By Russell Berman - 06/15/10 12:38 AM EDT
Congressional pressure on BP intensified Monday as lawmakers prepared to grill company executives in hearings and urged the oil giant to set aside $20 billion for a Gulf spill relief fund.
With the deepwater oil gusher nearing the two-month mark, BP faces another week under the Washington klieg lights.
The speech follows his fourth and longest trip to the Gulf Coast, where he met with struggling local business owners and pleaded for tourists not to abandon the region.
On Capitol Hill, lawmakers readied a pair of high-profile hearings: one on Tuesday with CEOs from the top five oil companies, and another on Thursday in which BP chief Tony Hayward will testify for the first time since the leak began on April 20.
In advance of Thursday’s appearance, two senior House Democrats warned Hayward that a preliminary congressional inquiry into the spill had found that BP “appears to have made multiple decisions for economic reasons that increased the danger of a catastrophic well failure.”
“The committee’s investigation is raising serious questions about the decisions made by BP in the days and hours before the explosion on the Deepwater Horizon,” Reps. Henry Waxman (D-Calif.) and Bart Stupak (D-Mich.) wrote in a letter to Hayward.
Waxman is chairman of the Energy and Commerce Committee, while Stupak heads the panel’s Subcommittee on Oversight and Investigations, which will hear Hayward’s testimony.
They cite company documents obtained during their investigation, including an e-mail from a BP engineer that refers to the doomed Macondo well as “a nightmare well” five days before the explosion that killed 11 workers and set off the massive oil leak that is still gushing into the Gulf of Mexico.
“In spite of the well’s difficulties,” Waxman and Stupak write, “BP appears to have made multiple decisions for economic reasons that increased the danger of a catastrophic well failure. In several instances, these decisions appear to violate industry guidelines and were made despite warnings from BP’s own personnel and its contractors. In effect, it appears that BP repeatedly chose risky procedures in order to reduce costs and save time and made minimal efforts to contain the added risk.”
The letter indicates that the congressional inquiry has only confirmed suspicions about BP’s actions that lawmakers have been expressing for weeks. They have criticized the oil giant for cutting corners and favoring profit over safety in constructing its deepwater wells. And the letter sets up what is likely to be a contentious week of hearings for BP executives on Capitol Hill, as lawmakers vent weeks of public outrage over the crisis.
As Congress probed the cause of the spill, Democratic leaders appeared to be coalescing around an Obama administration plan to ensure that BP pays for all costs associated with the disaster. The plan called for the company to put billions of dollars into an escrow account that would be used to reimburse Gulf businesses and individuals for damages and lost income.
Obama is expected to address the issue in his Tuesday speech and directly with BP executives in a White House meeting Wednesday. The White House said Monday it had the power to force BP to set up the account, which would be independently administered, with the goal of paying out claims faster than the company is doing now.
“We’re confident that we have the legal authority to compel BP to make sure that the folks that they have affected here are made whole,” spokesman Bill Burton told reporters on Air Force One. “And we’re also confident that we’re going to be able to move forward on that. The signs from BP aren’t that there is going to be a protracted legal battle over this or anything like that.”
“Establishment of this account would serve as an act of good faith and as a first step towards ensuring that there will be no delay in payments or attempt to evade responsibility for damages,” the senators wrote.
“Although creating this account at this level in no way limits BP’s liability, we believe it will do more to improve BP’s public image than the costly public relations campaign your company has launched.”
While BP has pledged to pay “all legitimate claims” and restore the Gulf Coast, the efforts by policymakers in recent days reflect a concern that the government lacks a binding commitment from the firm. Leading Democrats have also pressured BP to suspend dividend payments to its shareholders while Gulf residents are waiting for their claims to be paid.
Obama on Monday toured affected areas in Mississippi and Alabama, meeting with governors and local officials as well as with business owners and residents. He pledged a long-term commitment to the region, cautioning that a recovery would take time. He also used the visit to boost tourism, which has fallen off since the spill began.
“There’s still a lot of opportunity for visitors to come down here — a lot of beaches that are not yet affected or will not be affected,” Obama said.
Sam Youngman contributed reporting.