Patterico's Pontifications

6/26/2010

Why the BP Shakedown Matters

Filed under: Law,Obama — DRJ @ 12:08 pm



[Guest post by DRJ]

Several days ago (before the New Orleans federal judge lifted Obama’s moratorium), J.E. Dyer at Hot Air’s Green Room looked at what would have happened without the BP shakedown:

“Following the rule of law would produce relief for the oil spill’s victims. It just wouldn’t put Obama’s appointee in sole charge of a $20 billion fund. That has a meaning beyond the “Chicago” implication of pure extortion, fund-skimming, and payola. It means Obama couldn’t use the money to cushion the near-term consequences of his own policies. He’d be constrained by that pesky rule of law, if he weren’t holding the discretionary purse strings for the damages payouts.

The most obvious current evidence of that relates to his moratorium on deepwater drilling. A lot of people are losing their livelihoods because of it. A lot of businesses will be going under, and a lot more jobs will be lost. The losses will be in the billions just this year alone. But Obama didn’t have to take this action. He wasn’t even advised to by professional experts.

A judge in a federal court would take that into account as lawsuits came pouring in against BP. Even assuming BP is found to have liability through negligence when this is finally adjusted in court, there is every possibility that BP would not be found liable for the drilling shut-down itself, and all the business and jobs lost because of it.

Making BP pay the freight for his agenda-driven, business-killing moratorium is an abuse of executive authority on Obama’s part. He’s extorting BP for his payoff fund, to be used on the thousands of “small people” who will see their way of life destroyed, not by the oil spill but by Obama’s agenda-perfect reaction to it.”

Combine the $20B shakedown with Obama’s renewed efforts to impose some form of an offshore drilling moratorium, and effectively BP’s $20B fund will pay for more than the impact of the oil spill because some money will undoubtedly go to pay people affected by Obama’s moratorium. Did BP specifically agree to that in writing? I doubt it, and absent that only a court should be allowed to determine damages and compel payment (let alone compel payment in advance).

Then there’s the offshore drilling moratorium itself, which the Administration indicates will continue in some form for some time. Affected businesses are suing to stop the moratorium and have been successful so far, but the Obama Administration nevertheless has the upper hand adn can delay or halt a lot of drilling. This not only has a disastrous job-killing impact on oil-producing states, it reduces domestic oil and gas production and opens the door to more government strong-arm tactics and corruption.

Over time, our memories of the BP Oil Spill will blur as they did after the Exxon Valdez cleanup, but the oil and insurance industries won’t forget. Imagine how much more American offshore oil and gas exploration will cost in the years to come, if there is any worth mentioning.

Finally, that all pales in comparison to the damage done to the rule of law. America’s laws govern how we live and what our government can do … but President Obama is shredding those rules when it comes to business and capitalism. Conservatives believe capitalism and the rule of law are key pillars of democracy. President Obama is doing his best to prove they aren’t.

— DRJ

18 Responses to “Why the BP Shakedown Matters”

  1. Nothing that Obama does will last beyond his presidency, except the consequences. Reagan immediately decontrolled oil and gas and gas prices dropped like a rock. Too many don’t remember or never knew that.

    I saw a comment at another blog yesterday that told me just how malignant the present educrats are. A mother was volunteering in her son’s school. The class was studying the moon. She commented on the fact that there was nothing about the moon landings in the lesson even though it was a science class.

    The other two mothers said they had never been taken in by that hoax about the moon landing. She turned to the teacher who said she had never believed we had landed on the moon and thank god that hoax was not in the textbooks.

    Why do you expect people to understand about oil well accidents ?

    Mike K (82f374)

  2. What is totally overshadowed here is the responsiblity the federal government should share in this disaster. After all its regulatory agency MMS oversaw and approved every step of the drilling operation. Obama continues to obfuscate his agency’s part in it.

    By demonizing BP, he takes the onus off of himself. But not for long. I am sure there there are some good lawyers who know the US Government has deeper pockets than BP, and can’t fall back on liability limits or bankruptcy.

    Corky Boyd (922457)

  3. DRJ – I do not believe business interruption insurance is intended to cover the arbitrary and capricious acts of government officials pursuing ideological agendas.

    daleyrocks (1d0d98)

  4. Corky–before you pursue that line of thought further, check out “sovereign immunity”. In some things, the government can screw up or even do wrong on purpose and not end up having to pay any damages–the only remedy is to get the legislature (in this case Congress) to pass a special bill for each case appropriating money for the plaintiffs.

    DRJ–at the beginning there was a lot of talk about federal law limiting oil company liabilities to a relatively ridiculously low figure. You may remember Congress was going to pass a law to change that, and have it apply to BP. (Hopefully someone has pointed out what the Constitution says about ex post facto laws since then.) Do you know how that plays into things here?

    kishnevi (07cf78)

  5. daleyrocks:

    DRJ – I do not believe business interruption insurance is intended to cover the arbitrary and capricious acts of government officials pursuing ideological agendas.

