Right-wing media absurdly declare Obama admin acted in “illegal,” “unconstitutional” manner by “forcing” BP to create escrow account

Written by Eric Schroeck

Published

Right-wing media have absurdly claimed that the Obama administration is “illegal[ly]” “forcing” BP to fund a $20 billion escrow account for victims of the oil spill, with some suggesting the administration's actions were “unconstitutional.” However, BP agreed on its own to establish the account after negotiations with the White House.

Right-wing media baselessly claim administration acted in “illegal,” “unconstitutional” manner by “forcing” BP to fund escrow account

Kuhner: Obama “proceeding in an unprecedented and illegal manner” by “forcing” BP to fund account. In a June 17Washington Times column, Jeffrey Kuhner wrote that BP “is fully liable and should pay through the nose. This is what courts are for. This is why the legal process is in place. Mr. Obama, however, is proceeding in an unprecedented and illegal manner: He is forcing BP to set aside $20 billion in an escrow account to be administered by an Obama appointee to pay compensation to the victims of the spill.” Kuhner further noted that “BP has agreed to the fund under immense political pressure.” From Kuhner's column:

[Obama] is waging a frontal assault upon the rule of law and traditional property rights. BP should pay for the full costs of the spill and clean-up operation; it is their mess. BP is also responsible for the vast economic consequences to the region -- the loss of fishermen's jobs and livelihoods, the crippling of the tourism industry and the blow to communities. The oil giant is fully liable and should pay through the nose. This is what courts are for. This is why the legal process is in place. Mr. Obama, however, is proceeding in an unprecedented and illegal manner: He is forcing BP to set aside $20 billion in an escrow account to be administered by an Obama appointee to pay compensation to the victims of the spill. BP has agreed to the fund under immense political pressure. The oil giant has capitulated to the administration's thuggery.

Kilmeade forwards Barton's criticism, suggests administration actions in establishing the fund were “unconstitutional.” On the June 18 edition of Fox News' Fox & Friends, co-host Brian Kilmeade discussed Rep. Joe Barton's (R-TX) criticism of the $20 billion escrow account and said, “You know, [Barton's] upset that they set up this -- that they told BP, 'I need $20 billion into this fund.' ... He felt as though that was out of the administration's realm. They shouldn't be allowed to do that. That's not constitutional, and they shouldn't go ahead -- go forward with that.”

Establishment of account a result of “negotiation session” between BP, White House in which "[b]oth sides got what they wanted"

BP agreed to fund escrow account reportedly after “four hours of intense White House negotiations.” The Washington Post reported on June 17 that the White House meeting between Obama and BP executives “turned into [a] no-nonsense business meeting in which the oil giant agreed to pay $20 billion into an escrow account.” The Associated Press reported that an agreement was reached “after four hours of intense White House negotiations.”

Wash. Post: “Both sides got what they wanted out of the encounter.” The Washington Post further reported that in the meeting between the White House and BP, "[b]oth sides got what they wanted out of the encounter," noting that “BP, though poorer on paper in the short run, got some much-needed clarity on its long-term liability, plus an explicit statement from Obama that the administration doesn't want to see BP driven into bankruptcy.”

BP announced $100 million to support unemployed oil industry workers as a “voluntary gesture.” The Post also reported on June 17 that Obama asked BP “for a voluntary contribution to a foundation that will support unemployed oil industry employees” and that “BP agreed, offering $100 million.” The Post quoted BP adviser Jamie Gorelick as saying, “We made clear that we do not think this is a liability for the company. The president said he's concerned about those workers. He asked if there was something we could do as a voluntary gesture.”

The Atlantic: “President Obama cannot force BP to pay $20 billion into the proposed escrow fund,” but BP may calculate that “the public-relations value is worth agreeing to Obama's plan.” In a June 14 Atlantic post prior to the negotiation, Chris Good wrote that “President Obama cannot force BP to pay $20 billion into the proposed escrow fund, but he will provide several reasons why BP should go along with the plan.” He further wrote that "[i]t's possible BP will calculate that it has no way out from a high damages bill, and that the public-relations value is worth agreeing to Obama's plan." From Good's post:

President Obama cannot force BP to pay $20 billion into the proposed escrow fund, but he will provide several reasons why BP should go along with the plan: saving its own public image, the consensus in Congress that BP should pay damages without limit, and the potential that BP's ignorance of warning signs could be construed as negligence. BP, on the other hand, will want to evaluate claims on its own and has bankruptcy in its back pocket.

It's possible BP will calculate that it has no way out from a high damages bill, and that the public-relations value is worth agreeing to Obama's plan. If not, tense negotiations will likely follow.

Environmental law expert: OPA “does require BP to establish a process for 'the payment or settlement of claims for interim, short-term damages' ”

Environmental law expert: Section of OPA “does require BP to establish a process for 'the payment or settlement of claims for interim, short-term damages,' ” which could include escrow account. In a June 15 post on the blog Legal Planet titled, “Can Obama Require BP to Form an Escrow Fund?” Dan Farber, director of Berkeley Law's environmental law program, wrote that “the answer isn't very clear” but that the Oil Pollution Act (OPA) “does require BP to establish a process for 'the payment or settlement of claims for interim, short-term damages' that might encompass an escrow and independent decision-makers.” Indeed, Section 1005 of the Oil Pollution Act states:

SEC. 1005. INTEREST; PARTIAL PAYMENT OF CLAIMS.

(a) GENERAL RULE. -- The responsible party or the responsible party's guarantor is liable to a claimant for interest on the amount paid in satisfaction of a claim under this Act for the period described in subsection (b). The responsible party shall establish a procedure for the payment or settlement of claims for interim, short-term damages. Payment or settlement of a claim for interim, short-term damages representing less than the full amount of damages to which the claimant ultimately may be entitled shall not preclude recovery by the claimant for damages not reflected in the paid or settled partial claim.