BP has agreed to place about $20 billion in an escrow account to be used to pay damage claims resulting from the Gulf Coast oil spill, The New York Times is reporting.
CNN and the AP have also confirmed the deal.
The Times is also reporting that the fund will be overseen by Kenneth Feinberg — the pay czar charged with overseeing top Wall Street salaries under TARP. Feinberg also oversaw the 9/11 victims compensation fund.
BP executives met with President Obama at the White House today. Before the meeting, Bloomberg reported that the administration and BP hadn’t yet reached a deal on the escrow account.
According to the Times, BP likely won’t be in any rush to deposit $20 billion in the escrow account anytime soon: The deal’s “preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.”
The White House also released details this afternoon on how the claims will work. Feinberg will serve as “independent claims administrator,” and a panel of three judges will hear any appeals of his decisions on claims of individuals and businesses harmed by the spill. Government agencies will still make claims directly to BP.
BP will put $5 billion a year into the account in each of the next four years, beginning in 2010. In the meantime, it will set aside $20 billion in U.S. assets to assure its commitments.
And the damages may not stop at $20 billion: “This account is neither a floor nor a ceiling on liability,” the White House announced.
And it sounds like claimants will still be able to sue BP, even if they do get payouts from this account: “Dissatisfied claimants maintain all current rights under law, including the right to go to court or to the Oil Spill Liability Trust Fund.”
BP will also contribute $100 million to a foundation supporting unemployed oil right workers.
Editor’s Note: This post has been added to since it was first published.