    Nor do I. I hope I didn’t give a different impression with what I wrote.

    DRJ (d43dcd)

  6. kishnevi:

    DRJ–at the beginning there was a lot of talk about federal law limiting oil company liabilities to a relatively ridiculously low figure.

    It wasn’t a ridiculously low figure based on government models of what would happen as a result of an oil spill. But this event will obviously cause oil and gas exploration costs to go up, at least when it comes to American wells.

    DRJ (d43dcd)

  7. Agreed. But would that liability limit have limited BP’s liabilities to much less than the 20Billion? Or would they have had to pay more despite the limit?

    IOW, did BP, in agreeing to the 20billion figure, actually agree to pay more than it was legally liable for?

    kishnevi (07cf78)

  8. “I hope I didn’t give a different impression with what I wrote.”

    DRJ – Absolutely not. I was attempting to point out the insurance industry takes a dim view of arbitrary government actions in designing their coverages. The damage a president such as Obama does to the business community by operating outside the law is incalculable. He has already paralyzed large portions of the economy through uncertainty over what draconian jobs killing measures he will implement next.

    daleyrocks (1d0d98)

  9. BP will probably have to pay a lot more but the question is who will be making the decision as to how much — the President or the courts. Courts are set up to implement laws that govern liability. Presidents aren’t.

    DRJ (d43dcd)

  10. “Presidents aren’t.”

    DRJ – Correction. Most presidents know they aren’t. Former community organizer shakedown artists don’t know any better even if their supporters claim they are brilliant constitutional scholars.

    daleyrocks (1d0d98)

  11. Also, I doubt BP’s $20B will even count when it comes time to compensating people in court. Not only will the fund have already been disbursed, but it was a “voluntary” payment unless there are documents detailing how it will be credited.

    The best BP can hope for is that the courts will count any money paid into that fund as an offset provided the person getting paid was also paid by the fund, but I doubt that will work in most cases. All the claimant has to do is say the BP fund paid for their moratorium/out-of-work costs and the lawsuit is designed to compensate them for damages from the oil spill. BP is legally obligated to pay the latter damages from its spill but not the first.

    Bottom line: That $20B might as well have come out of BP’s advertising funds because it’s basically PR money.

    DRJ (d43dcd)

  12. There’s a billion plus dollars what’s been collected by taxing oil production already that was collected expressly to deal with an oil spill. But if America isn’t going to actually follow the law and use that money, what happens to the money?

    happyfeet (19c1da)

  13. I assume that money is in the general fund, happyfeet, and it’s probably paying for the Doc Fix.

    DRJ (d43dcd)


  14. Combine the $20B shakedown with Obama’s renewed efforts to impose some form of an offshore drilling moratorium, and effectively BP’s $20B fund will pay for more than the impact of the oil spill because some money will undoubtedly go to pay people affected by Obama’s moratorium. Did BP specifically agree to that in writing?

    I don’t know if they got it in writing but here is something from CNN http://www.cnn.com/2010/US/06/21/gulf.oil.disaster/index.html:

    BP has agreed to set aside $100 million to compensate oil workers idled by the moratorium, company chairman Carl-Henric Svanberg said last week.

    A senior administration official told CNN on Monday the White House pushed for that compensation fund.

    “We believed we had legal means to push them on funds for workers affected by the moratorium, and they ultimately agreed to set $100 million aside,” the official said.

    SaintGeorgeGentile (aa85b2)

  15. True, SaintGeorge, but where is the agreement that the funds will be segregated or escrowed … not to mention rules for how the Pay Czar will dispense them?

    DRJ (d43dcd)

  16. In other words, what they say isn’t what they have to do unless it’s in writing and enforceable.

    DRJ (d43dcd)

  17. As Obama tackles the Gulf crisis, he’s told America that if we can win WWII and put a man on the moon, we can solve our dependency on fossil fuels.

    But there’s a missing piece: the soldiers in WWII had the Pentagon and Neil Armstrong had NASA. What’s the man on the street supposed to do to solve the fossil fuel problem? Is it time for an organized, funded effort?

    The following link is to a satirical video, but it underscores this issue in real terms.

    Link: You’re Soaking In It

    bondwooley (7597dc)

  18. “capitalism and the rule of law are key pillars of democracy. President Obama is doing his best to prove they aren’t.”

    Change we can believe in.

    Getting millions from the 9/11 contributions didn’t stop some of the shake down artists from suing to get more. Like there are thugs in chicago politics, there are greedy people who are victims. Never let a good crisis go to waste.

    Jim (844377)


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