Obama shows legal savvy


Most Gulf residents try to find some fault with how President Obama has responded to the BP spill, suggesting that as “CEO of America” he should have done things differently. These states are really red after all But some of the recent criticism suffers from a serious lack of experience. As somebody who has negotiated with Big Oil for millions and millions of dollars more than two decades, I can tell you he’s doing very well as “lead attorney” for America notwithstanding the unified command fiasco.

Because it’s wrong to see the U.S.-BP relationship as some sort of business deal. What we have here, in effect, is the early phase of a years-long lawsuit. The two main players now, the federal government which will be the largest plaintiff and the oil company, have to work together to cap the well, but beyond that they have – and should have – very different agendas. BP has tried and will continue trying to limit access to evidence detrimental to its case, and the government will continue to investigate any wrongdoing. By negotiating the $20 billion victims’ fund, the administration calmed many short-term Gulf-area fears. Hey, we had no idea of what BP might do, at least this creates a “floor” of liability, and it doesn’t include any limits. Not bad.

Maybe the most common criticism is the idea that the president should have called BP CEO Tony Hayward immediately, or as an editorial on MSNBC’s website put it, “… in a New York minute.” Okay – and say what? “pretty please help” There’s no doubt the government was getting as much information without those conversations as it would with them, and the president created a very good negotiating position by ignoring him and doing what he did.

Look, big oil companies don’t negotiate themselves into handing over $20 billion out of love for their fellow citizens. You first have to establish a credible down-side threat for them, and President Obama was rattling some fairly significant sabers while ignoring Hayward. Brilliant negotiating strategy. It’s important to realize that this isn’t really a business deal, it’s a pre-lawsuit settlement discussion. BP needed to buy time, both to cap the well and to keep lawmakers from taking significant action, and President Obama positioned himself as the man who could make that happen … or not.

Trust me, you can only deal with Big Oil from a position of power. If not, they just don’t give a tinker’s damn. If it takes some time to create that position, then so be it.

Not that positioning ever ends. The Administration, for example, should be very concerned that many news outlets are referring to the hard-won $20 billion fund as being controlled by “President Obama’s claims adjuster.” At best, Ken Feinberg is what he says he is – independent. At worst, he’s what some of my colleagues call him in recent court filings – a BP surrogate.

© 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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