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BP Escrow Fund Set-Up Is Inappropriate, Would Make Government a Virtual Partner in Gulf Oil Production

Aug. 11, 2010

BP Escrow Fund Set-Up Is Inappropriate, Would Make Government a Virtual Partner in Gulf Oil Production

Public Citizen Sends Letter to Obama Citing Conflicts of Interest and Calling for a Change in the Fund’s Structure

WASHINGTON, D.C. – A proposal to use revenue from BP’s oil and gas wells in the Gulf of Mexico to ensure the solvency of a $20 billion escrow fund for victims is a bad idea because it will create a conflict of interest for the government and make it a partner in Gulf oil production, Public Citizen told the administration today.

In a letter sent to President Barack Obama, Public Citizen noted that the proposed arrangement creates two main conflicts:

1) The proposal would inhibit the government’s ongoing criminal probes of the company. The government would be reluctant to mete out harsh sanctions to BP – such as banning the company from federal leases in the Gulf – if the victims’ fund relies on BP revenue from the Gulf.

2) BP’s management problems are well-known and deep. The company has one of the worst environmental and worker safety records in the business. If the escrow fund is conditional on offshore drilling profits, would the administration address BP’s systemic safety problems that the Deepwater Horizon incident has exposed?

“The proposed arrangement is wildly inappropriate, as it will make the government and BP virtual partners in Gulf oil production,” said Tyson Slocum, director of Public Citizen’s Energy Program. “It will give the government a financial incentive to become an even bigger booster of offshore oil drilling in the Gulf – which was the fatal flaw of the Minerals Management Service at the time of the BP disaster.”

 Public Citizen urges the administration to change the way the fund is structured to ensure the government can remain unbiased and prioritize the public’s interest – not BP’s interests.

The letter is available at https://www.citizen.org/our-work/access-justice/articles/letter-president-obama-regarding-whistleblower-protections.