Posted: Aug 11, 2010 7:57 PM by Alison Haynes
WASHINGTON (AP) - The $20 billion victims' compensation fund
established for the Gulf oil spill may use revenue from BP's oil
and gas drilling as collateral, according to details released
Wednesday by the White House.
The government watchdog group Public Citizen criticized the
arrangement as a conflict of interest, arguing that it gives the
government a financial incentive to encourage BP to keep drilling
BP has already made a $3 billion initial deposit, announced
Monday. The company must pay $2 billion more this year and continue
in installments of $1.25 billion, according to the trust documents
The trust calls for a collateral fund to ensure that all the
necessary money will be available if something happens to the BP
subsidiary that established the trust. Details must still be
negotiated, but the trust documents say that unless a different
agreement is reached, BP will agree to give the trust first
priority to production payments from the company's U.S. oil and gas
production as collateral.
Tyson Slocum, director of Public Citizen's energy program, said
that securing the compensation fund with drilling revenue "is
wildly inappropriate, as it will make the government and BP virtual
partners in Gulf oil production. ... It will give the government a
financial incentive to become an even bigger booster of offshore
oil drilling in the Gulf."
The trust fund was negotiated by the Justice Department. A
department spokeswoman did not immediately return a call for
The trust is to be administered by two independent trustees,
with claims being processed by Kenneth Feinberg, the Obama
administration's pay czar.