BP Pressured to Set Up Oil Spill Compensation FundJun 14, 2010 | Parker Waichman LLP
President Obama wants BP to establish an escrow account to reimburse victims of the Deepwater Horizon oil spill. According to The Wall Street Journal, the President is expected to make the demand in a meeting with BP executives on Wednesday.
Those who favor such a fund argue that it would provide security for oil spill victims, should BP file for bankruptcy. It could also give the government or its designees, rather than BP, control of distributing relief money, the Journal said.
Several other high ranking officials are also calling on BP to establish such a compensation fund. In a June 10 letter to BP released on Sunday, Senate Majority Leader Harry Reid (D., Nev.) and other Democrats asked BP to establish a $20 billion account. According to the Journal, the fund would be administered by an independent trustee, and would be used to pay the damages and clean-up costs associated with the spill.
Florida Governor Charlie Crist and other officials in the Gulf Coast region are also pushing for such a compensation fund.
According to the Associated Press, oil workers unable to work because there’s no deepwater drilling, stores without shoppers, hotels without guests, fishermen without clean water to fish, and states without expected revenue, could all benefit from such a fund.
Meanwhile, federal officials continue to press BP to speed up containment efforts at the site of the Deepwater Horizon oil spill. In a revised plan submitted to the government, the energy giant has outlined a strategy to contain more than 50,000 barrels of oil per day by the end of June. Currently, a containment system deployed last month is collecting 15,000 barrels per day.
The oil giant had originally planned on a gradual buildup of containment capacity, peaking at 50,000 barrels by mid-July. But the Obama administration demanded the company draw up new plans to speed up its containment operation.
It has now been 56 days since the Deepwater Horizon oil rig exploded in the Gulf of Mexico, killing 11 crew members and spawning the worst oil spill in U.S. history. Already potentially more than 100 million gallons of crude have poured into Gulf, far outpacing the 1989 Exxon Valdez disaster.
The well, which lies about 5,000 feet below the ocean’s surface, is expected to leak throughout the summer. It won’t be stopped until BP finishes relief wells it is drilling nearby, and those won’t be completed until August at the earliest.