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File BP oil spill claims early, administrator says

By Bruce Nichols

HOUSTON (Reuters) - The administrator of BP Plc's $20-billion fund for victims of the worst U.S. offshore oil spill on Wednesday encouraged claimants to file early for final settlements to get the most generous terms.

"I am determined to be more generous than the courts would be..." said Kenneth Feinberg of the Gulf Coast Claims Facility on a conference call as the program stopped taking emergency claims and started work on final settlements.

He warned that Gulf Coast people and businesses who decline to settle and refuse to give BP and its contractors a release from future risk of lawsuits might end up getting less money.

"There is no guarantee that, in the future, a lump sum final payment will be as generous as it will be currently," Feinberg said.

The April 20 blowout of BP's Macondo well while it was being drilled in the Gulf of Mexico off the coast of Louisiana killed 11 rig workers and spewed more than 4 million barrels of oil, closing fisheries and stunting tourism from Louisiana to Florida.

After the emergency claims filing period ended Tuesday, Feinberg outlined a final settlement process starting Wednesday that gives claimants two options.

They can accept a lump sum final payment in exchange for releasing BP and its contractors from future liability. Or they can continue to receive interim payments in hopes of a bigger final payment in the future.

Interim payments to claimants who filed by Tuesday could continue on a quarterly basis for as long as three years, the planned life of the fund, while they await final resolution.

Claimants also have the option to appeal inside the program. A process allows claimants and BP limited opportunities to challenge the fund's decisions. A three-judge panel will handle appeals, Feinberg said.

Those who elect not to settle have the right to go outside the claims payment program and appeal to the U.S. Coast Guard and the U.S. federal courts, Feinberg said.

Critics, who note that BP hired Feinberg, have questioned the speed and fairness of compensation and the fairness of demanding that claimants promise never to sue BP or its contractors before they can get a final settlement.

"Until we finish our negotiations with Mr. Feinberg, I advise claimants against signing a release or accepting a final payment without first consulting an attorney," Mississippi Attorney General Jim Hood said in a statement.

Feinberg said final settlements now will be more generous to cover possible future losses. He also said he is listening to critics, has made adjustments and expects to make more changes as the process evolves.

"I plan to deal with the problem," Feinberg said. "There's going to be inconsistencies. There's going to be mistakes. And I plan to address those mistakes."

Feinberg declined to estimate how many people will seek final settlements through the process. Some 7,000 already have filed final claims, he said.

BP paid hundreds of millions of dollars to victims before the fund, set up after meetings with President Barack Obama, began operation in August. The spill was halted in July and the well permanently capped in September.

Since it began, the fund has made $2 billion in emergency payments to 125,000 claimants, and the final emergency tally probably will reach $2.3 billion to 175,000 individuals and businesses, Feinberg said.

More than 400,000 claims have been filed, including a recent surge of emergency claims that could take until mid-December to clear before his staff can turn to final settlements, Feinberg said.

The fund is privately operated, but is intended to comply with the Oil Pollution Act of 1990, which requires responsible parties to compensate victims of spills.

(Reporting by Bruce Nichols. Additional reporting by Anna Driver. Editing by Robert MacMillan)

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