of, down in the 
weeds a little bit. But there are a large amount of people who 
have lost their income because of the oil drilling ban. You are 
not compensating people who were laid off because the President 
had an arbitrary moratorium on drilling.
    Mr. Feinberg. Not on my watch.
    Mr. Issa. But if those people, those tens of billions of 
dollars of income, those people who work offshore for very high 
wages and then come ashore and eat in restaurants and, you 
know, stay in hotels or rent apartments and so on, if they are 
laid off and they head out of the area, isn't there a ripple 
effect, where you will be compensating people for loss, and, 
really, all you know is that hotel on the beach or that 
restaurant on the beach had its income lost, and you really 
won't know how much of it is from the loss of fishing versus 
the loss of oil drilling?
    Mr. Feinberg. Well, that is a tough evidentiary question. I 
mean, you are right, I am compensating for damage arising out 
of the spill, not the moratorium. Now, how you define that when 
you get the documents that says, ``Here is what I made last 
year, and this is what I am making this year,'' I mean, that is 
a tough question.
    Mr. Issa. And, you know, I have absolutely no sympathy for 
BP. If your $20 billion can compensate everybody, that is 
great. If they need to give more, that is great. But I do have 
that great question of, aren't we in a predicament in which we 
are tying your hands because the facts you are presented are an 
effect but there are multiple effects there, including the 
scare tactics where, in many cases, people can come down but 
are scared away? All of that is going to end up being directly 
in the proximity of the shoreline part of the loss.
    Mr. Feinberg. Congressman, as usual, I mean, you are 
raising issues here that are very, very challenging. The loss 
of income of a motel due to bad tourist press that the oil--the 
beaches happen to be perfect; there is no oil on the beach. How 
we are going to address some of these issues, evidentiary in 
deciding eligibility and amount--formidable, formidable.
    Mr. Issa. Now, I have one question I don't believe was 
asked earlier. You have the direct effect on the individuals, 
but we have the communities. When you make somebody whole that 
had a direct loss, the community hopefully, if it is salary-
related, they are going to get some of that revenue. But, 
certainly, these communities have losses both because oil is 
not being drilled and because of the loss of fishing and so on.
    How do you view your role relative to the various parishes 
and so on? I mean, these are the people we talk to who aren't 
even being allowed to protect their shoreline, and then on top 
of that they are saying, ``Where do I make up for the lost 
revenue?''
    Mr. Feinberg. I have no jurisdiction, at the current time, 
over any governmental unit that files a claim for lost revenue, 
lost taxes, ad valorem. Real estate taxes are down. Sales taxes 
are off. Right now, this draft protocol and the new protocol 
that I am working on that I will share with this Commitee 
completely exempts from my jurisdiction any governmental claim 
against BP.
    Mr. Issa. Well, let me ask you a follow-up question. Time 
is short. Because you are still in the process of negotiating, 
and perhaps it will take additional funds. But these 
communities, in many cases, are providing services similar to 
the ones that you said you are providing. They are providing 
counseling; they are providing, if you will, legal advice and 
so on.
    Can you or will you consider trying to get authority to 
provide some funds so that you may contract these various 
parishes in related areas to perform some of these services, or 
to compensate them if they are performing services that benefit 
you?
    Mr. Feinberg. I will certainly pass on that constructive 
idea. Again, it is not part of my claims watch.
    I just want to say one other thing about the lawyers, 
Congressman. You will recall, in 9/11, as a direct result--
direct result--of questions that you posed, we set up this very 
successful pro bono lawyers program. And, as I said earlier, 
building on what we did with your help in 9/11 pro bono, I hope 
we can have a similar pro bono program here, and I plan to do 
so.
    Mr. Issa. Look forward to seeing that. Thank you.
    Thank you, Mr. Chairman.
    Mr. Nadler. I thank the gentleman.
    I now recognize the gentleman from Florida, Mr. Deutch.
    Mr. Deutch. Thank you, Mr. Chairman.
    Good morning, Mr. Feinberg.
    I have a few questions for you, Mr. Feinberg, about how 
some of these claims are calculated and the role that lawyers 
play. I mean, I know that, as you have just explained, on the 
one hand no one should need a lawyer; on the other, there will 
be this battery of pro bono attorneys willing to assist.
    Their assistance, I would think, whether pro bono or 
otherwise, would extend beyond even this facility, given that 
State law provides other rights without caps--the Oil Pollution 
Act, et cetera. I mean, there is more that will come into play, 
correct?
    Mr. Feinberg. I completely agree with you. I want to 
emphasize: I am a lawyer. And the legal community stepped up in 
the 9/11 fund. It would never have been as successful as it was 
without the help of pro bono and paid legal counsel. And I in 
no way want to say anything other than the legal community has 
a very, very valuable role to play here, and I hope it will 
step up once again.
    Mr. Deutch. Right. So I just wanted to set the record 
straight here, that, in fact, this facility that you are 
administering doesn't represent the sum total of every 
potential claim that might be filed under State law or other?
    Mr. Feinberg. You are absolutely right in that regard.
    Mr. Deutch. Okay. Thank you.
    I wanted to ask, then, about the way that the damages will 
be calculated. We have heard and I know you mentioned earlier 
that you have heard as well from realtors, and you are trying 
to figure out how to address the issues that realtors have. And 
I hear from real estate professionals who are losing contracts 
on a regular basis.
    When will you have some information for us? This is in the 
revisions to the protocol that you are working on?
    Mr. Feinberg. Yes. In the next protocol, which I hope to 
have finished in the next few days, not weeks--time is 
important here--I have to come to grips with this issue of both 
the real estate owner and the real estate broker. There is a 
serious question--I don't attempt to resolve it now, 
Congressman--as to whether or not either of them would have a 
valid claim in court. You can make arguments on both sides.
    But their concern and distress has been so pronounced 
everywhere I go that I am now, at your suggestion and others, 
trying to come up with some mechanism to deal with that concern 
that they have expressed.
    Mr. Deutch. Thank you.
    And as you calculate the impact that this spill has had on 
the business owners, there is a difficulty, obviously, from 
what I am told from business owners directly, and there is a 
concern that the focus will be on a comparison between this 
year and last year.
    And if you could speak to that, because, as I have been 
told repeatedly, this was the year when they were going to see 
the great comeback; last year is not a great comparison. And if 
you could just speak to that a bit.
    Mr. Feinberg. As with the 9/11 fund, if last year was an 
aberration, give us 2 years or 3 years to look at pre-spill.
    Frankly, when you mention, you know, this was going to be a 
great year, show me. I mean, I can't calculate compensation on 
the basis of speculation, but if you have a contract for this 
year, that you were going to be a charter boat or you had a 
rental that now was terminated, a valid contract, as a result 
of the spill, I don't even need, necessarily, to look at the 
past years.
