It is possible the so-called escrow fund pressured by the Obama administration to impose upon BP (NYSE:BP) may not be legal. Here's how an opinion piece at Fox News describes it as having no legal basis:
BP’s announcement on Wednesday that it will pay $20 billion into an escrow account may sound like a win for the USA and victims of the Gulf oil spill. In fact, it could be a powerful new tool for the White House’s political machine, and is the latest manifestation of the Obama administration’s willingness to work outside the law. It also lays bare Big Oil’s willingness to get cozy with the left.
There is no legal basis for the Obama administration to induce BP to pay $20 billion into a kitty to be controlled by one of its political appointees. While this may play well in populist circles, create the appearance of action, and was apparently easy to foist onto BP’s hapless management, it weakens the rule of law by essentially circumventing the law.
There is already a well-established legal process for remedying the economic cost of someone else’s negligence. Every day, thousands of Americans sue other individuals or companies, either by themselves or via class actions that combine their efforts. The design and rules of these legal processes are laid out in laws crafted by Congress and state legislatures.
BP’s $20 billion was extracted outside of this legal framework for reasons that have not been explained. There is a high risk that this fund will be doled out based on political, not legal criteria. Rather than judges and juries making decisions, an economic commissar will.
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