Discuss as:

Feinberg: Tough 'judgment calls' await on spill claims

Kenneth Feinberg, the man charged with administering damage claims arising from the BP oil spill in the Gulf, told a House committee on Wednesday that the most difficult task facing him will be making “judgment calls” on claims filed by merchants and workers who haven’t been directly hurt by the environmental disaster.

“It’s easy if you are a beachfront restaurant with oil or a fisherman with oil (who) can’t harvest,” he said. “… It’s the tough case -- ‘I own a motel 20 miles from the beach; I’ve lost 30 percent of my guests.’ Is that a legitimate claim?”

Feinberg, 64, also cited real estate agents and T-shirt manufacturers as examples of businesses that have suffered secondary harm from the spill.

“At some point, it’s a judgment call,” he told members of the House Judiciary Committee of the “tough decisions” that lay ahead. “This side of the line, eligible; this side of the line, ineligible.”

Feinberg, who said he expects to complete the transition from BP’s claims process to his independent operation by next month, explained that Gulf residents and companies would be able to receive an emergency payment equal to six months of wages or income without waiving the right to sue. But those who accept a second, final payment would agree not to litigate.

He also said that there would be a three-year limit for filing claims.

Rep. Darrell Issa, R-Calif., questioned whether Feinberg also would compensate Gulf residents and companies for losses attributable to what he called an “arbitrary moratorium” on deepwater oil drilling.

“Not on my watch,” Feinberg responded, while acknowledging that determining whether economic impact could be traced directly to the spill – and not the moratorium – would not always be crystal clear.

Feinberg, who also has overseen federal effort to compensate victims of the Sept. 11 terror attack and to set fair compensation for executives of companies that received federal bailout funds, also testified that he is hopeful that the $20 billion that BP has set aside to pay damage claims arising from the Deepwater Horizon accident will prove sufficient to pay “valid and legitimate claims.” But he also noted that the oil company has pledged to pay more if the fund is exhausted.

He also took issue with a recommendation by Rep. Stephen Cohen, D-Tenn., that BP be placed into receivership, a form of bankruptcy in which a court-appointed trustee would oversee a reorganization of the company. That, he said, would hinder prompt payment of claims filed by Gulf residents and businesses.

“I think it would be a monumental tragedy if BP was forced into bankruptcy,” he said.

-- Additional reporting by Rich Gardella and Amna Nawaz, producers, NBC News Washington bureau.