Funding Liabilities

The Wall Street Journal reports on the Obama Administration’s plans to ask BP to establish a fund to compensate victims of the Deepwater Horizon oil spill.

The fund would be independently administered, in effect taking some of the decisions about compensation out of BP’s hands. The WSJ article notes:

White House officials on Sunday said they wanted BP to put “substantial† funds into an escrow account to cover claims by Gulf Coast businesses and residents affected by the spill.

President Barack Obama plans to bring up the idea at a White House meeting Wednesday with top BP executives, including Chairman Carl-Henric Svanberg.†

The WSJ goes on to quote a spokesman for BP saying that the company expects to discuss the proposal with President Obama on Wednesday.

The article also cites legal experts saying that while other government-run funds exist (e.g. Superfund legislation, asbestos liability funds, and the 9/11 victims compensation  fund), they differ from the proposal facing BP.

As the responsible party, BP has already begun accepting claims filed by individuals and businesses to cover property damage and lost income as a result of the oil spill.

BP’s latest update of its response to the oil spill suggests that to-date over 51,000 claims have been submitted and more than 26,500 payments made, totaling over $62 million.

Industry commentators have noted that these claims totals will continue to rise as long as the oil continues to spill and affect the area and in the event of a large landfalling storm during hurricane season.

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