Wednesday, June 16, 2010

President Obama Meets With BP Executives

$20B escrow fund established; $100M for rig workers; BP apologizes twice; transcript & video of President's remarks after meeting
President Obama visited Grand Isle, Louisiana on May 28, during his second trip to the Gulf Coast region after the BP oil spill began on April 20, and again on June 4.

There's now a graveyard on Grand Isle, filled with dozens of crosses, each bearing a different word or phrase for what has been destroyed by the BP oil spill: Fishing. Crabs. Sand castles. Boiled Shrimp. Pelicans. Boating. Tuna. White Trout. Fishfrys. But the phrase on a cross at the front of the cemetery says it all: Our soul.

For the first time since the oil spill began on April 20 when the Deepwater Horizon rig exploded and sank, BP executives met with President Obama and top-level administration officials at the White House today. The meeting lasted about four hours, starting at 10:00 AM, and President Obama was there for about twenty minutes, then had a private meeting in the Oval Office with BP Chairman Carl Svanberg. (Above: The WH meeting)

In his remarks following the meeting, President Obama paid special notice to the impact of the oil spill on the traditional way of life in the region, as much as he paid notice to the devastating economic impact. But when speaking with reporters after the meeting, it was unclear if Svanberg had really paid close attention to what the President was saying.

The company has agreed to establish a $20 billion escrow fund to pay claims to people who lost income in the Gulf Coast oil spill, as well as a $100 million fund to compensate oil rig workers who are unemployed due to rig closures/drilling bans.

Washington lawyer Kenneth Feinberg, who was in charge of payments to families of victims of the Sept. 11, 2001, attacks, will oversee the massive fund. The $20 billion fund balance is not a “cap” on the company’s liabilities, President Obama said, and those hurt by the spill can still file lawsuits against BP.
(POTUS with Svanberg in the Oval Office)

Noting that those who glean their livelihoods from the sea, especially shrimpers and fishermen, and all those who own coastal small businesses, were still in the midst of recovering from Hurricanes Rita and Katrina when the spill began, the President said that he had urged Chairman Svanberg to take rapid action on processing financial claims.

"During a private conversation with Chairman Svanberg I emphasized to him that for the families that I met with down in the Gulf, for the small business owners, for the fishermen, for the shrimpers, this is not just a matter of dollars and cents," President Obama said. "...I emphasized...that when he’s talking to shareholders, when he is in meetings in his boardroom, to keep in mind those individuals; 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. And the chairman assured me that he would keep them in mind."

After the meeting, Svanberg, accompanied by his group, took questions from reporters at the White House stakeout. He took the opportunity to make a public apology; saying he'd like to "apologize to all the American people on behalf of all the employees of BP" and convey to the president the "sadness and sorrow" the company feels.

Svanberg also announced that the company will suspend dividend payments this year, following criticism that those effected by the oil spill have not received compensation, while shareholders have continued to reap profits. (Above: Svanberg during the stakeout interrogation)

"I hear comments that sometimes large oil companies are really companies that don't care. But that is not the case with BP. We care about the small people," Svanberg said.

Svanberg immediately came under fire for the use of the phrase "small people," from all corners of the media universe, but especially from those in the Gulf Coast. By late afternoon, Svanberg had apologized yet again.

"What I was trying to say – that BP understands how deeply this affects the lives of people who live along the Gulf and depend on it for their livelihood – will best be conveyed not by any words but by the work we do to put things right for the families and businesses who've been hurt," Svanberg said in a statement.

Present at the meeting from the administration: Attorney General Eric Holder, Carole Browner, Adm. Thad Allen, Vice President Joe Biden, Homeland Security Secretary Janet Napolitano and her coordinator for claims oversight, Interior Secretary Ken Salazar, Energy Secretary Steven Chu, Commerce Secrertary Gary Locke, Labor Secretary Hilda Solis, White House chief of staff Rahm Emanuel and senior adviser Valerie Jarret.

Representing BP today: Chairman Carl-Henric Svanberg, CEO Tony Hayward, and four other senior executives, as well as Jamie Gorelick, part of their legal team.

A fact sheet for the escrow account is below the President's remarks. The most recent posts on President Obama, the Gulf Coast and BP: The President addresses the nation on June 15, 2010--transcript & video; President declares seafood safe (but is it?); small business roundtable in Gulfport, MI.

The transcript of the President's remarks following the meeting:

Office of the Press Secretary
For Immediate Release June 16, 2010


State Dining Room

2:25 P.M. EDT

THE PRESIDENT: Good afternoon, everybody. I just concluded a constructive meeting with BP’s chairman, Carl-Henric Svanberg, and I raised two issues at the meeting. First was the containment of the oil that is still spewing into the Gulf. As I mentioned last night, my administration has directed BP to mobilize additional equipment and technology, and in the coming days and weeks, these efforts should capture up to 90 percent of the oil that is leaking out of the well.

Now, that’s not good enough. So we will continue to press BP and draw on our best minds and resources to capture the rest of the oil until the company finishes drilling a relief well later in the summer that is expected to stop the leak completely.

The second topic revolved around the issue of claims. As I traveled across the Gulf I heard growing frustration over the pace at which claims had been paid. And I also heard concerns about whether BP will make resources available to cover legitimate claims resulting from this disaster. So this discussion today was essential.

