Sources: BP agrees to $20B fund for spill victims

BP will set aside $20 billion to pay the victims of the massive oil spill in the Gulf, senior administration officials said Wednesday, a move made under pressure by the White House as the company copes with causing the worst environmental disaster in U.S. history.

The independent fund will be led by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks. In his current role, Feinberg is known as Obama's "pay czar," setting salary limits for companies getting the most aid from a $700 billion government bailout fund.

Obama was to announce the deal in a Rose Garden statement later Wednesday after wrapping up a meeting with BP executives at the White House.

The officials familiar with the details spoke to the AP on condition of anonymity before the announcement.

The still-unfolding disaster in the Gulf, as tens of thousands of gallons of oil continue to pour from the broken well daily, is jeopardizing the environment and ecosystems along with the livelihoods of tens of thousands of people across the coastal areas of Louisiana, Mississippi, Alabama and Florida. Those affected ranged from fishermen to restaurateurs to oil rig workers idled by Obama's temporary halt to new deep-sea oil drilling.

BP spokesman Toby Odone declined to comment on the fund.

Several big questions remain unanswered, including when BP would start processing claims and paying people out of the fund; who and what would exactly be covered under the plan; how the White House and BP came up with a figure of $20 billion; and whether other involved companies will be required to chip in.

At $20 billion, the size of the fund is the same that was recommended by congressional Democrats.

BP has taken the brunt of criticism about the oil spill because it was the operator of the Deepwater Horizon rig that sunk. It also is a majority owner of the undersea well that has been spewing oil since the explosion.

But when the day of reckoning finally comes, it may not be the only one having to pay up. That's because Swiss-based Transocean Ltd. owned a majority interest in the rig. Anadarko Petroleum, based in The Woodlands, Texas, has a 25 percent non-operating interest in the well.

Feinberg ran the unprecedented $7 billion government compensation program for the victims of the 2001 terrorist attacks. It was a job that lasted nearly three years as he decided how much compensation families of the victims should get, largely based on how much income they would have earned in a lifetime.

As pay czar, Feinberg has capped cash salaries at $500,000 this year for the vast majority of the top executives at the five major companies that received bailout funding: American International Group, GMAC Financial Services, Chrysler Financial, Chrysler and General Motors.

The selection of Feinberg was praised by Democratic Sen. Charles Schumer of New York. "He did an amazingly good job in New York for the families of those lost on September 11 and received plaudits from all sides. I believe when Feinberg completes his mission here, the people in the Gulf will feel the same way," Schumer said in a statement.

The development came as Obama was meeting on his turf with top BP leaders to press the London-based oil giant to pay giant claims.

BP Chairman Carl-Henric Svanberg, CEO Tony Hayward, and other officials walked slowly as a group from the Southwest Gate of the White House, climbing the steps leading to the West Wing.

Joining the president in the room were Vice President Joe Biden, Attorney General Eric Holder, White House chief of staff Rahm Emanuel and the secretaries of energy, interior, commerce, homeland security and labor.

The meeting came the morning after Obama vowed to an angry nation that "we will make BP pay for the damage their company has caused."

The crisis began with a deep water well that blew out on April 20, killing 11 rig workers and triggering the spill.

Obama in his speech to the nation on Tuesday night backed creation of a fund administered by an independent trustee to pay damages and clean up costs associated with the spill.

For the president, the tough diplomacy with a few officials behind closed doors is a bookend to his attempt to reach millions at once. Using a delivery in which even the harshest words were uttered in subdued tones, Obama did not offer much in the way of new ideas or details in his speech. He mainly recapped the government's efforts, insisted once again that BP will be held to account and tried to tap the resilience of a nation in promising that "something better awaits."

Obama's forceful tone about BP's behavior shows how far matters have deteriorated. The White House once had described BP as an essential partner in plugging the crude oil spewing from the broken well beneath nearly a mile of water. Now Obama says BP has threatened to destroy a whole way of life.

An Associated Press-GfK poll released Tuesday showed 52 percent now disapprove of Obama's handling of the oil spill, up significantly from last month. Most people - 56 percent - think the government's actions in response to the disaster really haven't had any impact on the situation.

(Copyright 2010 by The Associated Press. All Rights Reserved.)