BP’s website includes this initial outline of the funding of and rules for its fund to resolve claims from the oil spill. Some color commentary from outside counsel provides additional insights. Some excerpts are set out below from BP’s website:
Following a meeting with the President of the United States, the BP Board announces an agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill.
Agreement was reached to create a $20bn claims fund over the next three and a half years on the following basis:
BP will initially make payments of $3bn in Q3 of 2010 and $2bn in Q4 of 2010. These will be followed by a payment of $1.25bn per quarter until a total of $20bn has been paid in.
While the fund is building, BP’s commitments will be assured by the setting aside of U.S. assets with a value of $20bn. The intention is that this level of assets will decline as cash contributions are made to the fund.
The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs. Fines and penalties will be excluded from the fund and paid separately. Payments from the fund will be made as they are adjudicated, whether by the Independent Claims Facility (ICF) referred to below, or by a court, or as agreed by BP.
The ICF will be administered by Ken Feinberg. The ICF will adjudicate on all Oil Pollution Act and tort claims excluding all federal and state claims.
Any money left in the fund once all legitimate claims have been resolved and paid will revert to BP.
The fund does not represent a cap on BP liabilities, but will be available to satisfy legitimate claims. Further and more detailed terms regarding the establishment and operation of the claims fund and the ICF will be finalized and announced as soon as possible.
As a consequence of this agreement, the BP Board has reviewed its dividend policy. Notwithstanding BP’s strong financial and asset position, the current circumstances require the Board to be prudent and it has therefore decided to cancel the previously declared first quarter dividend scheduled for payment on 21st June, and that no interim dividends will be declared in respect of the second and third quarters of 2010.