BP's agreement to forego dividend payments for the rest of the year and deposit $20 billion over four years into an independent compensation fund goes a long way toward guaranteeing that Gulf Coast residents won't repeat one grim element of the Alaska oil spill experience.
The Gulf disaster that began with the explosion on the Deepwater Horizon on April 20 is a long way from over. But the president's insistence on an independent compensation agency is a step in the right direction for tens of thousands of Gulf residents and businesses.
And his appointment of Kenneth Feinberg to oversee compensation payments is a good choice. Feinberg won respect for his administration of compensation payments to the families of victims of the 9-11 terrorist attacks and more recently served in setting rules for executive compensation as part of the federal bailout of financial institutions. Feinberg has a reputation for diligence and fairness that promises prompt payment on honest claims throughout the Gulf Coast.
BP will make a $5 billion first payment into the compensation fund this year. That amount rings a bitter bell for Alaska plaintiffs in the Exxon Valdez punitive damages case. In 1994, a federal court jury in Anchorage awarded the plaintiffs $5 billion. Fourteen years later and almost 20 years after the 1989 oil spill in Prince William Sound, that award was cut by 90 percent before payments were made.
Alaskans felt they'd been through a long wringer of justice delayed, denied and finally reduced.
An independent compensation fund run by an experienced, respected administrator with no brief other than to make the injured whole means that Gulf residents won't wait through years of appeals, adjustments and a long haul to the Supreme Court.
It's also good news that BP has decided to set aside $100 million to compensate oil industry workers idled by the drilling moratorium. Gulf economies, already reeling, stand to suffer more with all deepwater drilling on hold. This will help.
So much work remains. The full toll hasn't been counted yet, can't be counted because it's still accumulating at estimated rates that keep going up. But at least Gulf residents have reason to believe they won't have to wait a decade or more for compensation.
BOTTOM LINE: Independent compensation agency, $20 billion to pay claims are solid steps.