Why Obama Should Put BP Under Temporary Receivership

Comment:  An experience oil company which took the cheap way to drill for oil with the kisses from the federal government and the oil company has no clue how to stop the flow of oil....let the military clean up the mess like they did in Iraq!  So when the VA uranium people say the federal government will protect us from uranium mining, just laugh in their face!

Robert Reich.Former Secretary of Labor, Professor at Berkeley
Posted: May 31, 2010 01:46

It's time for the federal government to put BP under temporary receivership, which gives the government authority to take over BP's operations in the Gulf of Mexico until the gusher is stopped.

This is the only way the public will know what's going on, be confident enough resources are being put to stopping the gusher, ensure BP's strategy is correct, know the government has enough clout to force BP to use a different one if necessary, and be sure the president is ultimately in charge.

If the government can take over giant global insurer AIG and the auto giant General Motors and replace their CEOs, in order to keep them financially solvent, it should be able to put BP's north American operations into temporary receivership in order to stop one of the worst environmental disasters in U.S. history.

The Obama administration keeps saying BP is in charge because BP has the equipment and expertise necessary to do what's necessary. But under temporary receivership, BP would continue to have the equipment and expertise. The only difference: the firm would unambiguously be working in the public's interest. As it is now, BP continues to be responsible primarily to its shareholders, not to the American public. As a result, the public continues to worry that a private for-profit corporation is responsible for stopping a public tragedy.

Five reasons for taking such action:

1.We are not getting the truth from BP. BP has continuously and dramatically understated size of gusher. In the last few days, BP chief Tony Hayward has tried to refute reports from scientists that vast amounts of oil from the spill are spreading underwater.  Government must be clearly in charge of getting all the facts, not waiting for what BP decides to disclose and when.

2.We have no way to be sure BP is devoting enough resources to stopping the gusher. BP is now saying it has no immediate way to stop up the well until August, when a new "relief" well will reach the gushing well bore, enabling its engineers to install cement plugs. August? If government were in direct control of BP's north American assets, it would be able to devote whatever of those assets are necessary to stopping up the well right away.

3.BP's new strategy for stopping the gusher is highly risky. It wants to sever the leaking pipe cleanly from atop the failed blowout preventer, and then install a new cap so the escaping oil can be pumped up to a ship on the surface.  Which brings us to the fourth argument for temporary receivership.


4.Right now, the U.S. government has no authority to force BP to adopt a different strategy. Saturday, Energy Secretary Steven Chu and his team of scientists essentially halted BP's attempt to cap the spewing well with a process known as "top kill," which injected drilling mud and other materials to try to counter the upward pressure of the oil. Apparently the Administration team was worried that the technique would worsen the leak. But under what authority did the Administration act? It has none.  The President needs legal authority to order BP to protect the United States.

5.The President is not legally in charge. As long as BP is not under the direct control of the government he has no direct line of authority, and responsibility is totally confused.
The president should temporarily take over BP's Gulf operations.

 We have a national emergency on our hands. No president would allow a nuclear reactor owned by a private for-profit company to melt down in the United States while remaining under the direct control of that company.

The meltdown in the Gulf is the environmental equivalent.

This post originally appeared at RobertReich.org
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