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Monday, 09 August 2010 11:25
BP Establishes Trust, Makes 3B Deposit of $20B For Deepwater Horizon Incident
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Summary:  BP announced that it has established a trust and has made a $3 billion initial deposit of the previously-announced $20 billion escrow account to pay legitimate claims arising from the Deepwater Horizon incident and the resulting oil and gas spill.  President Obama's US Justice Department said today that it has made  clear that the company still needs to ensure that the necessary funds will be available if something happens to the subsidiary that established the trust and it looks forward to completion of an appropriate security arrangement in the near future

 

BP announced today that it has established a trust and has made a $3 billion initial deposit of the previously-announced $20 billion escrow account to pay legitimate claims arising from the Deepwater Horizon incident and the resulting oil and gas spill.

In a statement posted on its website, BP said, “The purpose of the escrow account was to assure those adversely affected by the spill that we indeed intend to stand behind our commitment to them and to the American taxpayers,” said Bob Dudley, CEO of BP’s Gulf Coast Restoration Organization. “Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast.”

Two individual trustees have been named to the newly-established trust that will administer the account: the Honorable 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.

Citigroup will serve as corporate trustee and paying agent for the account. Arrangements have been made for checks drawn on the fund to be cashed free of charge at any of the 160 Whitney National Bank branches across the Gulf Coast region.”

Also, Justice Department has issued a statement saying that it has completed negotiations to establish a $20 billion fund to provide the necessary resources to those suffering from the effects of the oil spill in the Gulf of Mexico.  However, the statement also makes clear that the issue of availability of the funds and the security arrangements for the funds is not yet complete:

WASHINGTON – Associate Attorney General Tom Perrelli issued the following statement on the Department of Justice’s negotiations to establish an escrow account for the Deepwater Horizon oil spill:

"Today, the department announced that it had completed negotiations to establish a $20 billion fund to provide the necessary resources to those suffering from the effects of the oil spill in the Gulf of Mexico. 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. We have made clear that the company still needs to ensure that the necessary funds will be available if something happens to the subsidiary that established the trust and we look forward to completion of an appropriate security arrangement in the near future

BP also stated on its site today, “On June 16, following consultations with the U. S. Government, BP announced that it would transition the claims process required under the Oil Pollution Act of 1990 to an independent claims facility managed by Kenneth Feinberg and create a $20 billion escrow account to satisfy claims resolved by that facility and certain other claims, including natural resource damages and state and local response costs. BP announced at the time that the first deposit of $3 billion to the account would occur by the end of the third quarter. BP has decided to make this deposit early to demonstrate its commitment to meet its pledge to restore both the livelihoods of those affected by the oil spill and the environment.

An additional $2 billion deposit will be made in the fourth quarter of 2010. Thereafter, $1.25 billion will be deposited per quarter until a total of $20 billion has been deposited. “

Discuss the BP oil spill trust below.  What do you think about the trust fund?  Is it enough? 

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