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White House Wants Assurances BP Can Cover Claims

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White House Wants Assurances BP Can Cover Claims


White House Wants Assurances BP Can Cover Claims

White House Wants Assurances BP Can Cover Claims

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

President Obama is upping the pressure on BP to create an independently monitored escrow fund to handle claims by those affected by the Gulf oil spill. The White House hasn't put a price tag on the escrow fund it wants. But Senate Democrats called on the company to set aside $20 billion.


Now, the president meets for the first time tomorrow with BP executives, and we can expect they may discuss setting up a special fund to pay claims from people who've lost money because of the spill. That's what the White House wants, anyway.

Gulf Coast residents complained that BP has been slow to pay damages. The company's liability is likely to run into the billions of dollars.

NPR's Scott Horsley reports.

SCOTT HORSLEY: President Obama is promising Gulf Coast residents their lives will return to normal some day. But that day could be far in the future, and in the meantime, Mr. Obama wants to make sure people living paycheck to paycheck don't miss too many more.

President BARACK OBAMA: How do we structure a mechanism so that the legitimate claims that are going to be presented not just tomorrow, not just next week, but over the coming months are dealt with justly, fairly, promptly?

HORSLEY: The administration wants BP to set up an escrow fund to cover future claims and let an independent third party run it. Mr. Obama says his aides have had constructive conversations with the oil company, and White House spokesman Bill Burton told reporters traveling on Air Force One BP is likely to go along.

Mr. BILL BURTON (White House Spokesman): Right now, we're just working out the particulars of amounts, administration, things like that.

HORSLEY: The White House hasn't put a price tag on the escrow fund it wants, but Senate Democrats called on the company to set aside $20 billion. Senate Majority Leader Harry Reid says such a fund would serve as an act of good faith that BP won't try to evade its responsibility for damages.

Senator HARRY REID (Democrat, Nevada; Senate Majority Leader): Our message to BP is as simple as this: If you drill and you spill, we're going to make sure you pay the bill.

HORSLEY: The push for an escrow fund comes as BP is debating whether to suspend its dividend payment to shareholders. The company insists it has the wherewithal to pay both investors and spill victims. BP's stock has been taking a beating since the spill began. It fell again yesterday by almost 10 percent.

BP has promised to pay all legitimate claims from the oil spill, but there are sure to be questions of how far that responsibility goes: wages for the out-of-work fisherman. What about the restaurant where the fisherman used to eat? Or the oil rig worker idle because of the government's new moratorium on deep sea drilling?

Even environmental attorney David Pettit of the Natural Resources Defense Council says BP might have a hard time agreeing to the terms spelled out by Senate Democrats.

Mr. DAVID PETTIT (Environmental Attorney, Natural Resources Defense Council): We'd like you escrow $20 billion, with a B, and we'll take over claims processing. So we'll write the checks, and it'll be your money that backs them up, and you're out of the loop. You know, if I were BP, I'd have some problems with that.

HORSLEY: Still, Pettit says the government does have considerable leverage over BP. There's a criminal investigation of the oil spill, the possibility of huge civil fines, and the threat of withholding leases for future oil drilling.

Mr. PETTIT: You would think that BP having perhaps studied what happened in Alaska and the Exxon Valdez case, at some point, they're going to come to the government and say let's talk about a global deal here.

HORSLEY: Pettit says a global settlement with BP might be warranted, but environmentalists will be watching closely to see that the company doesn't get off too cheaply or end its responsibility before the oil cleanup is complete.

Law Professor Howard Erichson of Fordham Law School says there are other examples of companies setting up a special fund to pay widespread damage claims, but usually, those funds come at the end of a class action lawsuit. In this case, the fund would be set up much earlier in the process. Erichson says for BP, that might carry some advantages.

Professor HOWARD ERICHSON (Fordham Law School): By setting up a fund, it can generate some political goodwill, some public relations goodwill, and maybe put itself in a position where the compensation process will be more efficient, simpler, and just less troublesome.

HORSLEY: Of course, there's no guarantee that a compensation process run by the government or a third-party administrator would be more efficient than BP's has been. If the process remains cumbersome, the escrow fund could become just another target for Gulf Coast residents' mounting frustration.

Scott Horsley, NPR News, Washington.

(Soundbite of music)

INSKEEP: We talk with Robert Gibbs, the White House spokesman, elsewhere in today's program. And he asserts the president has the authority to force BP to write checks without waiting for a court proceeding. You can follow all of our coverage at and on Facebook, as well as on Twitter @MORNINGEDITION and @NPRInskeep.

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