Louisiana is no stranger to disaster recovery. Louisianians by nature are resilient people, as are brave Ukrainians defending their homeland from Russia. In recovering from record setting hurricanes and the largest oil spill ever in U.S. waters, Louisiana has learned many lessons, many of which should inform the U.S. recovery efforts to assist Ukrainians in rebuilding their homes, businesses and lives.
When the war ends, Russia will be held accountable for damages caused to Ukraine. Lawmakers in Washington are working to ensure that accountability, with recently introduced bipartisan legislation, The Ukrainian Sovereignty Act of 2022, sponsored by Reps. Debbie Dingell (D-Mich.) and Fred Upton (R-Mich.). The legislation would allow Ukrainians impacted by the Russian invasion to seek monetary damages through the U.S. judicial system for any losses incurred, with judgments paid from seized Russian assets or Russian oligarchs the U.S. has sanctioned.
While well intended, the U.S. judicial system is not designed to handle such a large class of expected claimants efficiently. Adding to their burdens, Ukrainians would have to seek damages here, leading to a potentially long and cumbersome recovery process. Courts would most likely have to appoint a special master to administer such a huge claims pool. While U.S. citizens and Ukrainians should have access to U.S. courts to seek monetary damages from Russia’s illegal actions, lessons learned from Louisiana’s disaster recovery provide a swifter way for justice.
The BP oil spill off Louisiana’s coast resulted in two main avenues for victim awards: 1) a Victim Compensation Fund (Gulf Coast Claims Facility), and 2) the court supervised settlement program which the Ukrainian Sovereignty Act could set in motion.
The Gulf Coast Claims Facility was the victim’s compensation fund that began accepting claims in August 2010 approximately five months after the BP spill began. This fund was led by Ken Feinberg who oversaw the 9/11 Compensation Fund. Feinberg and other contractors set up offices in the impacted areas of Louisiana and other states, hired translators, held town hall meetings discussing the process and documentation needed to verify claims. In 18 months, the Fund processed 1.2 million claims for individuals and businesses paying out $6.5 billion in settlements. In some cases, emergency payments were made once a claim was deemed valid. It also paved the way for more complex litigation to proceed in the judicial system.
The U.S. District Court supervised settlement program replaced the Feinberg Fund beginning in June of 2012 where it processed more than 386,000 claims. This process led to payment offers totaling more than $9.2 billion.
The two-tiered system applied in Louisiana and other gulf coast states was not without flaws. Accusations of wrongful denial of claims or underpayments, submission of fraudulent claims and other issues surfaced with both programs but that is expected with any catastrophic claim. This process had to also factor in not so much damage to real property (as in the case of Ukraine) but loss of business revenue which is more complicated. The Feinberg Fund also overpromised on timeliness of payments requiring further oversight and improvements along the way to ensure settlements were being disbursed more effectively.
The valuable lessons learned from Louisiana’s compensation process could be incorporated into a “Ukraine Settlement Fund” system ensuring greater efficiency and transparency. For example, a claimant’s settlement could be posted on a website, an appeals process implemented, fraud hotlines available to report bad actors and the GAO could perform random audits all as a means to ensure a fair process.
A Feinberg Fund-like process is a better approach to a speedier recovery in Ukraine. Claimants could meet with U.S. insurance adjusters in the field and file their claims directly without need for legal counsel. This process would still allow Ukrainians a choice on whether to seek relief through the “Ukraine Settlement Fund” or a U.S. Court.
Dingell and Upton are on the right track when it comes to holding Russia responsible for what they have done to the Ukrainian people. They should consult with Ken Feinberg along with their Louisiana colleagues to learn what Louisiana’s lessons can teach us about the best approach to aid the Ukrainian people.
Shane Doucet is a Principal at Doucet Consulting Solutions. He has represented local governments in recovery efforts before the U.S. government for Hurricane Katrina and the great flood of Baton Rouge in 2016. He has also represented Louisiana claims contractors involved with the Gulf Coast Claims Facility for the BP Deepwater Horizon Disaster.