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Wednesday, June 16, 2010

Where Does the Administration Get the Authority

BP and the Obama administration have agreed to set up an escrow fund and the administration has even assigned Ken Feinberg to administer the fund.

Ken Feinberg isn’t God. But forgive us if we get confused from time to time. The man we earlier deemed “The Special Master of America” will, the WSJ reports, soon be tapped to become the independent administrator of an oil-spill escrow fund being negotiated by BP and the Obama administration.

According to the NYT, BP has agreed to put $20 billion into the fund.

According to the NYT, the “preliminary” terms of the deal “would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors.”


The White House and BP agreed on Wednesday that the oil giant would create an independent $20 billion fund to pay claims arising from the worst oil spill in American history.

Bowing to pressure from the Obama administration, the company also said it would suspend paying dividends to its shareholders for the rest of the year and would compensate oil field workers for lost wages.

Now, BP has agreed to set up this fund voluntarily. Mr. Feinberg, more recently the pay czar (another dubious constitutional power), would be in charge of analyzing claims and then administering a fair payment out of the fund. It's important to note that receiving payment from this fund doesn't mean than an individual or entity can't sue BP in other places.

The question is what authority does the administration have to take BP's money and then to distribute that money to the folks in the gulf. This is inherently a civil process. That's what we have civil judges for. Ken Feinberg is not a judge. He serves on no court. This is done entirely outside the civil process. In fact, the administration itself is part of the Executive branch. We have separation of powers exactly to avoid this. The judicial branch is the one deemed to decide guilt and exact punishment, financial and otherwise. Now, our chief executive is usurping a power of the judiciary.

By doing this, the administration is creating a shadow court system strictly for civil suits related to the gulf mess. The judicial process can be painfully slow, and this process would likely cause all sorts of heart ache in the judiciary. The constitution is not a suicide pact. Still, we can't simply ignore the constitution because we've found a more orderly way to do things. While this may wind up paying money out more quickly and orderly, it's also under authority found neither in the Constitution nor in case law.

1 comment:

Joe said...

It was nice when we used to have a court system that could somewhat administer justice blindly. Now we can look forward to politicians picking and choosing who was wronged. I smell a big payday for the unions.

Also, I wonder if any BP stock owners are upset about the fact that they get to support leftist causes via the company putting money in a slush fund for political benefit and use by the Obama administration? Be wary of any company that employs ideologues - they will gladly hand over other people's money (taxes, company assets) for their cause. BP showed their leftist colors years ago (sad for those who bought BP stock thinking it was an investment) and appeared more than happy to hand their investors' money over. Forget the fact that this does nothing to protect them against future litigation. I predict BP leadership gets off scot-free (thanks to a wink, wink, nod, nod sort of arrangement) while the BP investors and employees take a bath.