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Robert Reich: Why the United States Can’t Get BP to Do What’s Necessary

June 13, 2010

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By **Robert Reich**

Here’s what Coast Guard Rear Adm. James A. Watson wrote to BP’s chief operating officer on Friday:

“Recognizing the complexity of this challenge, every effort must be expended to speed up the process.” BP’s plans don’t “go far enough to mobilize redundant resources” in the event of an equipment failure or another problem. “BP must identify in the next forty-eight hours additional leak containment capacity that could be operationalized and expedited to avoid the continued discharge of oil.”

Translated: You’re dragging your heels and aren’t even using all the equipment you have, damn it. You better, or I’ll…I’ll…

BP spokesman Jon Pack said the company received Watson’s letter and would respond to it as soon as possible.

Translated: Too bad. Have a nice weekend.

The Administration has not used legal authority to order BP to do a thing, because it hasn’t asserted any legal authority.

Meanwhile, the White House backed off its suggestion earlier in the week that it could stop BP from paying a giant dividend to its shareholders. That suggestion had caused BP shares to plummet and pressure to build on Britain’s new Prime Minister David Cameron. Twelve percent of dividends paid to pensioners in the UK come from BP. Cameron and Obama had a friendly chat Saturday, assuring one another BP is important to both countries.

You see where all this is heading. At some point there’s likely to be a direct conflict. Like any big corporation, BP has legal duties to repay its creditors and to maximize the share prices of its stockholders. Its duties to the United States are still vague and unknown. The Oil Pollution Act of 1990 can be interpreted in various ways. So far, the Administration hasn’t tried.

Yet BP is still in control of what’s happening in Gulf to stop the worst environmental disaster in U.S. history.

bq. Wouldn’t it be far simpler for the White House (stating that the Pollution Control Act of 1990 gives it authority) to put BP’s American operations into temporary receivership?

BP still has lots of money. But the final cost of plugging the leak in the Gulf, containing the spill, cleaning up after it, and paying all damages—including lost wages to millions of workers whose jobs have been lost or will be if the spill keeps tourists away—could easily be tens of billions of dollars. And right now BP’s first responsibility is to its creditors and shareholders, not to the American public.

So if it’s UK pensioners versus American workers and property owners, who wins? More to the point, who’s going to decide? Most likely, a judge—or several judges, here and in the UK, through a mountain of litigation that will keep thousands of attorneys, solicitors, and barristers busy for decades.

In the meantime, months or even years could go by as Coast Guard admirals and rear admirals, as well as the White House, tells BP it needs to spend more to stop and clean up the mess it’s created, it’s going way too slow, and it’s not divulging what it knows. And BP shrugs and says it’s doing all it can.

I’ve got a better idea. Wouldn’t it be far simpler for the White House (stating that the Pollution Control Act of 1990 gives it authority) to put BP’s American operations into temporary receivership? That way, Obama can take over BP’s assets here and use its expertise to stop the leak and clean up the mess as soon as possible—and leave the subsequent years of bickering to the courts.

Extra bonus: It shows the public the President is really in charge.

Copyright 2010 Robert B. Reich

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This entry originally appeared at RobertReich.org.

Robert Reich.JPGRobert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written eleven books (including his most recent, Supercapitalism, which is now out in paperback). Mr. Reich is co-founding editor of The American Prospect magazine. His weekly commentaries on public radio’s Marketplace are heard by nearly five million people.

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One comment for Robert Reich: Why the United States Can’t Get BP to Do What’s Necessary

  1. Comment by Mark Doughty on June 14, 2010 at 11:52 am

    You are assuming that the government has some interest in protecting the assets of the American public. As far as I can tell, this is a false assumption. The money trail of Big Oil corrupts every layer of politics from Congresspersons looking for ready cash; to regulators with cozy relationship and a revolving door to industry; to the retirement accounts of the power players and judges. The Standard Oil Trust was never really broken in the 1900’s like many think. The trust companies are very much entrenched into the fiber of our government. What happened at the Richmond refinery explosion? What happened to the Exxon Valdez clean-up? Why should this be different? Only by revisiting corporate charters and by subordinating corporate gains to human quality of life issues will it ever get any better. Corporations are not humans and should not have the same rights. Maybe it takes an incident like this to open our eyes.

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