BP Agrees To $20 Billion Fund To Help Gulf Victims
DEBORAH AMOS, host:
It's MORNING EDITION from NPR News. Im Deborah Amos.
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And Im Steve Inskeep. Good morning.
The escrow fund for taking care of Gulf Coast damages brings to mind the government's fund for the financial bailout. Nobody really knows how much it will cost to fix the problem so theyve chosen a very large number to start.
AMOS: BP says it will put $20 billion in that fund. That is by no means the total payment. But the president says BP has the financial strength to meet its obligations.
NPR's John Ydstie reports.
JOHN YDSTIE: BP has said all along it will compensate businesses and individuals harmed by the oil spill. President Obama says the escrow fund provides a financial and legal framework to make sure that happens.
President BARACK OBAMA: This $20 billion will provide substantial assurance that the claims people and businesses have will be honored. It's also important to emphasize this is not a cap. The people of the Gulf have my commitment that BP will meet its obligations to them.
YDSTIE: BP chairman Carl-Henric Svanberg, speaking in the White House driveway after the meeting, said the agreement should give the American people confidence that BP means what it says.
Mr. CARL-HENRIC SVANBERG (Chairman, BP America): We will look after the people affected. And we will repair the environmental damage to this region and to the economy.
YDSTIE: The president said that during their meeting, he told the BP chairman to keep in mind that many individuals and businesses on the Gulf Coast, decimated by Hurricanes Rita and Katrina, and the deep economic recession, had no financial cushion to fall back on.
In his post-meeting remarks, the president addressed those people directly.
President OBAMA: So if you or your business has suffered an economic loss as a result of this spill, you'll be eligible to file a claim for part of this $20 billion.
YDSTIE: The two sides agreed that an independent administrator would determine the legitimacy of the claims and distribute the funds. Kenneth Feinberg, who oversaw payments to the families of the 9/11 victims, will serve in that role. More recently, Feinberg has been the administration's pay czar, limiting salaries at companies that got extraordinary government aid during the financial crisis.
During his Oval Office speech Tuesday night, President Obama said he was going to essentially order BP executives to set up the escrow account, begging the question as to whether the president had the legal authority to do that.
Steve Roady, an attorney at Earthjustice, a public interest law firm, says the president does.
Mr. STEVE ROADY (Earthjustice): I think the government has a very strong case that they have the authority to require the responsible party to pay all the costs, especially with a disaster like this.
YDSTIE: Roady says the president's power flows from a 1990 amendment to the Clean Water Act called the Oil Pollution Act. He acknowledges the act doesnt specifically mention economic compensation to individuals. But Roady says another law, the Outer Continental Shelf Lands Act, discusses restitution for harm to property and the human environment.
Mark Cohen, vice president for research at Resources for the Future, an energy, environment and natural resources think-tank, says in disasters like this, presidents often assume authority and justify it later. But he said President Obama could also wield a big stick. For instance, he could make it very difficult for BP to access U.S. oil reserves or do business in the United States.
But, says Cohen, BP had other reasons to acquiesce to the president's call for an escrow fund.
Professor MARK COHEN (Vice President, Resources for the Future): You know, they have an enormous public relations problem. They're trying very hard to work through that. Realistically, they're looking at $20 billion and saying, we're going to have to pay one way or the other. And I think they're acting - you know, it's just an attempt for them to show some good faith.
YDSTIE: In response to another request from the president, BP set up a much smaller, $100 million fund to compensate oil rig workers laid off as a result of the president's six-month moratorium on new deepwater drilling. A BP legal advisor called it a goodwill gesture, but said the company does not accept any legal liability for the effects of the moratorium.
John Ydstie, NPR News, Washington.
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