UPDATE 1-Compensation czar takes charge of $20 bln BP fund

* Feinberg takes over administration of $20 bln fund

* He defends independence, vows fairness over claims

* Florida attorney general calls new process unfair
(Recasts with fresh quotes, detail)

By Matthew Bigg

BILOXI, Miss., Aug 23 (BestGrowthStock) – A $20 billion
compensation fund for economic victims of the BP Plc (BP.L: )
(BP.N: ) Gulf oil spill opened for business on Monday amid
accusations that rules set out by its administrator are
unfair.

Hundreds of people filed for an emergency payout with the
Gulf Coast Claims Facility after its offices opened in the
early morning, fund administrator Kenneth Feinberg told a town
hall meeting of fishermen and coastal residents in Biloxi,
Mississippi.

Feinberg takes over from a BP payments system that
disbursed $375 million, but he sought to distance himself from
that process and from the U.S. government, promising more
generous treatment and a faster disposal of claims.

“I don’t care what BP did. I’m in charge now,” Feinberg
told a meeting in Bay St. Louis for people affected by the
spill. “I don’t care if BP denied your claim. File it again. I
might find you eligible. It’s a new day.”

Compensation is a heated issue after the leak that began in
April when a BP rig in the Gulf of Mexico exploded and sank
killing 11 workers and unleashing millions of barrels of oil
before it was plugged in July.

The decision to submit a claim is voluntary but anyone who
provides paperwork in support of a claim would be paid within
48 hours if an individual and within one week if a business,
Feinberg said.

Many Gulf coast residents have been frustrated by the slow
pace of the claims process and skeptical about whether they
will get fair and prompt treatment.

“I don’t trust him,” said Biloxi resident Linda StMartin
after attending a town hall meeting. “I think he is a very
honorable man but I think he is boxed in by these very narrow
proscribed limitations” of the fund.

RIGHT TO SUE

BP set up the fund in June under White House pressure to
make reparations for losses sustained in the fishing, tourism,
housing and other industries in the Gulf coast states of Texas,
Louisiana, Mississippi, Alabama and Florida.

A separate $100 million is set aside for losses sustained
due to a federal six-month moratorium on new offshore
drilling.

Feinberg was named compensation czar because of his
reputation for fairness acquired administering the Sept. 11
fund and determining executive pay for companies bailed out by
the government after the financial crisis.

But the spill fund may provide an even tougher challenge,
according to insurance experts who said calculating claims for
businesses that have lost money is fraught with difficulty.

One point of dispute is the length of time during which
people can file a claim before they must waive the right to
also sue BP. Another is the rules surrounding claims for a
final payout, given that the full extent of losses from the
spill remains unknown.

For the next six months, anyone claiming an emergency
payment can also sue BP at a future date. But beyond that
period, claimants would forfeit the right to file against the
company, Feinberg said.

Florida’s Attorney General Bill McCollum issued a statement
last week saying the ruling favors BP and weakens provisions
advocated by state attorney generals along the coast.

“The current process appears to be even less generous to
Floridians than the BP process. Such an outcome is completely
unacceptable,” McCollum said in a statement, echoed by one
issued by Alabama’s attorney general.

In his defense, Feinberg said the idea for the cut-off
point was his rather than BP’s.

“I am beholden to neither the administration nor BP. I am
entirely independent,” Feinberg said.

He said no decision had been taken on whether people who
claimed after the six-month window would be able to sue other
companies such as Transocean (RIG.N: ) and Halliburton (HAL.N: )
who were also involved with the rig.
(Editing by Philip Barbara)

UPDATE 1-Compensation czar takes charge of $20 bln BP fund