Why Obama Should Put BP Under Temporary Receivership

It’s time for the federal government to put BP (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 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; Under temporary receivership, 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. Hayward says BP’s sampling shows “no evidence” oil is massing and spreading underwater across the Gulf. Yet scientists from the University of South Florida, University of Georgia, University of Southern Mississippi and other institutions say they’ve detected vast amounts of underwater oil, including an area roughly 50 miles from the spill site and as deep as 400 feet. 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. But scientists say that could result in an even bigger volume of oil – as much as 20 percent more — gushing from the well. At least under government receivership, public officials would be directly accountable for weighing the advantages and disadvantages of such a strategy. As of now, company officials are doing the weighing. 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. Asked Sunday whether U.S. officials told BP to stop the top-kill attempt, Carol Browner, the White House environmental advisor, said, “We told them of our very, very grave concerns” about the danger. Expressing grave concerns is not enough. 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. For example, listen for the “we” and “they” pronouns were used by Carol Browner in response to a question on NBC’s “Meet the Press” Sunday (emphasis added):  “We’re now going to move into a situation where they’re going to attempt to control the oil that’s coming out, move it to a vessel, take it onshore ….We always knew that the relief well was the permanent way to close this .… Now we move to the third option, which is to contain it. If [the new cap on the relief well is] a snug fit, then there could be very, very little oil. If they’re not able to get as snug a fit, then there could be more. We’re going to hope for the best and prepare for the worst.” When you get pronoun confusion like this, you can bet on confusion — both inside the Administration and among the public. There is no good reason why “they” are in charge of an operation of which “we” are hoping for the best and preparing for the worst.

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.

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About Robert Reich 547 Articles

Robert Reich is the nation's 22nd Secretary of Labor and a professor at the University of California at Berkeley.

He has served as labor secretary in the Clinton administration, as an assistant to the solicitor general in the Ford administration and as head of the Federal Trade Commission's policy planning staff during the Carter administration.

He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine. His weekly commentaries on public radio’s "Marketplace" are heard by nearly five million people.

In 2003, Mr. Reich was awarded the prestigious Vaclev Havel Foundation Prize, by the former Czech president, for his pioneering work in economic and social thought. In 2005, his play, Public Exposure, broke box office records at its world premiere on Cape Cod.

Mr. Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.

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11 Comments on Why Obama Should Put BP Under Temporary Receivership

  1. Are you insane? Why not just nationalize all private ventures in the US and get it over with? Do something Big Brother doesn't like? Perhaps you sell books that the government objects to? Why not just let the government handle it. They have such a GREAT record of crisis management <Rolls eyes>.

    You Socialists on the hard left are trying to grab every bit of totalitarian control you can. Worked so well for Chavez and the USSR, why not try it here?

  2. Right. The Fascist Reich wants a fed takeover with Obama in charge. Obama who can't even turn a screw driver.

  3. Great idea. Let’s take this away from the deep water drillers, and hand it over to a bunch of bureaurcrats who don’t know their butts from a bass fiddle.
    What are tey going to do… hire Haliburton?

  4. The insanity is having BP remain in charge of this disaster!! Hah, you can either bring a little transparency to this complete bum f*** of a situation by leveraging a little Obama charm or you can allow the coast line of the American south to be decimated by a company called BRITISH PETROLEUM.

    Jesus christ you people don't deserve to breath.

  5. In the 42 days since the start of this incident 11 human beings and several hundred sea birds and turtles have been killed. This is one of the costs of using petroleum. This could be reduced by increased regulation, which in hindsight appears to have been too lax. We do not need to rely on hindsight to see a problem that will occur in the NEXT 42 days that could be entirely prevented by govt regulation that is hundreds of times worse. In the next 42 days approximately 4000 people will die in auto accidents. Almost all of these could be prevented if the government simply used its authority to impose a national speed limit of 5 MPH. Why don't we do this? Because the 4000 deaths, however regrettable, impose less pain on society than a 5 MPH speed limit. We have had three big spills in the last 40 years. If we had no government regulation of drilling and transport procedures we would have had more spills, but cheaper fuel. If we could save 25 cents a gallon of fuel, but had to endure an event like this every month would it be worth it. Not to me it wouldn't be. On the other hand we might be able to reduce the number of major spills to one per millennium, if we were willing to pay $20/gal for fuel. Sorry, I prefer the oil spills. The optimum number of oil spills, like the optimum number of auto accident deaths is not zero. Politicians who say otherwise are either intellectually dishonest, stupid, or both.

  6. All the people who are using words like "Fascist" & "Mental Midget" as well as using comparisons to Stalin & Chavez need to quit watching so much Fox News. Seriously, come LOOK at the Gulf of Mexico and the coastal regions around the spill site & tell ALL those businesses & out of work fisherman that because we're afraid Obama & the Government are fascists, we'll continue to let BP (a British entity, NON-American owned corporation) continue to call the shots.

    You people are ridiculous with all the talk of "Hitler" & "Stalin" when our Gulf Region is being ruined by ideals from right; Big corporations, private business, minimal regulation for maximum profits, & small government that, when a disaster happens (ex. Enron, AIG, GM, Banks in general, & now BP), we continue to allow these same greedy entities to make the rules and ruin peoples lives. Shame on you ALL! Go to Louisiana and tell those people out of a job about "fascism" & "Stalin" and they'll punch you in the mouth.

    They need OUR government, regardless if you "like" who's in charge to take action and declare temporary receivership for the sake of what's left in the Gulf Region. Fascism talk at a time like this? PLEASE think American right now instead of using this rhetoric you hear on Fox News & in the conservative circuit. It's time out for that <expletive> right now. Let the U.S. Government do what they (R), (D), & (I) need to do to resolve OUR problem in the Gulf.

  7. First I agree that low regs and big business is a bad idea. However bad this incident you could comparae it to the Piper Alpha distaster that Killed nearly 200 people in one go. A disaster that happened on board an American owned platform conrtolled by American proceudres. When this happend Britain did not step in saying things like “throw them out now”, “put us in charge” why? Because they knew that they dont have the experts to tackle the problem. Things are not getting fixed fast enough, that is obvious but that is because this has never happend before and the remedial measures were theoretical at best and in practice they dont work so further thinking and engineering is required to tackle the leak.

    Also, trying to force money from BP to handover to other companies that may have lost some earnings due to the shut down of drilling is laughable. If anyone is due to pay this it should be the US Government for failing to install and follow up proper regulation on drilling of this nature. If you give someone an inch they will take a mile.

    I agree that BP should fork out for the clean up and any business/health issues that have arised due to the actual oil spill.

    There are many oil spills and other environmental and safety incidents every year at American owned and ran oil installations world wide, however as Fox and CBS dont really have enough passports to get a crew to travel to these they go largley igonored (in the US and by the US government). This Brittish and BP (it has not been called British Petroleum, traded as British Petroleum or even known as British Petroleum for many years) bashing is either a deflection from the lack of initial concern from the government or America’s right wing media doing what they can to close the door on a business from outside the US so in the time of a recession an America company or five could take their place once they have been hounded out. Either way it looks like another Boston Tea party….

    The only good thing to come from the Piper Alpha disaster was a huge increase in Health and Safety regualtions governing offshore work, it was this that really sprand health and safety being so titghly controlled and it has spread from the north sea around the world and BP has been a huge driver for this. Hopefully the only good thing that could come from this would be more stirct controls, legislations and regulations governing both the safety and environmental aspects of work like this. This may then lead to many more and potentially larger leaks from not happening in the future. Although as one poster did state earlier it would mean more expensive fuels.

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