Finally succumbing to pressure from a legion of Florida public officials, members of Congress and the president of the United States, British Petroleum agreed Wednesday to set aside $20 billion in an independently managed escrow account to compensate for losses caused by the Gulf of Mexico oil spill.
President Barack Obama and BPs top executives arranged Wednesday for the money to be deposited into the account over several years and to be managed by attorney Kenneth Feinberg, who oversaw the independent fund for victims of the Sept. 11, 2001 terrorist attacks.
BP, which leased the Deepwater Horizon rig responsible for the spill, will put $5 billion into the account annually for four years. An independent claims facility will be set up to manage the fund, and money from the account will be used to pay claims,judgments, settlements, natural resource damage costs, and state and local response costs. The money is not for Florida alone but for all oil-affected states.
The company is also suspending its dividend payments for the rest of the year.
The agreement comes in the wake of an Oval Office address in which Obama attempted to prove that the federal government was taking command of the oil spill response efforts.
BPs liabilities for this spill are significant, said Obama. They acknowledge that fact. And we will continue to hold BP and all other responsible parties accountable. Im absolutely confident BP will be able to meet its obligations to the Gulf Coast and to the American people."
Several Florida lawmakers and political candidates have been calling for BP to set up an interest-gathering escrow account from which the nation can draw funds, should the company become insolvent. And several of those were candidates for Florida office who claimed to have come up with the idea first.
The real No. 1 was Greenacres Sen. Dave Aronberg, a Democrat campaigning for attorney general. Aronberg called for the escrow fund on May 5. No. 2 was Sen. Dan Gelber of Miami Beach, his competitor in the Demoratic primary for attorney general, who said on June 7 that the oil giant should be paying into an escrow fund. No. 3 was Attorney General Bill McCollum, Republican candidate for governor, who didn't jump into the escrow race until June 10.
McCollum, who has claimed to make the original request for an escrow account, said this in a statement:
"As we stated when we made the original request to BP to establish an escrow fund for damages, this is an appropriate step to ensure the availability of funds for our states long-term recovery. ...Many questions remain about the structure and disbursement of these funds and how much of the $20 billion will be reserved for Florida claims.I intend to have those questions answered and guarantee that all affected Floridians are quickly and fairly compensated for their damages and losses."
Gelber said the escrow fund was a move in the right direction, but he is unsure it will be sufficient to address the costs of the spill. Oil has been leaking into the Gulf for nearly two months, with no end to the flow in sight.
He asserts that a system needs to be created to make sure recovery funds are distributed as they are needed on a state-by-state basis. Floridas economy is heavily dependent on its beaches, and it needs an overseeing local authority to compensate for lost hotel bookings, property damages and other costs to make sure it gets enough BP money.
I think there's a lot of questions still out there, and I do believe the state needs to have a commissioner who is looking out for its issues, he told Sunshine State News.
After weeks of calling for a change in the claims process, this announcement couldnt come soon enough for me, said CFO Alex Sink, a Democratic candidate for governor. Our small-business owners need cash now, and I will be watching like a hawk for an increase in the speed at which claims are paid. I will continue to fight for our small-business owners, who shouldnt have had to go through BP to have their claims paid.
Said Chief Financial Officer Alex Sink, a Democratic candidate for governor, After weeks of calling for a change in the claims process, this announcement couldnt come soon enough for me. Our small-business owners need cash now, and I will be watching like a hawk for an increase in the speed at which claims are paid. I will continue to fight for our small-business owners, who shouldnt have had to go through BP to have their claims paid.
Obama said in his Oval Office speech that he is appointing the secretary of the Navy to create a long-term Gulf Coast restoration plan to take into account the needs of states, businesses and workers. Within the state, officials are looking for ways to streamline the claims process.
BP so far has received almost 14,000 claims and paid out close to $11.25 million in compensation.
Democratic U.S. Senate Candidate Jeff Greene joined the group claiming to be among the first to call for an escrow account.
I called on BP to open an escrow account last week to ensure that they take responsibility and are held accountable, he said in a statement. I'm glad President Obama joined my call and pleased that BP is doing the right thing."
Alex Tiegen can be reached at (561) 329-5389 or atiegen@sunshinestatenews.com.
