BP Oil Spill Compensation Account Still Not FundedJul 28, 2010 | Parker Waichman LLP
BP has yet to deposit any money in the oil spill compensation fund announced by the Obama administration earlier this summer. During a meeting in Bayou La Batre, Alabama last week, Ken Feinberg, who has been tapped to administer the $20 billion BP oil spill compensation fund, said he could not begin making payments to businesses and individuals until BP makes a deposit.
Under an agreement it reached with the Obama administration, BP is supposed to put $5 billion a year over the next four years into an account to pay for spill-related costs, such as claims, environmental restoration and cleanup costs.
At last week’s meeting, Feinberg said he doesn’t have the authority to force BP to deposit the money, but that he expected the process to be finished in “the next week or so.”
A BP spokesperson told the Mobile Press-Register last week that the company’s agreement with the White House is still being finalized. “Funds will be made available immediately upon the conclusion of this process,” he said.
Today, the Press-Register is reporting that the White House expects to finalize the deal “soon.” Why it has yet to be finalized is not known.
Once the agreement is finalized, Feinberg has said he would take over the claims process from BP. Once that happens, he said he will distribute emergency payments worth six months of lost wages or business income to those with valid claims. According to the Press-Register, those payments will end once the gushing oil well in the Gulf of Mexico is permanently capped. Claimants will then have three years to ask for a lump sum payment to cover all of their damages.
However, once a lump sum is accepted, a claimant will give up the right to sue. Those not satisfied with a lump sum offer can turn it down and retain their rights under the law.
At the Bayou La Batre meeting, Feinberg also said he was considering giving partial payments to companies and people who are indirectly impacted by the spill, and would do something for property owners whose real estate values declined because of the disaster, the Press-Register said.
All of the uncertainty over the compensation fund has many worried. Last week, we reported that lawyers representing victims of the BP oil spill had filed a motion with U.S. District Judge Carl Barbier in New Orleans requesting that details on the fund be put in writing. The motion said that BP should produce “any and all trust documents, escrow agreements or other formation documents or agreements to which BP is a signatory’’ relating to $20 billion fund, as well as another set up to aid oilfield workers hurt by a U.S. offshore drilling moratorium imposed after the spill.