    As long as it is not speculative, as long as there is some 
basis for me to calculate the damage, I am more than willing to 
compensate.
    Mr. Deutch. And then if you could also just speak to your 
jurisdiction--specifically as a representative of south 
Florida, if oil winds up in the loop current and we see oil on 
our shores in south Florida, either along the gulf or coming up 
along the Atlantic coast, are you charged with handling those 
claims, as well?
    Mr. Feinberg. I have jurisdiction over those claims. 
Understand--you do, but make sure your constituents 
understand--it is not necessary under this protocol for oil to 
show up. What is necessary is that the natural resources are 
harmed, you can't fish, tourism is hurt.
    I mean, I have tried to spell out in even the draft 
protocol, but the staff of this Commitee has reminded me on 
more than one occasion that there doesn't have to be actual 
physical destruction, if you have lost profits or you have lost 
income or what have you, and I will take a look at those 
claims.
    Mr. Deutch. Thank you.
    And then finally, very quickly, can you just confirm that 
the 90-day period for considering interim payments has not 
commenced simply because the cap is in place?
    Mr. Feinberg. That is correct.
    Mr. Deutch. Thank you, Mr. Feinberg.
    Thank you, Madam Chair.
    Ms. Jackson Lee. [Presiding.] Thank you very much.
    I now recognize the gentleman from Texas, Mr. Gohmert, for 
5 minutes.
    Mr. Gohmert. Thank you, Madam Chairman.
    And, Mr. Feinberg, I appreciate very much what you are 
taking on. As a district judge, I was asked to take over what 
was deemed the biggest, worst tort claim in Texas history that 
had been going on for 11 years, with over a hundred lawyers. 
And, anyway, I took that on, and so I have great sympathy for 
what you are doing.
    But I have some questions. I am a little muddy on process. 
And pardon my muddiness. It is something I carry with me.
    But I was wondering, do you know how you were chosen, out 
of all the people in the United States, to do this job, besides 
being crazy enough to take it on?
    Mr. Feinberg. Well, I was chosen by the Administration and 
BP by agreement. You will have to ask representatives of both 
as to why they are relying on me to act in this independent 
capacity. I suspect much of it has to do, as others have 
pointed out, with some of my prior work with 9/11.
    Mr. Gohmert. Right. But you don't know who selected you. 
You just knew the Administration--well, who called you, the 
President?
    Mr. Feinberg. No, I have never talked to the President 
about this. On the BP side, I had two meetings with BP 
officials in Houston. They asked me to come down and meet and 
talk about my experience and how I might go about doing this.
    And on the Administration side, the contact person for me 
has been Associate Attorney General Tom Perrelli. He is the one 
I have been dealing with. I think I had one conversation with 
Carol Browner of the White House, but it has been Tom Perrelli 
on the Administration side.
    Mr. Gohmert. Okay. Well, today you weren't subpoenaed, you 
came voluntarily, correct?
    Mr. Feinberg. To this Commitee?
    Mr. Gohmert. Right.
    Mr. Feinberg. I always come when the Chairman invites me.
    Mr. Gohmert. You know, you had said before in some other 
venues, and it seems clear, that you are really not accountable 
to anyone--British Petroleum, the Administration. So is there 
anyone who you do account to?
    Mr. Feinberg. I think I am accountable to the people in the 
gulf that I am trying to help. As with 9/11----
    Mr. Gohmert. Okay. But what do they do if they disagree 
with what your decision is?
    Mr. Feinberg. I think they would voice their objection to 
the Members of this Commitee. If I lose confidence of this 
Commitee----
    Mr. Gohmert. Well, then who could fire you?
    Mr. Feinberg. I guess I can be fired by BP or the 
Administration. They can decide that my services are no longer 
needed. I suppose they could agree consensually.
    Mr. Gohmert. Okay. Because generally you say you are 
accountable, you guess, to the people in the gulf, but, 
normally, accountability carries with it the possibility that 
those to whom you are accountable can do something if they 
disagree with you.
    Mr. Feinberg. Well, I suppose----
    Mr. Gohmert. So they would complain to our Commitee, and 
then we would put pressure on BP and the Administration, and 
then somebody in that duo would fire you.
    Mr. Feinberg. I think that is right, or they would agree 
that my services are no longer needed.
    Mr. Gohmert. Okay.
    Mr. Feinberg. You know, in----
    Mr. Gohmert. But with the folks in the gulf, if they don't 
like your decision, did I understand there is an appellate 
review?
    Mr. Feinberg. Not only is there a review by a panel that 
has yet to be selected----
    Mr. Nadler. Well, and who will select the panel?
    Mr. Feinberg. The panel will be selected by--names will be 
submitted to me. Right now, under the protocol, I select the 
panel. But understand, Congressman----
    Mr. Gohmert. Boy, I would love to, as a judge and as a 
chief justice of court of appeals, have gotten to choose those 
that were going to review my decisions, but----
    Mr. Feinberg. Let me just say two things about this.
    If the claimants have lost confidence in what I am doing, 
there is no requirement that they sign up. There is no greater 
check on my ability to serve the people of the gulf than that 
people have lost confidence in me and voluntarily don't apply. 
There is no requirement that they apply. If they are not 
applying to get the compensation----
    Mr. Gohmert. Well, so you would self-fire yourself?
    Mr. Feinberg. Well, if I have nothing to do because people 
aren't confident in me and no longer are signing up, no will is 
going to have to fire me, I will resign.
    Mr. Gohmert. Okay. And you have, obviously, a very able 
staff. Are they working pro bono?
    Mr. Feinberg. No.
    Mr. Gohmert. Who decides their salary?
    Mr. Feinberg. BP is paying for the entire cost of this 
facility. Who else?
    Mr. Gohmert. Okay. But who decided on what their salaries 
would be?
    Mr. Feinberg. I have submitted proposed salaries--or I will 
submit proposed salaries to BP. BP has already been paying 
about 1,500 people in the gulf. We will decide who should be 
continued and who shouldn't.
    Mr. Gohmert. Okay.
    Mr. Feinberg. But on the issue of who is paying for the 
cost of this facility, it is obvious to me that the only 
responsible party to pay for this facility has to be BP. You 
can't ask claimants to pay, and you can't ask the government to 
pay.
    Mr. Gohmert. But can they tell you they disagree with the 
salary you have set?
    Mr. Feinberg. I suppose they could say it, but----
    Mr. Gohmert. Okay. And one final thing. You mentioned 
jurisdiction. Who set your jurisdiction?
    Mr. Feinberg. The jurisdiction has been established by the 
government and BP.
