There is no doubt that the oil spill produced by the Deepwater Horizon rig and BP is a disaster of monumental ecological proportions. There is no doubt that the spill has caused the loss of livelihood for fishermen, hotel owners, beach surfboard renters and millions of other people on the gulf coast. There is also no doubt that it is the responsibility of BP to get the well shut off and pay for the cleanup. Finally, there is no doubt that a full investigation should be conducted into how the spill happened, the role of BP and of the government in the spill and the mistakes made in the cleanup. It is important that we find out what caused the blowout, how it could have been prevented, why the cleanup was so slow in getting started, why foreign experts were not allowed to help, why the EPA is blocking applications of products as simple as hay which could soak up oil, and why Governor Jindal and others were disallowed the means to protect their shore lines by government bureaucracies.
However, none of these events or responsibilities gives the president the power to suspend the constitution, revoke the rule of law or demand payments from a company. In fact the $20 billion fund "demanded" of BP by the Obama administration does just that. To understand let's review the facts around the fund.
The fund will contain $20 billion to ostensibly pay for cleanup efforts and provide compensation to those affected by the spill. Kenneth Feinberg, who is also known as Obama's "pay czar", will administer the fund. Mr. Feinberg, a political appointee, will have the final say so on who will receive money from the escrow funds and how much they will get paid. It is unknown what rules of evidence will be in force, what documentation will need to be provided and what the priorities and process for payout will be. Furthermore, so far there are no known constraints on what the fund can be used for; since Obama clearly views alternative energy as a long-term solution to oil spills in general, it is possible that he could direct part of that 20 billion to alternative energy research. In short, this is a huge 20 billion dollar fund under the sole direction of a single guy without even congressional oversight. Disturbed yet?
If you try to find the power in the constitution that allows Obama to do this, you will be even more disturbed. In this case the government can't even claim the commerce clause of the constitution as legal basis because the commerce clause, even misinterpreted as it is, only applies to the legislature, not the executive branch. Where exactly in the enumerated powers of the constitution does the president have the right to "demand" money from a corporation, deem them guilty of a crime and extract a settlement amount? The short answer is "nowhere."
Another pertinent question is what BP got out of this deal with the president. It is unlikely that they simply agreed to just drop $20 billion in escrow without agreements, legal documents or contracts specifying the use of the money. If BP obtained immunity from prosecution in exchange for the money then President Obama just violated extortion laws. Will we get full disclosure on the deal given to BP for this fund? What about the payouts themselves? Will we be allowed to be a watchdog over those funds? At this time it doesn't look like it.
To illustrate the problems with this fund, imagine you are a fisherman with a claim to 6 million in damages from the fund but the government only wants to pay you 2 million? Where do you appeal? What are the standards to prove damages? What about a hypothetical sign painter working out of Utah paid 3 million on his claim because he is the son of a congressman? What about the hypothetical hotel operator that has claims of damages for 5 million but is in competition with the brother of an administration official and is therefore denied? Furthermore, with millions applying to a single office for payment, how long will that fisherman be waiting before he can make his payroll?
In the USA we have a court system set up to provide rules of evidence, assess actual damages, estimate punitive damages, evaluate claims of complainants and assign settlements or verdicts to those damaged. If you have a problem with the ruling, you can appeal that ruling. When you go to court you will have to prove actual damages, not just imagined ones or political connections, and the defendant will have the ability to refute your claims if they so desire. When millions of people filed for damages due to leaking silicone breast implants, the system worked. When millions filed for claims due to asbestos exposure, the system worked. The system is designed to be fair, impartial and above all non political. However in the case of BP the system was summarily replaced with a single pay czar with sole discretion over 20 billion dollars.
It is always easy to defend the rule of law when it is applied to a sympathetic target but much more difficult when applied to an oil company responsible for a spill of this magnitude. The natural reaction of anger makes it hard for politicians to get up and say, "Woah, wait a minute, this is wrong." Few politicians have the courage to do so. Those that do express reservations about the process, such as Michelle Bachman (R-MN), are universally excoriated in the press as fans of big oil and apologists for big business. However, that couldn't be further from the truth. The rule of law is there to prevent the society from turning into anarchy. The rule of law is there to prevent the government from gaining too much power and imposing tyranny. Finally the rule of law is there to protect the people from reactions of anger. If we will suspend the rule of law for BP, why not suspend it for accused killers and let people exact vigilante justice?
The end result of this BP oil cleanup fund is more likely to be little fisherman without political connections being left hanging in the wind while their politically connected allies get big payouts. Money will go to alternative energy projects, well connected businesses and political interests while the actual people hurt by the spill are left out. Of course we won't know that this is going on because Feinberg will likely use "privacy" arguments to make sure the payouts are not public; in fact the Obama administration has a history of such opacity.
One thing this fund won't do for sure is shut off the gushing oil well, or cleanup a bird. It won't make the government accept help from international experts. The fund won't convince the EPA to allow American product developers to use their products to soak up the oil in the gulf. The fund won't allow us to find out what really happened, what role the government had in the spill or why the cleanup was slow. The fund will merely be a political tool for assuaging the pitchfork crowd out front that Obama is doing "something" about the mess in the gulf.