Oil spill fund officially established
WASHINGTON (Legal Newsline) - The federal government has completed negotiations with oil giant BP over the company's agreement to establish a $20 billion fund to compensate victims of the Gulf oil spill.
BP has also made a $3 billion initial deposit, according to the Justice Department. The negotiations followed an agreement made between the London-based company and President Barack Obama on June 16.
"We are pleased that BP made an initial contribution and has taken an important step toward honoring its commitment to the president and the residents and business owners in the gulf region," Associate Attorney General Tom Perrelli said in a statement Monday.
Perrelli said the initial contribution represented "an important step" toward honoring BP's commitment to the president and to the residents and business owners in the Gulf region affected by the oil spill.
An explosion and fire occurred on Transocean's drilling rig Deepwater Horizon, licensed to BP, on April 20, killing 11 workers and resulting in the largest offshore spill in U.S. history.
The company, Perrelli said, still needs to ensure that all the necessary funds will be available if something happens to the BP subsidiary that established the trust and that the Justice Department looks forward to completing an appropriate security arrangement in the near future.
Bob Dudley, CEO of BP's Gulf Coast Restoration Organization, said establishing the trust and "making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast."
BP had said it would make the deposit by the end of September.
An additional $2 billion deposit will be made in the fourth quarter of 2010. Thereafter, $1.25 billion will be deposited per quarter until $20 billion has been deposited.
The fund, administered by lawyer Ken Feinberg, doesn't cap BP's liability for cleanup costs and economic damage, Obama said in June. It also doesn't supersede the rights of individuals or states to sue the company.
BP announced that two trustees will administer the account: John S. Martin, a former U.S. District Judge for the Southern District of New York; and Kent Syverud, Dean of the Washington University School of Law.
Meanwhile, about 70 federal lawsuits filed in Florida against BP are stalled until a panel of federal judges decides later this month who will preside over the cases and where they will be heard, according to the Palm Beach Post News.
During a 90-minute hearing in Boise, Idaho, last month, 23 attorneys made their case for a specific venue or judge. BP wants the cases tried in Houston, home to the company's headquarters.
A Louisiana lawyer said the cases should be heard in Louisiana -- the state that has suffered the most. Ervin Gonzales, a Coral Gables lawyer, argued that "clearly, Louisiana is the most affected state, but there may be appearances of conflict" for judges and jurors. He suggested Miami.
An attorney for the West Palm Beach law firm of Searcy Denney Scarola Barnhart & Shipley suggested the cases be split by topic among three judges. One could handle death and personal injury claims from those aboard the Deepwater Horizon rig and perhaps the claims of economic loss; another could handle the complaints of BP shareholders who lost money; and another could take on environmental cases.
The seven-judge panel is expected to rule this month, although no date has been set, the Post News reported over the weekend.
Alabama Attorney General Troy King is among the many who are preparing suits against the oil giant. King announced late last month he was preparing a lawsuit against BP and the others responsible for the oil spill to make up for lost tax revenue.
King described the spill as "the largest legal disaster ever encountered," and said the state would be working for years to rebuild its economy.
Meanwhile, Mississippi Gov. Haley Barbour has asked state Attorney General Jim Hood to refrain from filing a lawsuit against BP following the spill.
In a letter to Hood late last month, Barbour asked him to wait until the claims process and the Natural Resource Damage Assessment have a chance to work. A lawsuit, the governor said, may interrupt the payment of claims.
In addition to those suits filed against BP, close to 250 lawsuits or claims have been filed against Transocean, the company that owns the BP-leased offshore rig behind the oil spill, according to a filing by the firm last week.
From Legal Newsline: Reach Jessica Karmasek by e-mail at email@example.com.