    Mr. Gohmert. The government being us?
    Mr. Feinberg. The Administration.
    Mr. Gohmert. Oh, the Administration.
    Mr. Feinberg. The Administration and BP together, 
consensually, chose me and explained my jurisdiction to me 
orally. And that is my current jurisdiction.
    Mr. Gohmert. So there is nothing in writing?
    Ms. Jackson Lee. The gentleman's time is----
    Mr. Feinberg. Not that I have seen.
    Mr. Gohmert. Okay. Thank you.
    Mr. Feinberg. Thank you.
    Ms. Jackson Lee. The gentleman from California, Mr. Schiff, 
is recognized for 5 minutes.
    Mr. Schiff. Thank you, Madam Chair.
    Mr. Feinberg, thank you for joining us, and thank you for 
talking on this responsibility. It is good to have someone of 
your capability and dedication on the task.
    I want to follow up on some of the questions my colleagues 
asked. And I apologize if you have to repeat some of the things 
you said earlier.
    But I am interested at the outset in, when people submit a 
claim to you, is there ever a case where they--do they have to 
waive any kind of a court remedy when they do so?
    Mr. Feinberg. Yes. People who submit a claim to me seeking 
emergency payments--pay the mortgage, put food on the table, I 
am unemployed because of the spill--people who make such a 
claim can receive from the facility up to 6 months of lost 
wages or lost income without any obligation. They do not sign 
away any rights they may have to go to court, to sue, not sue. 
It is without obligation.
    Subsequently, if they want to voluntarily request a lump-
sum final payment for any additional present or future damage, 
we will calculate that damage and offer them, the claimant, 
here is a check for $600,000 or whatever it might be. Only if 
the claimant decides that it is in her or his interest to take 
that check will they then sign a release.
    Mr. Schiff. And that release would basically waive any kind 
of claim in the future?
    Mr. Feinberg. Against BP.
    Mr. Schiff. Against BP. So even if there was some 
unanticipated economic cost down the road, they would waive 
that.
    Mr. Feinberg. They would waive that.
    Mr. Schiff. Now, is it presumed that the 6-month emergency 
assistance, should they litigate later, would be deducted from 
the amount that BP would owe them?
    Mr. Feinberg. Yes. If they litigated later and if they won 
and if there was a damage award, then BP would be able to say, 
``You got damages of X, but we paid you 6 months, so deduct 
that.''
    Mr. Schiff. And what you are trying to do in determining 
who is eligible and what is an eligible claim is use the same 
issues of causation and proximity that the courts would employ?
    Mr. Feinberg. That is the starting point. And the more I 
listen to the House Judiciary Committee staff and others, the 
starting point is probably, for most of these claims, involving 
business loss or wage loss, not State law but the Federal 
Pollution Control Act, which is more liberal in causation 
requirements.
    But that is the starting point. Then what I would have to 
do is exercise my discretion, my judgment, in trying to decide 
whether a claim that might not even be eligible for 
compensation in court should nevertheless be paid as part of 
this facility.
    Mr. Schiff. Does BP have to give you the okay to do that?
    Mr. Feinberg. No.
    Mr. Schiff. Subject to the $20 billion limit, they have 
given you basically the discretion, even if goes beyond what 
they would be obligated under law, they have given you the 
discretion to say, if, in your judgment, even under Federal or 
State law we wouldn't be obligated, you should go ahead and pay 
the claim?
    Mr. Feinberg. That is correct. And it is not limited to $20 
billion. BP has made it very clear that if $20 billion--
hopefully it is enough, but if it is not enough, they will 
honor any subsequent supplementary obligations, financially, 
they may have.
    Mr. Schiff. Now, I assume, though, they will keep an eye on 
the degree to which you find claims eligible to determine how 
much above $20 billion they are willing to go?
    Mr. Feinberg. Of course.
    Mr. Schiff. I think, frankly, the ultimate cost of this is 
going beyond the capacity of any company, no matter how 
wealthy, to pay--the full costs.
    At some point, will the government claims for reimbursement 
be in competition with the claims of private parties? I mean, 
if there is a finite amount of resources that BP has, how will 
that get adjudicated? Who will be the debtor that gets the 
priority, or the creditor, or----
    Mr. Feinberg. In one sense, they are already in 
competition. Under this $20 billion that has been set aside, 
that $20 billion is used not only for the private claims that I 
am administering but for the government claims, as well. So the 
$20 billion is not targeted just for the claims that I am 
processing; the $20 billion also includes cleanup costs, tax 
revenue lost from States or cities or what have you.
    Now, BP has stated publicly and privately to the 
Administration, if $20 billion is not enough to cover all of 
this, they promise to supplement the $20 billion with 
additional money.
    Mr. Schiff. But now you are not adjudicating--you, 
yourself--the government claims?
    Mr. Feinberg. That is right.
    Mr. Schiff. So they submit those directly to BP, but they 
are paid out of the $20 billion.
    Mr. Feinberg. That is correct.
    Mr. Schiff. So that means that there is, you know, some 
urgency. Apart from the emergency funding that people are 
submitting claims for right now, people in the gulf need to 
feel some urgency, if they feel that the BP resources won't 
ultimately hold out, if they want to seek a lump-sum payment 
now rather than wait for litigation, and a BP that may or may 
not be able to pay all claims, there is some, you know, race 
for compensation?
    Mr. Feinberg. You could characterize it that way. I think 
there is an urgency for claimants to seek a lump sum quite 
apart from competition; they just need the funds. And they 
ought to get the funds for their own wellbeing.
    I am not particularly concerned, although you raise a very 
valid argument, I am not particularly concerned that there has 
to be a race for funds because the money may dry up. I have no 
indication of that, from BP or the Administration, that that is 
likely.
    Ms. Jackson Lee. The gentleman's time has expired.
    Mr. Feinberg. I am concerned that people not delay, because 
they need the money, and they ought to be racing to try and 
enter the facility.
    Mr. Schiff. Thank you, Madam Chair.
    Ms. Jackson Lee. Mr. Poe of Texas is recognized for 5 
minutes.
    Mr. Poe. Thank you, Madam Chairman.
    Mr. Feinberg, I will try to put this in perspective. And I 
appreciate your enthusiasm on this. It is great.
    I represent southeast Texas, a district that borders 
Louisiana. And because of the Gulf Stream, we don't get oil 
spill; it goes to Louisiana.
    However, the people in my district work in Louisiana, and 
there are two concerns: one, the direct injury by not being 
able to fish crawfish, shrimp, all of that. And the second 
problem is the moratorium. Now, I know you are not directly 
involved in that. But has BP put money into a fund to pay for 
losses based upon the moratorium?
