Administration: BP agrees to expedite oil spill claim payments

Cleanup and containment efforts continue at the Gulf of Mexico site of the oil spill following the Deepwater Horizon explosion.
By William Branigin and Dana Hedgpeth
Washington Post Staff Writer
Thursday, June 10, 2010; 2:53 PM

Oil giant BP, under mounting pressure to meet its obligations in the Gulf of Mexico oil spill, has agreed to implement a more transparent and expedited claims process to pay individuals and businesses harmed by the disaster, U.S. officials said Thursday.

Coast Guard Adm. Thad W. Allen, who heads the federal response to the disaster, told reporters that he and other administration officials met with BP representatives Wednesday at his request to talk about claims issues following public criticism of the company by President Obama.

At the White House, where Obama met Thursday afternoon with relatives of workers who were killed in the drilling rig explosion that marked the start of the oil spill disaster, the president called on Congress to update federal laws to improve the government's ability to respond to such crises and to make sure that affected people are "all made whole." Eleven workers died after the Deepwater Horizon drilling rig burst into flames April 20 following an oil well blowout 5,000 feet below the surface of the gulf.

Obama also said the United States needs to "move much more aggressively" on energy policy.

After meeting with congressional leaders, he said existing U.S. laws "have not been adequate for a crisis of this magnitude." The 1990 Oil Pollution Act, which caps the liability of offshore leaseholders at $75 million per spill, plus removal costs, "was passed at a time when people didn't envision drilling four miles under the sea for oil," Obama said. "And so it's going to be important . . . that we update the laws to make sure that the people in the gulf -- the fishermen, the hotel owners, families who are dependent for their livelihoods in the gulf -- that they are all made whole and that we are in a much better position to respond to any such crisis in the future."

Obama added: "Although our immediate task is to deal with a crisis that is affecting millions of people down in the gulf, we can't keep our eye off the importance of having an energy policy that meets the needs of the next generation and ensures that the United States is the leader when it comes to energy policy. We are not yet that leader. And that's what I want us to be."

House Speaker Nancy Pelosi (D-Calif.) said after the meeting that U.S. taxpayers "must know that BP will be held accountable for what is owed." Asked whether BP should cut its dividends to shareholders, Pelosi suggested that it was more appropriate to reimburse beleaguered businesses in the gulf. "They have a responsibility under the law to pay these damages," she said. "They made $17 billion last year. Maybe people who receive dividends have deeper pockets."

Senate Minority Leader Mitch McConnell (R-Ky.) agreed that BP must "clean up the spill," but he said Republicans oppose using the spill as a "rationale" for passing energy legislation that includes what he called a "national energy tax" in the form of a cap-and-trade provision. That, he said, would be "completely and totally unrelated to a logical response to the environmental catastrophe we're experiencing in the gulf."

In a news conference at the Department of Homeland Security, Tracy Wareing, a top DHS official, said the U.S. side voiced "pressing concern" at the meeting with BP about the time the company was taking to pay claims. She said U.S. officials pointed out, and BP recognized, that its previous approach of waiting until after the books have closed for each month before paying claims "will not work."

Wareing said BP promised to "implement a more expedited claims process" that takes into account the ability of businesses to pay expenses for the upcoming month and the issue of seasonal earnings. For example, she noted, shrimpers, whose season officially began last week, earn most of their annual income in a few months, so calculating damage payments to them based on a monthly average of their yearly earnings shortchanges them.

Allen said the pumping of oil and natural gas from a damaged wellhead deep in the gulf continues apace. In the latest 24-hour period, he said, 15,800 barrels (663,600 gallons) of oil was produced, the highest level yet. However, an undetermined amount of oil continues to escape from a containment cap placed on the wellhead last week, and the total amount of oil coming up from the well remains unknown.

Also Thursday, Attorney General Eric H. Holder Jr. pledged that the Obama administration would ensure that U.S. taxpayers are not stuck with the costs of the BP oil spill.

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