BP oil spill fund gets first $3 billion deposit as claims pile up
BP completed negotiations with the Justice Department Monday that establishes the $20 billion BP oil spill compensation fund. BP deposited $3 billion into the fund that will compensate victims of the oil spill in the Gulf of Mexico 2010. BP agreed to set up the oil spill fund after meeting with president Obama on June 16. So far, BP said its oil spill costs have totaled $6.1 billion, including $319 million paid out in BP oil spill claims. But more than 100,000 people are still waiting to hear about their claims. And the lawyers still aren’t sure how the fund will work.
BP oil spill fund deposit ahead of schedule
BP said it would make the initial deposit into the BP oil spill fund by the end of September. Robert Dudley, who replaces Tony Hayward as BP’s chief executive officer on Oct. 1, told Bloomberg that making the deposit ahead of schedule emphasizes the company’s commitment to “making it right in the Gulf.” When president Obama announced the BP oil spill fund in June, he said its creation doesn’t limit BP’s liability for cleanup costs and economic damage, and it doesn’t supersede the rights of individuals or states to sue the company. BP agreed to pay $5 billion into the oil spill fund in each of the next four years. An additional $2 billion will be paid in the fourth quarter this year, and BP will deposit $1.25 billion per quarter until the $20 billion is reached.
BP claims process bogging down
Checks from the BP oil spill fund will be cashed for free at New Orleans-based Whitney National Bank, which has 160 branches along the Gulf Coast. Kenneth Feinberg, the government-appointed administrator of the fund, said a BP oil claims facility should be in operation this month. BP said that 145,000 oil spill claims had been filed through Aug. 7. It has paid 103,900 claims worth $319 million. NPR reports that the oil spill in the Gulf of Mexico 2010 has many coastal residents fighting for their economic survival, and they expect BP to keep them afloat. But more than 100,000 people are still waiting to hear about their claims. Many say they are getting the runaround from the BP claims process. Some businesses have given up on BP altogether and say they’ll wait until Feinberg takes over the BP oil spill fund later this month.
Details lacking about BP oil spill fund
While the BP oil spill fund has been highly publicized, the actual details of what is going on with the fund are murky. The Legal Broadcast Network (LBN) reports that very few lawyers or clients have any clue as to how the BP oil spill fund is going to work or if it makes sense to participate. Lawyers handling oil spill claims wonder about the ability of their clients to structure oil claim payments over time to reduce the tax hit. And many oil spill claimants may not be aware that legal fees on BP oil spill claims are NOT tax deductible. LBN said these questions remain to be answered, or even asked, of the people running the fund.