    Mr. Feinberg. Yes.
    Mr. Poe. Who is administering that fund?
    Mr. Feinberg. That fund is being administered right now--I 
don't think they have chosen an administrator for that fund 
yet.
    My understanding on the moratorium is as follows: You are 
correct, Congressman, it is not on my watch. $100 million has 
been set aside, unrelated to the $20 billion, for moratorium 
rig worker claims only--not businesses associated with the 
moratorium, rig workers. That $100 million will be administered 
separately by some charity or nonprofit foundation in the gulf. 
I don't think they have selected anybody yet.
    Mr. Poe. Hopefully not FEMA.
    Mr. Feinberg. I don't know. I don't know.
    Now, as to Texas residents in the gulf who are adjoining 
Louisiana who fish and shrimp and harvest oysters and, as you 
put it, are directly impacted, they should be filing a claim. 
There is no geographic limitation as to who can file a claim. I 
have talked to the attorney general of Texas----
    Mr. Poe. Greg Abbott.
    Mr. Feinberg [continuing]. About Galveston and what is 
going on around Galveston. And I urge those Texas residents in 
your district to file a claim if they are being directly 
impacted----
    Mr. Poe. How many claims centers do you have in Texas?
    Mr. Feinberg. Right now, BP set up 36 different claims 
centers around the gulf. And we will continue those claims 
centers----
    Mr. Poe. How many are in Texas? Do you know?
    Mr. Feinberg. I don't know. I don't think there are any yet 
in Texas. The attorney general has suggested we may need one in 
Galveston or that environ there. We may do that. I think right 
now there are only, thank goodness, 70 claims, I think, from 
the Galveston area. And, if needed, we will certainly set up a 
facility there.
    Mr. Poe. Another question regarding the same issue. Like 
Judge Gohmert, I am a former judge. I see a conflict in losses 
based upon the actual damages of the oil spill and the 
moratorium, kind of meddling together with claimants.
    Are you going to make a decision that, ``This is a claim 
based on the moratorium, so that goes somewhere else, and so 
this percentage is based upon the actual oil spill, and then we 
will compensate some way''?
    Mr. Feinberg. The direct claims are not a problem because, 
as I understand it, the moratorium claims are only for 
moratorium-impacted rig workers. Nothing to do with the spill 
directly. So those eligibility determinations will be 
relatively straightforward and will be made by somebody else.
    The question posed earlier, which is problematic, is: 
Somebody who files a claim for lost revenue--``I have a motel 
on the beach, and I am down 30 percent, and some of that is 
attributable to the moratorium.'' That is going to be tough, 
evidentiary-wise, for me to distinguish. I am not sure I will 
be able to. That will be a more problematic issue.
    Mr. Poe. The last question regarding sort of the statute of 
limitations. Do you have a statute of limitations that you are 
looking at, from when the accident occurred to when, 
eventually, will all claimants be paid through your agents?
    Mr. Feinberg. My understanding is the current protocol 
urged a 3-year statute of limitations. In other words, the 
facility, once up and running, that I am administering, would 
be administered for 3 years, after which it would terminate on 
a date certain, and claims would have to be brought within that 
3-year period.
    Mr. Poe. Thank you, Madam Speaker.
    Ms. Jackson Lee. Thank you. The gentleman yields back. The 
gentlelady from California, Ms. Sanchez, is recognized for 5 
minutes.
    Ms. Sanchez. Thank you, Ms. Chairman. Mr. Feinberg, I want 
to express my appreciation for you being here today and 
answering our questions. And some of them may be a little bit 
duplicative, so I am going to apologize for that. But I want to 
start by asking you sort of some process questions and then 
some substance questions, if that is okay.
    Who is helping you to develop the process under which 
claims are going to be guided?
    Mr. Feinberg. Have I developed a process?
    Ms. Sanchez. Who is helping you establish the process under 
which claims will be processed?
    Mr. Feinberg. I am relying on, first and foremost, the 
deputy who has worked with me in all of these other claims, 9/
11 and Virginia Tech and Agent Orange, Camille Biros. She is in 
my firm. She has been with me as a permanent employee. Then we 
are relying on outside consultants. Garden City, Brown Greer in 
Virginia. We are relying on people in the Gulf; the Worley 
Company from Hammond, Louisiana, which has been already 
processing claims, over $200 million worth of claim.
    Most of the help that I will be relying on will be local 
help. You can't do this from Washington. Somebody else 
mentioned this. You need trusted people from the community, and 
we will be using those vendors.
    Ms. Sanchez. In any part of that process are there BP 
employees that are assisting in that claims process?
    Mr. Feinberg. Well, there won't be in a few more weeks. 
There may be one or two more consultants. But right now 
everybody is working for BP. In a few more weeks, when the 
facility replaces BP, we will be totally independent, without 
BP employees, other than maybe we want a few in transition as 
consultants.
    Ms. Sanchez. Will you be, at that point when the facility 
opens, relying on any of the guidelines that BP previously 
established?
    Mr. Feinberg. No.
    Ms. Sanchez. So completely independent?
    Mr. Feinberg. We will look at those guidelines, decide 
whether we independently verify and ratify them, but we will 
have our own system, our own criteria, our own procedures.
    Ms. Sanchez. And you established earlier that BP is paying 
the salaries of staff that will be assisting you, is that 
correct?
    Mr. Feinberg. BP will be ongoing paying the staff.
    Ms. Sanchez. So when the facility opens, BP will also be 
paying those salaries as well?
    Mr. Feinberg. Yes. And I guess who else? I mean, BP better 
be paying the salaries of everybody associated with this 
because when you try and think of who else might pay, it is a 
pretty short list, I must say.
    Ms. Sanchez. I happen to be in agreement with you there. My 
question for you, though, is will the salaries that are being 
paid for the staff that are going to be assisting in the claims 
processing, will those salaries--will that payment come from 
the Gulf Coast Compensation Fund itself or that fund is simply 
for the claimants?
    Mr. Feinberg. Everybody associated with the facility that 
isn't a BP employee, all of our claims processors, once the 
facility takes over, all of that infrastructure payment will 
come out of the $20 billion facility. It will be paid by the 
$20 billion, which is, of course, indirectly BP also. I am 
pretty confident that the entire infrastructure, the entire 
salary of everybody associated with this facility, will be 
covered--more than covered by the interest on the $20 billion.
    Ms. Sanchez. Okay. That was what I was getting at, is who 
bears the ultimate cost of those salaries. You said that--I 
believe you said, or it might be in your written testimony, 
that there will be three-judge panels to hear appeals of 
awards, is that correct, or appeals of denied claims?
