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Obama Scores $20 Billion for Oil Spill Claims and an Apology From BP

4 years ago
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As the five BP executives filed out of the West Wing of the White House following their meeting with President Obama on Wednesday, someone in the press corps began (softly) humming Darth Vader's Imperial Death March theme from "Star Wars." If BP CEO Tony Hayward -- in his first visit to 1600 Pennsylvania Ave.-- was Vader (BP Chairman Carl-Henric Svanberg was perhaps more an Emperor Palpatine?), then the hero of the hour -- the Skywalker of this Deepwater Horizon saga -- was clearly Barack Obama.

During a meeting that was scheduled to last only 20 minutes but ended up running nearly two hours, Obama managed to secure an agreement with BP to create a $20 billion escrow fund to pay out claims to individuals and businesses harmed by the spill. The White House further established that the fund would be overseen by an independent third party, Ken Feinberg -- who previously administered the 9-11 victims' fund -- and a secondary three-person panel, to ensure both timeliness and impartiality.

Obama and his advisers scored a second victory in persuading the oil company to create a $100 million fund to compensate oil rig employees put out of work by the disaster, though Obama noted in a statement later it would be "an important step towards making the people of the Gulf Coast whole again, but [it would not] turn things around overnight."

In a press conference Wednesday afternoon, White House Director of Energy and Climate Change Carol Browner explained that the $20 billion fund was neither "a floor or a ceiling but...this gives us assurances so that we can make sure that people...[who] have been impacted can get their claims in in a timely manner...We wanted to make sure there were adequate resources." White House Press Secretary Robert Gibbs was quick to add that, "This does not in any way limit or cap the economic damages that BP may be responsible for."

Obama drove home the notion that he was not yet done with BP. "This fund does not supersede either individuals' rights or states' rights to present claims in court. BP will also continue to be liable for the environmental disaster it has caused, and we're going to continue to work to make sure that they address it."

To establish the $20 billion dollar fund, BP will put aside $5 billion per year for four years, beginning in 2010. The White House announced that BP would provide assurance for these commitments by setting aside $20 billion in U.S. assets.

Svanberg, in his first post-spill address to the U.S. media, took a notably conciliatory tone -- a marked difference from CEO Hayward, who has come under fire for a seeming lack of sensitivity. "We made it clear to the president that words are not enough," said Svanberg, "We understand that we will and we should be judged by our actions...I would like to take this opportunity to apologize to the American people on behalf of all the employees in BP, many of whom are living on the Gulf Coast. And I do thank you for the patience that you have in this difficult time. Through our actions and commitments, we hope that over the long term that we will regain the trust that you have in us."

The icing on the cake was certainly the concession from BP -- which Svanberg announced following the meeting -- not to pay dividends to its shareholders for the rest of the year. BP had been under intense pressure from the president to freeze dividend payments until victims of the Gulf disaster had been reimbursed for their claims.

The timing on these announcements could not have come at a more opportune time for Obama. The president received poor marks from much of the news media for the first Oval Office address of his career, delivered Tuesday night, and questions remained Wednesday morning as to whether he would be able to secure the escrow funding from BP. Gibbs and Browner refused to detail the negotiations or describe any sticking points, describing the summit only as "a business meeting." Browner did say, however, that the BP executives "actually began the meeting... with an apology."

For his part, Obama maintained focus on the victims of the spill. Where the president could have taken the moment to champion White House efforts as successful, he ended his remarks by saying, "I emphasized to [BP chairman Svanberg] keep in mind those individuals [in the Gulf]; that they are desperate; that some of them, if they don't get relief quickly, may lose businesses that have been in their families for two or three generations... That's going to be the standard by which I measure BP's responsiveness. I think today was a good start."

Indeed, the meeting with the BP executives was a rare win for Obama, who has been plagued by a seemingly unending cascade of bad news since the explosion of the Deepwater Horizon oil rig on April 20th. Had the Jedi returned? On Wednesday, it would seem so.

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