Bait and Switch


In old-school bait-and-switch fashion, the BP $20 billion fund now includes state and local governments, despite early indications that those entities would deal directly with the oil company. That’s a big win for BP, because it puts those agencies into Kenneth Feinberg’s process and away from direct negotiations.

It also means the federal government is dragging state agencies into the same conflict of interest it created by tying the fund’s security to future BP revenues in the Gulf of Mexico. But that is secondary to the funding level. Not only is $20 billion over the next few years not going to be enough to cover individual claims, now with state and local governments desperate to get paid in a down economy, the $5 billion annual installments are sure to fall well short of the mark. BP has, of course, always said the $20 billion is not a “cap,” but is has also not disclosed what strings would be attached to any future money – just look at the 40 pages of strings attached to the current fund (see BP-government agreement here).

It follows that the next time BP executives face get-tough negotiations with the White House, they will already know their future in the Gulf is assured – it has to be, because the fund is tied to production revenue.

Once again, the big winner here is BP. And, once again, the big losers are the victims, the families and now the local governments that absorbed the brunt of the spill and will deal with dispersants and other fallout for decades.

© Smith Stag, LLC 2010 – All Rights Reserved

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