    Mr. Feinberg. That is right. It doesn't have to--it will be 
a three-member panel. I am not sure they have to be ex-judges 
or anything.
    Ms. Sanchez. I meant three adjudicators.
    Mr. Feinberg. Yes, there will be three claims appeal 
neutrals, right.
    Ms. Sanchez. Thank you. So claimants will have an 
opportunity then if they are denied claims to appeal if they 
don't agree with that decision to this three-member panel.
    Mr. Feinberg. Yes.
    Ms. Sanchez. Will claimants also have the opportunity to 
appeal awards that they think are not fully compensating them?
    Mr. Feinberg. Yes.
    Ms. Sanchez. And those will be heard by these
    three-member panels.
    Mr. Feinberg. Yes.
    Ms. Sanchez. How long will claimants have to decide to 
appeal either their denials or the compensation?
    Mr. Feinberg. I don't recall. I think 10 days. I don't want 
to delay excessively getting money into the hands of claimants 
that are unhappy with their award.
    Ms. Sanchez. I understand that, but my concern is that I 
feel that it is likely that many of those claimants may be 
representing themselves pro se because it is sort of set up in 
a way to try to keep you from litigation and attorneys, et 
cetera. And I think sort of the timeframe, although you don't 
want to delay too long, you also don't want it to be too brief 
for somebody to really take advantage of the appeals process.
    Mr. Feinberg. I agree with that. Let me also say this. I 
must say, if you want one obvious example of my failure in this 
process, it is if people are appealing my--what I thought was 
sound judgment. If people start appealing to this three-member 
panel, that is a significant bit of evidence that I am not 
satisfying claimants. And I will view appeals, if they are 
necessary, as a sign of failure. And that is why I am hoping 
the number of appeals are pretty small.
    Ms. Sanchez. Okay. Another question I have about the 
appeals process is, will BP have the opportunity to appeal a 
claim if they think that----
    Mr. Feinberg. The current protocol states that BP can 
request the right to appeal, but only I can grant or certify 
that right to appeal, which will not easily be permitted.
    Ms. Sanchez. I appreciate the clarification.
    The last question that I have for you is on the issue of 
undocumented workers who may have legitimate claims under the 
GCCF. I know that the 9/11 Victims Compensation Fund did allow 
undocumented workers to people regardless of their current 
immigration status to make claims.
    What is your opinion regarding potential claims of folks in 
this scenario?
    Mr. Feinberg. I must say I will do whatever the law 
requires. Now in 9/11, Congresswoman, the Administration--the 
Bush administration--went to the Department of Immigration and 
received a ruling from the Department that permitted 
undocumented workers to be eligible, their families to receive 
full compensation just as if they were citizens of the United 
States. I have got to follow the law. I have got to follow the 
tax laws. I have got to follow the immigration laws. If this 
Commitee or if whoever wants to include in compensation under 
this program undocumented workers, and we can get a ruling from 
Immigration that it is lawful, that it is appropriate, that it 
is the right thing to do, I will do whatever is agreed upon. I 
want to follow the law and I want to do whatever is permitted 
to maximize compensation.
    Ms. Sanchez. Perfect. Thank you for your answer. And I 
thank the Chairwoman. I yield back.
    Ms. Jackson Lee. I thank the gentlelady. The gentleman from 
Virginia is recognized for 5 minutes, Mr. Scott.
    Mr. Scott. Thank you. And thank you, Mr. Feinberg, for 
being with us again. You indicated something about your staff. 
Do you have any idea of the number of lawyers you are going to 
be hiring and paralegals and other staff persons?
    Mr. Feinberg. No. I don't think this is a job that will 
require a great many lawyers on my staff. Some. I am a lawyer. 
This is a job that will require expertise in claims processing, 
in claims evaluation, in evaluating the legitimacy of proof of 
claims. I don't think this is a big project for lawyers, 
myself.
    Mr. Scott. Do you have an idea about the number of staff 
people?
    Mr. Feinberg. We are trying to develop that now. Now BP, 
Congressman, has hired 1,600 people that are currently employed 
throughout the Gulf--local people, primarily local people--who 
have been evaluating and processing claims. And they have paid 
out, as you know, over $200 million in emergency payments. We 
will hire additional people as needed. We will reduce the size 
of overhead as needed. We will know more about that, and I will 
be glad to notify your office within the next 30 days.
    Mr. Scott. Language is a challenge. Will you be hiring 
people with appropriate language skills?
    Mr. Feinberg. Yes. We are already doing that. As I 
mentioned to Congresswoman Chu earlier, we have reached out to 
the Vietnam organizational community, Cambodian organizational 
community. We will hire as many experts as needed to make sure 
that whatever language barriers, cultural barriers, we have got 
to overcome that because we have got to get these people to 
file.
    Mr. Scott. You mentioned you won't have that many lawyers 
and indicated in previous answers that you are working with the 
Trial Lawyers and the ABA and others to try to get volunteer 
lawyers. Is it your understanding that many of these will be 
eligible for Legal Services Corporation, Legal Aid Services?
    Mr. Feinberg. Yes. We are looking for any and all local or 
national organizations to help us with pro bono legal 
assistance for claimants.
    Mr. Scott. The claim for injuries, will claims for injuries 
include pain and suffering or just medical expenses?
    Mr. Feinberg. Well, you know, I knew you would hit me with 
a good question. Under the 9/11 Fund, as you will recall, pain 
and suffering associated with a physical injury was included. 
And I have got to think about that. I think if you are going to 
be consistent with the 9/11 Fund, it should be.
    Mr. Scott. You probably have some things that are probably 
more intense in this situation than 9/11. You will have 
psychological situations where it is my understanding that the 
requests for mental health services has gone up significantly 
in the Gulf. Would that be a compensable injury?
    Mr. Feinberg. I doubt it. I doubt it. We dealt with this in 
9/11. If you start compensating purely mental anguish without a 
physical injury--anxiety, stress--we will be getting millions 
of claims from people watching television. I mean you have to 
draw the line somewhere. I think it highly unlikely that we 
would compensate mental damage--alleged damage--without a 
signature physical injury as well.
    Mr. Scott. Will you be doing cleanup expenses?
    Mr. Feinberg. No, not on my watch.
    Mr. Scott. Business losses?
    Mr. Feinberg. Yes.
    Mr. Scott. You mentioned, I think in a previous answer, 
people working off the books, how indirect general business 
losses would be compensable. Because the economy has tanked, so 
everybody is losing.
    Mr. Feinberg. We have got to draw that line, what is 
eligible and not eligible. Direct cause, easy. Fishermen, 
shrimpers, oil on the beach. We are not going to pay a 
restaurant in Richmond that says its business is down because 
it can't get Gulf shrimp. I don't think any court would allow 
that. Even in Virginia they wouldn't allow that. So we are 
going to have to draw the line somewhere.
