WASHINGTON (AP) -- BP will set aside $20 billion to pay the victims of the massive oil spill in the Gulf, senior administration officials said Wednesday, as President Barack Obama met with the oil giant's top executives. BP is acting under heavy White House pressure in dealing with the worst environmental disaster in U.S. history.
The independent fund will be directed by lawyer Kenneth Feinberg, who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks. At present, Feinberg is known as Obama's "pay czar," setting salary limits for companies getting the most aid from a $700 billion government bailout fund.
The $20 billion is not a cap - if legitimate claims outstrip that amount, then BP will required to pay more, one administration official told The Associated Press.
Obama was to announce the deal later Wednesday after wrapping up his meeting with BP officials. Many details were still forming. The president darted in and out of the negotiating session in the Roosevelt Room as the session ran overtime, delaying the president's public announcement by more than an hour.
Officials familiar with the deal spoke to the AP on condition of anonymity before the announcement.
The eight-week disaster in the Gulf, with tens of thousands of gallons of oil still pouring from the broken well daily, is jeopardizing the environment as well as the livelihoods of tens of thousands of people across the coastal areas of Louisiana, Mississippi, Alabama and Florida. Those affected range 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 from the fund, who and what would exactly be covered and whether other involved companies would 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, which killed 11 workers.
But when the day of reckoning finally comes, BP 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 after the 2001 terrorist attacks. It was a job that lasted nearly three years as he decided how much families should get, largely based on how much income victims 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.
Word of the fund was well received on the Gulf Coast. Applause broke out during a community meeting in Orange Beach, Ala., when Mayor Tony Kennon briefed participants on the White House meeting.
"We asked for that two weeks ago and they laughed at us," Kennon said. "Thank you, President Obama, for taking a bunch of rednecks' suggestion and making it happen." Obama visited Orange Beach on Monday.
Senate Majority Leader Harry Reid, D-Nev., also sought to take some credit. "While this fund will in no way limit BP's liability, it is a good first step toward compensating victims," he said. Reid and other Senate Democrats proposed a $20 billion BP-financed fund earlier in the week.
The president met at midday with the top BP leaders to press the London-based oil giant to pay giant claims.
Company Chairman Carl-Henric Svanberg, CEO Tony Hayward and other officials walked 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 in a TV address that "we will make BP pay for the damage their company has caused."
In his speech, Obama backed creation of a fund administered by an independent trustee to pay damages and clean-up costs associated with the spill.
For the president, Wednesday's meeting with a few company officials behind closed doors was 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 Tuesday night speech. He recapped the government's efforts, insisted once again that BP would 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 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 coastal way of life.