Wednesday, 16 March 2011

$20 Billion BP Oil-Spill Escrow Account - A Shakedown?

By Peter Bilodeau
Platinum Quality Author
If you believe BP's establishment of a $20 billion restitution fund to victims of the 2010 Gulf of Mexico oil spill is a "shakedown", or "extortion," consider:
Under normal circumstances, in such a disaster, we would leave it up to those who were victimized to seek restitution from BP on their own, usually through a lawsuit. This is the right way to go when it's unclear who is responsible for the problem or who may be at fault.
When you compare it to the aftermath of a natural disaster, like Hurricane Katrina, one cannot sue Mother Nature. People are still victimized, but it's unclear whether they were victimized by those who didn't rescue them on time, those who didn't put up enough safeguards against such a storm or by their own choices in where they lived, how they lived etc.
In the case of the oil spill, the responsible party is clear and there is no need to litigate that. BP has declared many times since the spill that it is responsible, and it would pay all legitimate claims to individuals and businesses who've lost their livelihoods because of the spill.
There is a need to guard against fraudulent claims, but that should be relatively simple to detect. Those victimized should be able to fill out a simple form, present it to the overseer of the fund and, after verifying the information on the claim and documenting the amount of damage incurred, get a check.
As we know, with government and bureaucracy involved, nothing is simple, and this may be part of the reason for the reaction by U.S. Reps. Joe Barton of Texas and Tom Price of Georgia, who both used the word "shakedown," and syndicated radio talk show host Neal Boortz, who used the word "extortion" to describe the government's and BP's negotiations to set up the fund. How they feel about President Barack Obama's policies in general may also play a part in their reaction.
If you are a victim of the spill, you are probably broke, or close to. You probably made a decent living from the sea, but you may not have had much of a financial cushion that could get you through something like this. You can't work because the sea is polluted. It's not something you've done to yourself. It has been done to you, albeit probably not deliberately. That's the risk an oil company takes when it drills.
To most of those affected, the thought of having to sue BP to get restitution is almost as daunting as dealing with the spill itself. To effectively litigate, you'll need to hire a lawyer or, find a lawyer that would work on a contingency basis. Even turning it into a class action, to minimize each individual's expenses, would be costly. A judge would likely make BP responsible for all legal fees, but there's no guarantee. For a big chunk of that $20 billion, or whatever BP would ultimately pay, to go into lawyers' pockets would not seem right in many minds.
Also, even though BP has admitted responsibility, its lawyers would work very hard to minimize what it would pay out. They would probably try to pin responsibility on the victims themselves. Litigation is cruel and nasty. This is no time for that. Also, litigation would probably take years to even be heard in court, and more time after that to be resolved. The victims need their money now. They should get it in weeks, not years.
Of course, there's nothing stopping victims from litigating. More power to them, if they go for it. Damage to the environment as a whole - wildlife, plants, seascape etc. - may have to be litigated because it's so difficult to quantify. But for the fishermen, small restaurant owners and others who cater to tourists who aren't coming to the Gulf region, along with those who've lost jobs as a result, the fund is designed to simplify and expedite their restitution. Let's hope the government doesn't mess it up.
Did the government play hard-ball with BP? Sure. Does BP need to buff its image with the public? Of course. BP expected this, and benefits from the deal, because no one wants to see it go bankrupt. This takes away some of the uncertainty in its liability. Also, BP' legal expenses likely were minimized. Was "a shakedown" or "extortion" committed? You be the judge.
Peter Bilodeau is a journalist and professional copywriter. His work can be seen at