    Mr. Scott. What about a department store in New Orleans?
    Mr. Feinberg. I am sorry?
    Mr. Scott. What about a department store in New Orleans 
that has a significant diminution in sales because nobody is 
working?
    Mr. Feinberg. The question there is should we say to that 
department store in New Orleans, Your business is down in part 
certainly because of the spill. Tourists aren't coming and 
buying. Maybe one answer for that department store is, You are 
eligible. But we will give you whatever you prove is your loss, 
we will give you 20 percent or 40 percent. We have got to come 
up with a creative way--I haven't finalized it yet--to decide 
what is eligible, what is ineligible, and what might be 
eligible but a partial payment. And any ideas you have, 
Congressman, I welcome your thoughts.
    Mr. Scott. I think your selection was as a result of the 
fact that you had been in this unchartered waters in other 
situations, so we are counting on you to come up with some fair 
resolutions.
    How timely should people expect their compensation; how 
quickly should they expect to get paid?
    Mr. Feinberg. That is key. I think that once they are 
deemed eligible and they have corroborated or proven their 
loss, if it is an emergency payment, we should get that payment 
out within 2 days.
    Mr. Scott. Two days.
    Mr. Feinberg. Once, here is the claim, now I have proven my 
claim. I need money for my mortgage, to put food on the table. 
I am out of work. Within 48 hours we should get them a check.
    Ms. Jackson Lee. The gentleman's time has expired. Let me 
thank you, Mr. Feinberg, for the generosity of your time. You 
have been very generous with your time and with us. I think of 
the Members that inquired, I may be the only one--and I know 
that I came in after some of the questions--who started with 
the Select Committee on Homeland Security before the Homeland 
Security Committees were designed and so was engaged with 9/11, 
as all Members were, but particularly in a jurisdictional 
manner, first as a Member of the Select Committee on Homeland 
Security and then as a Member of the Homeland Security 
Committee, which I continue today. So I know how we had to 
craft your unique position after a lot of frustration. And you 
recall a lot of lawyering, a lot of people without lawyers, a 
lot of heartache that still continues, the 9/11 families that 
were frustrated, and certainly many people with who were left 
in a very, very bad economic condition.
    I remember specifically a series of latchkey children that 
were at home in apartments in New York that had to be addressed 
and were left without a parent or a major guardian. Many of 
these were single-parent homes. So you have gone through a lot.
    I also am very much engaged with a legislative initiative 
that has gone through this particular Commitee, which is the 
overdue payments to people who in New York and I guess 
specifically have indicated that they subsequently were ill and 
have never been compensated.
    So if you would indulge me for a moment. And I am from the 
Gulf region, and so I am very concerned that we get this right. 
I am somewhat, without any diminishing of the hard work that 
you are doing, concerned that we are overwhelmed and that all 
that we are trying to do will not get done.
    So my first question, with the backdrop of recognizing that 
there are still some people left behind in New York and the 
frustration we had with that claims process in some instances, 
what is your view of being able to take up, if you will, all of 
the claims that are within your jurisdiction in this region? It 
seems like claims can pop up over a series of days--next week, 
next month, next year--because the impact is just being 
generated.
    Mr. Feinberg. We will have the resources to make sure that 
any claimant in New Orleans or anywhere else in the Gulf who 
files a claim, we will have the resources, Congresswoman, to 
make sure that that claim can be processed promptly.
    Ms. Jackson Lee. And what is the comment that I heard that 
Texans cannot apply for any relief?
    Mr. Feinberg. That is incorrect.
    Ms. Jackson Lee. What about Texans whose product comes from 
their restaurant and their product comes from that area and 
they have literally been shut down?
    Mr. Feinberg. There is no geographic barrier to any 
claimant from any State applying to the claims facility.
    Ms. Jackson Lee. Then, in a meeting that you were captured 
on television and I think an oysterman, fisherman jumped up and 
indicated the potential of this being a very good year. Here is 
my concern. I have been down to that area and talked to 
oystermen. I am concerned about the Wall Street--and I only use 
that term--the business standards that you may place on an 
industry that has a different way of doing business. My concern 
is those little guys are going to be disadvantaged. If you are 
going to be using even some of the standards that the BP claims 
system used, you are not going to help these little guys. And 
they are the ones that are hurting so badly beyond those who 
tragically lost their loved ones and are still mourning.
    How are you going to be fair to an industry that many 
Americans aren't familiar with and don't meet the standard 
accounting business procedures and they feel that they are 
being put upon?
    Mr. Feinberg. Congresswoman, I am determined to do right by 
those people and those businesses in the Gulf. I will rely on 
local people who know the culture, who know the community, who 
know how people live in that vicinity. I don't begin to claim 
here in Washington to have all that information. You have got 
to rely on local people with credibility to give you that 
information.
    Now, in terms of it was going to be a very good year. Show 
me. Show me. I will bend over backwards to help these local 
businesses. I am trying to help them. Don't come to me and say, 
Trust me, it was going to be a great year. At the other end of 
the spectrum is the person who comes in and says, Look, Mr. 
Feinberg, I had this contract and I had this contract. This was 
going to be a great year. Look. Okay. That is the minimum 
proof. That is fine here. So I will work with you, 
Congresswoman, and the people down there to try and maximize 
the compensation.
    Ms. Jackson Lee. Well, I am going to reach out on some 
small businesses whose restaurants were named after Louisiana 
names and they are placed in Texas. And my understanding is 
that they have been treated poorly. But just, if I could, 
engaging you, how do you prove that you left your product that 
was thriving and growing on the seabed, on the bottom of the 
ocean bed, that there is a mountain of oysters or a mountain of 
shrimp, a mountain of other fish that you could have caught. 
How do you prove that other than to say that you are an expert 
or you do some deepsea diving and you say look at all these 
oysters that are not usable now. Some of them have been soiled, 
if you will, and are not edible; that that would have been a 
good year. I work hard and I know I would have gotten 90 
percent of those and been really having a thriving business. 
How do you do that?
    Mr. Feinberg. I will give you a couple of ways to do it. 
One, show me before the spill for the last not 1 year; Katrina 
year. Show me 3 years. Show me how successful you were in the 
past in harvesting those oysters. Two, if you can't do that, 
show me how--bring in evidence from your colleagues, from your 
other captains, from other people in that community that will 
vouch for your optimism in terms of going forward. I will work 
with you to try and come up with a credible formula that will 
allow you compensation without a lot of Wall Street or business 
methodologies and requirements. I am trying to help.
    Ms. Jackson Lee. So, capture it again. Show you what?
