BP agrees to put $20 billion in escrow fund, official says


Washington (CNN) — BP has agreed to place $20 billion in an escrow fund to pay for claims in the Gulf of Mexico oil disaster, a senior administration official told CNN on Wednesday.

The development came as President Obama sat down with top BP executives at the White House on Wednesday in a highly anticipated meeting that follows repeated administration insistences the company must pick up the tab for the Gulf of Mexico oil disaster.

The meeting between Obama and BP Chairman Carl-Henric Svanberg was also attended by Vice President Joe Biden, Homeland Security Secretary Janet Napolitano, Attorney General Eric Holder, White House Chief of Staff Rahm Emanuel, Interior Secretary Ken Salazar, Energy Secretary Steven Chu, Commerce Secretary Gary Locke and Labor Secretary Hilda Solis, among others, according to an administration official.

Also representing BP: company CEO Tony Hayward and Managing Director Bob Dudley, along with BP America CEO Lamar McKay.

The meeting was expected to last roughly two hours, according to a senior administration official.

Attorney Kenneth Feinberg has been tapped to oversee the claims process, a senior administration official said.

Referring to the meeting Wednesday, Obama said he would tell Svanberg “that he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company’s recklessness.”

The fund will be controlled not by BP, but by an independent, third party, he said.

In a statement, BP said, “We share the president’s goal of shutting off the well as quickly as possible, cleaning up the oil and mitigating the impact on the people and environment of the Gulf Coast. We look forward to meeting with President Obama … for a constructive discussion about how best to achieve these mutual goals.”

Speedy claims processing was expected to be high on the meeting’s agenda.

David Axelrod, Obama’s senior adviser, has said a new claims plan would call for an independent third party to handle the process.

BP announced Tuesday that it accelerated commercial large-loss claims and has approved 337 checks for $16 million to businesses that have filed claims in excess of $5,000. Initial payments began over the weekend and will be completed this week, the British energy giant said.

Obama vowed Tuesday to unleash whatever resources may be needed to fight the oil spill in the Gulf of Mexico and to keep the pressure on BP.

“We will fight this spill with everything we’ve got for as long it takes,” Obama said after two consecutive days surveying the Gulf Coast, which is threatened by a massive oil spill that began April 20.

Speaking during prime time from the Oval Office, the president predicted that “in the coming days and weeks,” efforts to contain the leak “should capture up to 90 percent of the oil leaking out of the well.”

Ending the leak should occur later in the summer, when a relief well being drilled by BP is slated for completion, he said.

Reaction to Obama’s speech

During his speech, Obama made no reference to the announcement earlier Tuesday by government scientists they had increased their estimate of oil flowing into the Gulf of Mexico by 50 percent — to between 35,000 and 60,000 barrels per day.

That translates into 1.5 million gallons to 2.5 million gallons per day.

The government’s previous estimate, issued last week, was 20,000 to 40,000 barrels per day.

The change was “based on updated information and scientific assessments,” and was reached by Chu, Salazar and Marcia McNutt, the head of the U.S. Geological Survey, who leads the government’s Flow Rate Technical Group.

The heightened estimate of the scope of the continuing disaster came as Obama appointed Michael Bromwich, a former Justice Department watchdog in the Clinton administration, as the new head of a reorganized federal effort to regulate offshore oil drilling.

“His charge over the next few months is to build an organization that acts as the oil industry’s watchdog — not its partner,” Obama said in his Tuesday night speech.

A White House statement said Bromwich would “lead the effort to reform the Minerals Management Service,” an Interior Department agency accused of corrupt practices and poor oversight of offshore drilling in the run-up to the Gulf oil disaster.

iReport: Share your views, solutions on Gulf oil spill

Meanwhile, the Food and Drug Administration said that seafood from the Gulf remains safe for consumers, but health threats from the disaster could last for years, a health expert told a Senate committee Tuesday. The health expert also said officials lack knowledge on how long chemicals in the spilled oil and dispersants will remain toxic.

Crews cleaning up the oil in one Louisiana parish have trampled the nests and eggs of birds, Plaquemines Parish President Billy Nungesser said Wednesday. Among them was the brown pelican, which came off the endangered species list last year.

Nungesser said the parish doesn’t want to turn away contractors, but he called for more care when crews work in the sensitive wetlands.

He said officials recently found broken eggs and crushed chicks on Queen Bess Island, near Grand Isle.

The spill dwarfs the 11 million gallons that were dumped into Alaska’s Prince William Sound in 1989 when the tanker Exxon Valdez ran aground, and oil in varying amounts and consistencies has hit the shores of Louisiana, Mississippi, Alabama and Florida.

BP has been siphoning oil from a containment cap placed atop the ruptured well.

About 10,440 barrels of oil — or nearly 440,000 gallons — were collected Tuesday from the ruptured well, according to BP, a drop from the day before.

A total of 15,420 barrels of oil were collected Monday. The overall oil collection rate declined Tuesday due to a lightning strike that caused a fire to break out aboard the drilling ship Discover Enterprise. Oil collection was temporarily suspended until the fire was extinguished.

BP said Wednesday that it had started collecting oil through a second containment system attached to the ruptured well. The new system is connected directly to the blowout preventer and carries oil up to a second ship, the Q4000.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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