Ask the Expert: Michael Conathan on BP in the Gulf
Is BP following through on its pledge to “make things right” in the Gulf Coast?
In the months after the spill, at the request of President Obama, BP established a $20 billion escrow fund to pay economic claims arising from the impacts of the spill. But it’s worth noting that they also filed for a tax credit recently that would effectively leave taxpayers paying for $10 billion of that $20 billion fund. Also they put a three-year cap on claims against that fund, meaning that as of 2013 no more claims would be received or would be paid. It’s worth noting as well that in the aftermath of the Exxon Valdez spill the Herring Fishery in Prince William Sound didn’t collapse until more than three years following that spill. So fishermen in that case would not be entitled to any renumeration under the fund even though clearly their economic hardship was a result of the spill.
BP has also recently found language in the Clean Water Act and sent a letter pointing out this language to a federal court. This language could potentially reduce their liability for Clean Water Act fines from an expected $4 to possibly $18 billion down to just $23 million. So clearly BP is backing away from its previous commitments to “make things right” in the Gulf.
How has the government response been to the spill and what can be improved?In the immediate aftermath of the spill Congress jumped into a seemingly endless series of hearings to discuss the various impacts of the spill from an environmental and economic standpoint. They introduced over 100 bills in the last Congress—not of which actually ended up becoming law.
This year the first actions of the Republican-controlled House of Representatives on oil-related legislation have been to move three pieces of legislation that would actually facilitate additional offshore drilling in the Gulf and open new areas in the Atlantic and the Pacific to drilling that are currently off limits. This is absolutely the wrong tack to take, and we have to fix the broken system before moving ahead.
Another example of something Congress should work on immediately to repair following the spill is the issue of liability limits. Currently the law sets the liability cap on economic damages from an oil spill at just $75 million. The damages from this spill are expected to run into the tens of billions. So clearly this is insufficient, and it needs to be addressed immediately by Congress.
Federal agencies also need to do their part to step up in response to the spill. While there have been some additional safety measures put in place and technology is being developed by oil companies that the companies claim will be able to handle a spill and a blowout like the BP Horizon event, there have been no assurances yet that that technology will work. It hasn’t been put in the ocean, and we simply don’t know how it will respond under those conditions. As a result, it seems premature to be proceeding with new leases as the Bureau of Ocean Energy Management, Regulation, and Enforcement is already doing.
Additionally, the Environmental Protection Agency, which approved application of over 2 million gallons of dispersant in the aftermath of the BP spill still has yet to do any additional testing to determine what the long-term health impacts of dispersant use may be.
So clearly the agencies have quite a bit to do to fulfill their role as well.
What must be done to ensure a robust environmental and economic recovery for the Gulf?Clearly for an economic and environmental recovery to be successful in the Gulf is going to require a significant investment of funds. President Obama’s National Oil Spill Commission as well as a report from Center for American Progress and Oxfam America have recommended investment of 80 percent of fines that BP will be required to pay under the Clean Water Act directly to Gulf Coast restoration efforts. Currently those funds would go into the general Treasury. But it’s logical to have those funds dedicated back to the region that experiences the impacts of the oil spill rather than simply being absorbed into the general fund.
Congress has already introduced bills in both houses to make this a reality, and Congress must act swiftly to enact these bills.
The fact is the Gulf Coast can use this oil spill as an opportunity to rebuild an economy that’s stronger, more diverse, and ultimately more sustainable than the one they have now that’s so heavily reliant on a fossil fuel economy.