    Mr. Feinberg. Either show a contract. Show us what in the 
past what you have done that now you can't do. Claims facility, 
$500,000 3 years ago, $600,000 2 years ago, $100,000 last year, 
Katrina. Whatever. This year, nothing. $25,000. I have shown 
you the difference. Good enough.
    Ms. Jackson Lee. So if they can find or show past receipts 
or a statement from restaurant X that I bought $55,000 worth of 
product, you would be able to use that kind of material to 
predict and to be able to provide for them.
    Mr. Feinberg. That is one way. Another way. Mr. Feinberg, I 
just started this company. I don't have past records. But I am 
bringing in Captain Jones and Captain Smith and Captain Brown 
and they will all vouch for the fact that but for the spill, 
this is what I would have done, this is where we would have 
harvested. Give me some credible argument that will allow me to 
pay the claim.
    Ms. Jackson Lee. Let me just ask this before I yield to the 
gentlelady from California. BP's obligations, are these claims 
binding on BP and could BP appeal every decision of the claims 
facility?
    Mr. Feinberg. No. Under my current protocol, which I am 
working on with the help of the Judiciary Committee staff, 
there could only be an appeal by BP in any case if I certify 
it. If I agree that it is an important enough issue, we will 
appeal it. Otherwise, BP has no right to appeal any claim.
    Ms. Jackson Lee. Thank you. The gentlelady from California 
is recognized.
    Ms. Waters. Thank you very much, Madam Chairwoman. I am 
pleased I was able to get here, even though a little bit late, 
because I wanted to certainly meet Mr. Feinberg and to tell him 
it gives me a level of comfort that you are now in a position 
to construct and implement this claims process. I appreciate 
the work that you did after 9/11 with New York and I am looking 
forward to your creating the kind of protocols that will get us 
into a claims system that is fair and will compensate those who 
have been harmed in the right way.
    I have a few questions I would like to ask you. And some of 
these questions may be a little bit premature, given that you 
are still working on these protocols. The first thing I would 
like to ask is about the $20 billion. That amount was 
negotiated kind of by the Administration. And I am wondering if 
this includes a cap on liability. That somehow those persons 
that participate in getting compensated out of this $20 
billion, if they accept a settlement, they cannot sue. Is that 
correct?
    Mr. Feinberg. That is correct, if they accept, 
Congresswoman, the lump some payment that I offer them. 
However, any claimant who is eligible and can prove the claim 
will receive up to 6 months emergency payment without any 
obligation of any type to release or promise not to sue. So it 
is only if a claimant comes to me and says voluntarily, Mr. 
Feinberg, I have already got my 6 months payment, and thank 
you, but I want now a lump sum payment for the remaining 
present damage. Only if they like that amount do they waive 
their right to sue BP.
    Ms. Waters. Was there a cap on liability in the 9/11 claims 
process?
    Mr. Feinberg. No, nor is there a cap on liability in this 
process.
    Ms. Waters. But in the New York process, if you accepted 
whatever amount and you discovered that there was a lingering 
health problem, for example, did you have the ability to sue?
    Mr. Feinberg. No. In the 9/11 Fund, which I administered, 
if you settled with the 9/11 Fund with full disclosure that it 
was a waiver of any future claim, you had to waive that claim. 
And if you didn't want to, don't come into the fund.
    Ms. Waters. You can sue.
    Mr. Feinberg. They have that choice.
    Ms. Waters. As an individual.
    Mr. Feinberg. I am sorry?
    Ms. Waters. You can sue as an individual.
    Mr. Feinberg. You can sue as an individual if you didn't 
want to take the payment. Same as this.
    Ms. Waters. That is right. Very good.
    Now I am focused on New Orleans because they had something 
called the Road Home Program. It was a mess. And I am a little 
bit upset that there was money left over that we eventually 
reclaimed in this recent conference committee that we just did, 
and there are people who are left who still did not get their 
money or the right amount of money and they still have not 
rehabbed those homes, what have you. So I certainly want to see 
this claims process work a lot better than New Orleans.
    Now, in this process here is what I think you are going to 
find. I have gotten to know the black oyster fishermen, for 
example; the African American oyster fishermen, with Mr. Byron 
Encalade, a wonderful man, who knows the history, four 
generations of fishermen down there in the area. When they 
first went into the claims process prior to the Administration 
getting involved and agreeing on this $20 billion amount, the 
initial attempt by BP to get them to waive rights if they 
accepted small amounts was disturbing. And I certainly did not 
want that to be the kind of thinking that would lead us into 
that overall claims process.
    So you have got a handle on that. What I am worried about 
is this. We are going to have fishermen without receipts. We 
are going to have fishermen without IRS filings. We are going 
to have fishermen who maybe are not that literate. They have 
fished all of their lives. They earn a living for their 
families in the villages that they live in but they are not the 
kind of structured business people that you could say, I want 
your audited receipts in order to prove that you are eligible 
for this claim.
    What alternatives do you have to help these people get some 
compensation, justly so, without all of that kind of 
documentation? What can you substitute for the kind of 
documentation that I just alluded to?
    Mr. Feinberg. Mr. Jones, you are a fishermen. Come in and 
have your ship captain tell me what he paid you. I don't need 
documentation. Have your ship captain come. Have your priest 
come in and verify. I need some corroboration, some proof. I 
don't need extensive business records. You have got to 
demonstrate that you have a valid claim. But I will bend over 
backwards to try and find----
    Ms. Waters. Will you define this in your protocols, how you 
have an alternative system of proof; that verification by 
legitimate folks; whatever, whatever, whatever. You will spell 
that out?
    Mr. Feinberg. Absolutely.
    Ms. Waters. Okay. That is very good.
    Mr. Feinberg. I do not need IRS returns and expensive 
business documentation. I do not need it.
    Ms. Waters. All right. Well, I thought I heard something, 
but I didn't. Unanimous consent for 1 minute.
    Ms. Jackson Lee. The gentlelady is recognized for 1 minute.
    Ms. Waters. Thank you. I am learning a lot about the oyster 
beds and I haven't figured out yet because I haven't had a 
chance to talk to Mr. Encalade about it so that he can really 
explain it to me, about these oyster beds. I was reading last 
night that the oysters are dying because the fresh water is 
getting into them and killing them. I couldn't determine 
whether or not these oyster beds are natural or they are 
designed; they belong to one entity or they belong to 
everybody. Have you gotten into that yet?
    Mr. Feinberg. No.
    Ms. Waters. Okay.
    Mr. Feinberg. You have anticipated, as you usually do, 
Congresswoman, you have anticipated another question or issue I 
haven't thought of. And I will look into it.
