A $20 Billion Outrage


It’s outrageous that British Petroleum is being allowed to secure its $20 billion victims’ fund with our oil! Most people don’t realize that the oil British Petroleum produces in the Gulf is owned by us, the citizens of the United States. We should all be deeply concerned by this and demand that British Petroleum provide security through its worldwide assets rather than through its future production in the Gulf of Mexico. In fact, just days before the deal was finalized, sources within the Justice Department stated that one of the hitches was a government requirement that British Petroleum secure payments above $20 billion with funds from the mother ship in London. I assume this requirement fell by the wayside due to the Administration’s need to get a deal done immediately, and that parent BP (i.e., BP plc) simply said “no.” At a minimum, the feds should have required the global BP, to agree to jurisdiction in the United States for all civil actions, which is something they have refused to do up to this point. We are being required to spend huge sums, time, and energy serving global BP (http://en.wikipedia.org/wiki/BP) pursuant to the Hague convention (see http://en.wikipedia.org/wiki/Hague_Service_Convention).

This is a huge victory for British Petroleum.

And that’s just one of several disappointments (we’ll get to some others) in the just-released 40-page agreement that creates the fund, but it may be the most important because it gives British Petroleum the clear upper hand from here on in. The advocacy group Public Citizen immediately nailed a key point, saying that using British Petroleum’s production profits as collateral is “wildly inappropriate” because it may give the Obama Administration pause in pursuing criminal charges against the London-based oil company and in cracking down on its safety failings.

See agreement here:Deepwater Horizon Oil Spill Trust

It also means we’ve given away some serious leverage in this process. Criminal actions would have given the Administration the option of “evicting” BP from the Gulf and preventing the company from making off with our oil – but that’s not going to happen if the $20 billion fund is “secured” by British Petroleum’s oil revenue. It has been my experience that you can only deal with Big Oil from a position of strength, and we surrendered that with this agreement. It also means anyone who might face criminal charges is breathing much easier today, because they now know that’s a lot less likely to happen.

There are numerous laws that may have been broken by British Petroleum, many of which carry criminal penalties.

Look, anyone who thought that British Petroleum and the government were “too cozy” before – first turning a blind eye toward regulations before the spill then backing each other in low-ball flow estimates and discrediting scientists who dared oppose them…well, we ain’t seen nothin’ yet. This is exactly the kind of conflict we should be very worried about: the “investigating” agency now has a direct financial stake in the outcome, and the Obama Administration has tied future claims to British Petroleum continuing to make money in the Gulf. It’s an outrage…plain and simple.

What’s also outrageous is that under the terms of offshore oil and gas leases, our government gives the private corporation a proprietary interest in the oil and gas reserves themselves – instead of just contracting out the work to develop and produce the reserves. This give-away is no longer practiced anywhere else in the world. In fact, even in Iraq the oil and gas companies bid not on the reserves themselves but on a contract to produce them for the government. Does anybody remember the big push at the end of the Bush Administration to hand out leases around the country? This practice has to stop.

© Smith Stag, LLC 2010 – All Rights Reserved

Add comment

Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

Follow Us

© Stuart H Smith, LLC
Share This