Begich proposes formalizing escrow fund for spill victims

Erika Bolstad

WASHINGTON - Sen. Mark Begich, D-Alaska, on Monday filed legislation that makes formal BP's $20 billion escrow arrangement with the federal government, and ensures that future violators must also set up similar accounts.

Future oil spills would trigger a process where the Interior Department would determine how big of a fund an oil company - or whoever the responsible party is - would have to set up to compensate victims of the spill. Eleven people died in the April 20 explosion that destroyed the Deepwater Horizon oil rig and continues to spew upwards of 60,000 barrels of oil a day into the Gulf of Mexico.

BP last week at the urging of the Obama administration established a $20 billion escrow fund to pay businesses and individuals for their losses stemming from the spill. A third party will administer the fund, including determining who is eligible for claims.

"It's nice that they've volunteered," Begich said of BP, but added that Congress can't trust that responsible parties in future oil spills will step forward without legislation forcing them to do so. "Into the future, if any other company ends up in the same situation, then it will ensure that there's a formal process that they're going to be really clear about," he said.

People need some sort of assurance that if this happens again, they'll have be compensated, too, Begich said. Begich also backed fellow Democrats who are calling for BP to pay money into the escrow fund before they pay a shareholder dividend; the company has since suspended its dividend payments.

If the costs are greater than the initially fund, Begich said, the company could be asked to contribute more money later.

"They've put aside $20 billion now, but the impact could be greater," Begich said. "The goal is to put aside as much as you can early on, so you now that the victims or the people who have to have compensation are going to be taken care of. And that's the idea."

Begich has forwarded the legislation to Sen. Lisa Murkowksi, R-Alaska, for review, but so far she hasn't signed onto it. Murkowski is working on her own oil spill legislation, which has as its centerpiece rules that allow the administration to set liability on offshore oil and gas projects on a case-by-case basis.

The liability limit would depend on the company's safety record and the depth and pressure of the reserve being developed, among other factors. Responsibility for claims in excess of an individual cap would be shared by all offshore operators in U.S. waters.

She also wants to establish an administrative process -- with an administrator named by the president and confirmed by the Senate -- to approve compensation claims quickly, without litigation.