    Ms. Waters. That is real important because it seems to me 
that if everybody has got access to certain oyster beds, you 
have got to figure out what they have got coming to them.
    Now having said all of that, will you print some kind of 
pamphlet or brochure that is instructive that people can at 
least use to say, Oh, this is how the process works?
    Mr. Feinberg. We will have all of that. We will have it at 
35 claims offices, we will have it online, we will have it in 
different languages. We will have frequently asked questions. 
Here is how you go about filling out the form. We will help you 
fill out the form. We will do all of that.
    Ms. Waters. Last, and I will just wrap this up, there are a 
number of organizations that are trying to help people down 
there, the nonprofits, et cetera. But, as you know, they 
survive on donations, et cetera. Have you got a little advocacy 
money in this $20 billion that you can help pay some of these 
not-so-big organizations that are helping them?
    Mr. Feinberg. We will look into that. I must say, 
Congresswoman, most of those organizations have not asked for 
it. They are working pro bono. They are glad to help, 
regardless of funding from the $20 billion. But I will look 
into it.
    Ms. Waters. Look into it, because they come to us later and 
say, We have been doing all this work and we can't get any 
money for it. If we get in front of it, we might be able to 
work with it. Thank you so much for being here today.
    Ms. Jackson Lee. Thank you very much. Mr. Feinberg, let me 
just wrap up with a few rapid-fire questions and build on what 
my colleague from California just asked you. Does that mean, 
and you are willing to say at this hearing, that the oystermen, 
shrimpers, and fishermen who may have engaged with the BP 
claims process and may not have gotten it right because of what 
you have just articulated, are you saying to them now--because 
one of the issues is for outreach. For them to get this 
information way off where they are, they may be on vessels of 
opportunity and doing some work and not getting all that they 
need. Are you saying to them now they can reach out to this 
claims process and you will take what they have already been 
given or not given and you will reassess it or assess it if it 
is a new start?
    Mr. Feinberg. Yes.
    Ms. Jackson Lee. Thank you.
    Pending legislation. As you well know, your working with 
our Judiciary staff might impact what BP's liability would be. 
My question is in particular if, for example, laws are passed 
that suggest that pecuniary or nonpecuniary damages became 
available, would your rules of protocol change to assess those 
nonpecuniary damages, particularly mental health and others 
that are drastically needed?
    Mr. Feinberg. Yes.
    Ms. Jackson Lee. In the amount of staffing that I think my 
colleague inquired of, you said that you are using some 
familiar faces but you are also going to be looking in the 
region. Do you know when you really staff up how many you might 
be working with in your operation?
    Mr. Feinberg. No, Congresswoman, not yet. I will know in a 
few more weeks.
    Ms. Jackson Lee. You indicated to a Member. Would you get 
it to the Commitee and would you get it to myself, please, as 
someone from that region?
    Mr. Feinberg. Yes. What I wanted to add is just that if you 
have--if you can vouch for vendors or individuals in the region 
who would be a wonderful addition to what I am doing, by all 
means, I welcome those names.
    Ms. Jackson Lee. I think it is important. As you well know, 
the economy is such that we hate to take advantage of a 
disaster and devastation. But one of the things I want to 
emphasize is small businesses, minority-owned businesses, 
women-owned businesses, and particularly as it relates to 
individuals, that you have a range of diversity. Is that 
something that you all will be looking at in terms of both 
employees and vendors?
    Mr. Feinberg. Yes. And the protocol itself will so state.
    Ms. Jackson Lee. I think I raised the question of
    nonphysical health claims. Because what you are saying is 
until you have that protocol, that the law is passed, you will 
be able to reassess what their status is.
    The final point that I would like to raise is what I raised 
at the very beginning--the aftermath. The individuals who in 9/
11 say they have been made sick or something happened to them 
pursuant to this disaster, what kind of range do we have with 
that potential, and do you believe that this fund is going to 
run out? And just as some instructive direction to many of us, 
after seeing these two disasters that you also handled at 
Virginia Tech--I think you said that--wouldn't it be effective 
to have at least a core structure in the Department of Homeland 
Security that could be activated quickly, using your protocol, 
not precluding your protocol, but having something so we didn't 
have what we have with BP, where it was an individual system? 
They tried, but many complaints.
    Mr. Feinberg. It is an interesting idea. After 9/11 there 
was some legislation considered that would put in place some 
sort of triggering mechanism in the event that there was 
another unanticipated disaster. That legislation, I think, went 
through the House. It died over in the Senate Judiciary 
Committee. Something like that sort of anticipating the next 
time might be--I will work with you if you would like on that.
    Ms. Jackson Lee. I would really like to do so. The question 
of aftermath sicknesses and illnesses and BP running out of 
money. Those two questions, the aftermath and BP running out of 
money. If you could comment on that.
    Mr. Feinberg. I doubt very much that BP is going to run out 
of money. BP has made it pretty clear that it will not run out 
of money, that it will honor any and all obligations even above 
the $20 billion. And I think it would be a disaster if BP was 
unable to shoulder its obligations here and keep people working 
in the Gulf. In terms of the aftermath, one of the goals I have 
got over the next 3 years is to try and review the nature of 
the claim population and try and get handle on how likely or 
how broad that aftermath will be.
    Ms. Jackson Lee. You have been very kind. I think we 
respect the structure that the Administration has worked out. 
We respect that there are hardworking people at the company of 
BP. I think we should respect those workers who are just doing 
their work every day. But some people fear that they will run 
out of money. And they look to the past record. So I think it 
will be very important for your constant reaffirmation as you 
go through this process that your doors are open, that you are 
working, that if you just got the word August 10 or just got 
the word September 1, that you should hear that Mr. Feinberg's 
door is open, that you should present your claim and I would 
argue vigorously, Mr. Feinberg, that you do a massive outreach. 
People live in all corners of Louisiana and Texas, and 
sometimes they are focused simply on getting bread on the 
table. And it is amazing, and I think you knew it, in Hurricane 
Katrina there are people still trying to organize a complaint. 
Maybe in the 9/11 you have some aftermath. I just want to make 
sure that is going to happen.
    Mr. Feinberg. Will do.
    Ms. Jackson Lee. Thank you for your testimony. Thank the 
witness for his generosity in his time. Without objection, 
Members will have 5 legislative days to submit any additional 
written questions for you, which we will forward and ask that 
you answer as promptly as you can to be part of the record. 
Additionally, let me thank you on behalf of the Members for 
your agreement to work with a number of us. We will reach out 
to you on legislative fixes and reviews.
    Finally, the record will remain open for 5 legislative days 
for the submission of other additional materials.
    The hearing is now adjourned.
    [Whereupon, at 12:50 p.m., the Commitee was adjourned.]

                                 
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