June 16, 2010, 3:46PM
By JENNIFER A. DLOUHY HOUSTON CHRONICLE
WASHINGTON -- Under pressure from President Barack Obama, BP agreed today to set aside $20 billion in a spill recovery escrow account to compensate Gulf Coast fishermen and others who have lost wages and work because of the massive spill from a BP deep-water well.
The company also said it will suspend its quarterly dividend payments to shareholders for the rest of this year and will divert some of that cash to the escrow account, which would be managed by an independent administrator and be funded over three and a half years.
BP also agreed to set aside $100 million to compensate oil industry workers whose jobs disappear because of the government's moratorium on deep-water drilling and a delay of exploration in shallower depths while regulators develop new safety regulations.
BP's concessions are a win for Obama, who has struggled to show he is in control of the crisis in the Gulf of Mexico. The agreements — hammered out in a three-hour meeting with BP executives at the White House - give the president a concrete example of administration efforts to help coastal residents.
Obama called the claims fund "an important step toward making the people of the Gulf Coast whole again."
The escrow account could soothe complaints in coastal communities and Congress that the claims process has been flawed -- a sentiment that has shaken confidence in BP executive's repeated assurances that the company will pay all "legitimate" economic damages.
"We have always met our obligations and responsibilities," said BP Chairman Carl-Henric Svanberg, speaking outside the White House. He said the escrow account and revised claim process should assure Americans that "we will look after the people affected, and we will repair the damage to this region."
The spill response fund will be administered by Kenneth Feinberg, a veteran claims administrator who oversaw compensation for victims of the Sept. 11, 2001 terror attacks.
Obama stressed that the fund would not prevent anyone from pursuing claims in court and does not place a cap on BP's responsibility.
BP will fund the account with initial payments this year of $3 billion in the third quarter and $2 billion in the fourth quarter, followed by quarterly payments of $1.25 billion until the total reaches $20 billion.
BP pledged to set aside $20 billion in U.S. assets as collateral, which will decline as the reserves in the fund build.
Although it will take time to establish the fund and rules governing payouts, White House energy adviser Carol Browner promised a seamless transition from the existing claims process.
Senate Majority Leader Harry Reid, D-Nev., called the decision "a good first step toward compensating victims."
Sen. Robert Menendez, D-N.J., called the fund the "very least BP must do to start making the coastal communities devastated by its recklessness whole again."
But other lawmakers fretted that the $20 billion could be misused. Rep. Pete Olson, R-Sugar Land, said he views the account as a "privately funded, government slush fund that the administration is going to divvy out as they see fit."
BP's decision to suspend its prized quarterly dividends is a blow to pension funds and investment portfolios in the U.S. and overseas that count on the revenue.
The White House meeting was the first time Obama has spoken with BP's corporate chiefs since oil began gushing from the Macondo after an April 20 blowout that also destroyed the Deepwater Horizon drilling rig and killed 11 workers.
Obama said he told the executives about the anxiety among fishermen and shrimpers who are watching their businesses and way of life disappear as the crude encroaches on the coast.
He insisted that the executives keep those people in mind when making decisions about spill recovery and cleanup.
"That's going to be the standard by which I measure BP's responses," Obama said after the meeting. "Throughout this process, as we work to make sure that the Gulf is made whole once again the standard I'm going to be applying is whether or not those individuals I met with, their family members (and) those communities that are vulnerable are uppermost in the minds of all concerned."
jennifer.dlouhy@chron.com
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