Monday, 09 August 2010 12:24
Is BP Spill Recovery Fund Secure Despite $3 Billion Deposit?
Written by  {ga=staffwriters}

steve_sabludowsky01Summary:  BP has deposited $3Billion of the $20B of the amount that President Obama and the company agreed upon in June.  However, there are numerous questions remaining about the security of the outstanding amounts owed and the collectability of the remaining balance for the claims and damages related to the Gulf of Mexico oil spill from the Deepwater Horizon rig. 

 

While BP has deposited 3B into the Gulf fund escrow account what about the other 17 billion dollars?  Also, does the 20 billion dollars cap the total amount of which it will be liable?  


In a press statement today, BP said, “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.”
The Justice Department also issued a press release today.  In that release, it said, “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”.


Thus, important questions remain.
BP has said it is acting in good faith and perhaps it is do just that.  But, for now, here are some of my questions:
How exactly will BP ensure the US that the funds will be available?
What is to occur if there is a default?  What rights does the US have to proceed against the BP subsidiary or the parent company or companies?
What type of security instrument can US obtain and feel comfortable with given the fact there is still 17B outstanding?
Is there any interest or penalties on money owed now or in the event of default?
What does BP mean when it stated, “and certain other claims, including natural resource damages and state and local response cost”  Exactly what claims and damages are covered by the 20B?  What claims and damages are not covered by the claims escrow trust fund?


President Obama, the justice department, the Department of the Interior and  Kenneth Feinberg should quickly and specifically address the unanswered questions and post an FAQ on all relevant Internet sites so the world can fully understand the limitations and responsibilities of all parties involved in the tragic oil spill tragedy.

by Stephen Sabludowsky, J.D and Publisher of Bayoubuzz.com

Discuss the BP oil spill trust below.  What questions do you have about the fund?  How would you rate the Obama administration on this issue?

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