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Friday, June 18, 2010

President Obama Secures $20 Billion Commitment from BP

Earlier this week, President Barack Obama met with BP officials and announced that the oil company would establish a $20 billion fund to compensate victims who suffer property damage or lost wages as a result of the Deepwater Horizon disaster. After four hours of intense negotiation, including a long, private conversation with BP's Chairman, Carl-Henric Svanberg, BP agreed to the fund, which will be administered not by BP or by the US government, but by an independent third party.

The fund is good news for residents, businesses, and property-owners in the Gulf States, who feared that the oil company might be protected by a $75 million cap on damages, a cap put in place in 1990 with the Oil Pollution Act. With estimates of financial losses running as high as $100 billion, letting BP get away with a $75 million liability seemed unjust. However, an attempt by the Obama administration to raise the damages cap in Congress was blocked in committee by Sen. Lisa Murkowski (R-Alaska), making it seem unlikely that the cap would be raised by legislative means.

So why would BP agree to $20 billion if it might get away with only $75 million? First, it would not be protected by the cap if the company were found to have acted recklessly or with gross negligence, and there are some indications that it would be possible to describe BP's actions as such. During negotiations, President Obama probably raised that possibility and noted that if a huge number of lawsuits went through the courts it could easily cost BP far more than the $20 billion. Next, BP actually benefits from putting a hard number on its losses out there. Even though this $20 billion is not a cap, it is still a number and can replace the nebulous notions of its liability that has undermined the value of BP stock over the past few weeks. Finally, if BP is going to rebuild its reputation, it has to start somewhere, and BP is working on that. Among the typical acts of contrition--including a series of public apologies and the routine flogging by members of Congress--it is good to see something done that will actually benefit the victims of the spill.

If you have suffered property loss or damage to your livelihood, you may be able to receive compensation. To learn more, please contact The Cochran Firm today.

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posted by Benjamin A. Irwin at 9:29 AM

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