Currently, under federal law, there is a $75 million cap on how much oil companies could under certain circumstances be required to pay for economic damages resulting from a spill such as this. That amount obviously would be insufficient. That’s why I'm pleased to announce that BP has agreed to set aside $20 billion to pay claims for damages resulting from this spill.

This $20 billion will provide substantial assurance that the claims people and businesses have will be honored. It’s also important to emphasize this is not a cap. The people of the Gulf have my commitment that BP will meet its obligations to them. BP has publicly pledged to make good on the claims that it owes to the people in the Gulf, and so the agreement we reached sets up a financial and legal framework to do it.

Another important element is that this $20 billion fund will not be controlled by either BP or by the government. It will be put in a escrow account, administered by an impartial, independent third party. So if you or your business has suffered an economic loss as a result of this spill, you’ll be eligible to file a claim for part of this $20 billion. 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.

Additionally, BP voluntarily agreed to establish a $100 million fund to compensate unemployed oil rig workers affected by the closure of the deepwater rigs.

We’ve mutually agreed that Ken Feinberg will run the independent claims process we’re putting in place. And there will be a three-person panel to adjudicate claims that are turned down. Every effort will be made to expedite these claims. Ken has long experience in such matters, including running the fund that compensated the victims of 9/11. And I’m confident he will ensure that claims are administered as quickly, as fairly, and as transparently as possible.

BP’s liabilities for this spill are significant -- and they acknowledge that fact. We will continue to hold BP and all other responsible parties accountable. And I’m absolutely confident BP will be able to meet its obligations to the Gulf Coast and to the American people. BP is a strong and viable company and it is in all of our interests that it remain so. So what this is about is accountability. At the end of the day, that’s what every American wants and expects.

The structure we’re establishing today is an important step towards making the people of the Gulf Coast whole again, but it’s not going to turn things around overnight. And I want all Americans to know that I will continue to fight each and every day until the oil is contained, until businesses recover, and until the Gulf Coast bounces back from this tragedy, as I know it will.

One last point. During a private conversation with Chairman Svanberg I emphasized to him that for the families that I met with down in the Gulf, for the small business owners, for the fishermen, for the shrimpers, this is not just a matter of dollars and cents; that a lot of these folks don’t have a cushion. They were coming off Rita and Katrina; coming off the worst economy that this country has seen since the Great Depression, and this season was going to be the season where they were going to be bouncing back. Not only that, but this happened, from their perspective, at the worst possible time, because they’re making their entire income for the year in the three or four months during which folks can take their boats out, people are coming down for tourism.

And so I emphasized to the chairman that when he’s talking to shareholders, when he is in meetings in his boardroom, to keep in mind those individuals; 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. And the chairman assured me that he would keep them in mind.

That’s going to be the standard by which I measure BP’s responsiveness. I think today was a good start, and it should provide some assurance to some of the small business owners and individuals down in the Gulf who I was visiting with that BP is going to meet its responsibilities. But I indicated to the chairman that, throughout this process, as we work to make sure that the Gulf is made whole once again, that the standard I’m going to be applying is whether or not those individuals I met with, their family members, those communities that are vulnerable, whether they are uppermost in the minds of all concerned. That’s who we’re doing this work for.

All right. Thank you very much, everybody.

END 2:33 P.M. EDT

The Claims and Escrow Fact Sheet:

Office of the Press Secretary
June 16, 2010


A new, independent claims process will be created with the mandate to be fairer, faster, and more transparent in paying damage claims by individuals and businesses.

· To assure independence, Kenneth Feinberg, who previously administered the September 11th Victim Compensation Fund, will serve as the independent claims administrator.

· The facility will develop standards for recoverable claims that will be published.

· A panel of three judges will be available to hear appeals of the administrator’s decisions.

· The facility is designed for claims of individuals and businesses who have been harmed by the oil spill; local, state, tribal, and federal government claims will continue to be handled directly by BP.

· The facility will decide all claims as expeditiously as possible, and in any event within the existing statutory timeframe.

· Dissatisfied claimants maintain all current rights under law, including the right to go to court or to the Oil Spill Liability Trust Fund.

· Decisions under current law by the independent claims facility shall be binding on BP.

· All claims adjudicated under this facility have access to the escrow account for payment.


BP has agreed to contribute $20 billion over a four-year period at a rate of $5 billion per year, including $5 billion within 2010. BP will provide assurance for these commitments by setting aside $20 billion in U.S. assets.

· BP has reaffirmed its commitment to pay all removal costs and damages that it owes as a responsible party. It will not assert any liability cap under OPA to avoid liability.

· The creation of the escrow account will provide assurance to the public that funds will be available to compensate the injured.

· This account is neither a floor nor a ceiling on liability.

· The escrow account is to be used to pay claims adjudicated by the independent claims facility, as well as judgments and settlements, natural resource damage costs, and state and local response costs.

· BP will contribute to a foundation $100 million to support unemployed oil rig workers.

· The Administration’s May legislative proposal would create a new program of unemployment assistance, modeled after the Disaster Unemployment Assistance Program, to provide benefits to workers who lose their jobs as a result of a spill of national significance.

· BP has previously committed $500 million for the ten-year Gulf of Mexico Research Initiative to improve understanding of the impacts of and ways to mitigate oil and gas pollution.

· As a part of this initiative, BP will work with governors, and state and local environmental and health authorities to design the long-term monitoring program to assure the environmental and public health of the Gulf Region.

*President Obama photos by Pete Souza/White House; Svanberg photo by Getty; Cemetery photos via Reuters