On June 16th, 2010, BP and President Barak Obama agreed to the terms needed to create a $20 billion dollar escrow fund that will be used to compensate victims of the Deepwater Horizon Oil Spill in the Gulf of Mexico. President Obama has appointed attorney Kenneth Feinberg to be the administrator of the independent fund. Mr. Feinberg was previously the administrator of the September 11th Victim Compensation Fund and the Special Master for TARP Executive Compensation, which dealt with bank bailouts during the financial crisis.
Since the creation of the BP Fund, Mr. Feinberg has asserted his independence from both BP and the Obama Administration in implementing his policy regarding victims claims and has created the new “Gulf Coast Claims Facility” in order to better handle the claims of the spill victims and get them money quicker and with more transparency. The schedule for total payments from the fund are as follows:
- $5 billion dollars paid over the second half of 2010
- $5 billion dollars paid each year thereafter until fund depletion
According to the information that has been released to this point, the BP Fund will pay claims using a two phase process. During the first phase, which lasts until the oil is permanently stopped from flowing into the Gulf, claims will be paid to businesses and individuals in lump sum payments to cover between three and six months worth of expenses. The initial lump sum payment could be expedited and are not expected to have a maximum predetermined limit. By accepting this initial payment from the BP Fund, you will not waive your right to sue BP for future damages.
After the well has been permanently capped, the second phase of the fund process will begin. During this phase, businesses and persons would receive payment for all future losses. To receive payment though the second phase, the claimant would have to waive all rights to file a lawsuit on BP. Mr. Feinberg has stated that he expects the new Gulf Coast Claims Facility to begin processing payments from the $20 billion dollar BP Fund in early August.
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