May 26, 2010

Believe It or Not, It Could Be Worse

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In April 20th, an oil well blowout resulted in a catastrophic fire aboard the offshore drilling platform Deepwater Horizon.  Situated some 40 miles off the coast of Louisiana, the platform sank, leaving 11 people missing and 17 injured, as well as a monstrous oil geyser vomiting thousands of barrels of raw crude and natrural gas into the Gulf of Mexico each day.  Because British Petroleum (BP), the holder of the drilling lease, has refused to allow independent examination of this toxic eruption, estimates of the volume of poison pumping into the Gulf vary from BP's own 5,000 barrels per day, to as high as 100,000 barrels every 24 hours. 

In any case, the Deepwater Horizon spill is rapidly developing into one of the worst - if not the worst - environmental disasters in the history of the United States.  The complete lack of substantive progress made in stanching this toxic eruption means that one of North America's busiest fishing and tourism areas is in very real danger of becoming a lifeless spill pond, its beaches, marshes and wetlands tragically, and perhaps fatally, fouled.

Federal and local state officials have roundly condemned BP's failure to stop the flow of oil from the damaged well, but other than promising to keep a collective "boot on their neck," responsibility for cleaning up this catastrophe remains in the hands of those who allowed it to occur, and there has been little visible penalty to British Petroleum.  That may be changing, however, as the Environmental Protection Agency (EPA) has begun weighing drastic sanctions against the company.

Officials at the Environmental Protection Agency are considering whether to bar BP from receiving government contracts, a move that would ultimately cost the company billions in revenue and could end its drilling in federally controlled oil fields.
Federal law allows agencies to suspend or bar from government contracts companies that engage in fraudulent, reckless or criminal conduct. The sanctions can be applied to a single facility or an entire corporation. Government agencies have the power to forbid a company to collect any benefit from the federal government in the forms of contracts, land leases, drilling rights, or loans.

The most serious, sweeping kind of suspension is called "discretionary debarment" and it is applied to an entire company. If this were imposed on BP, it would cancel not only the company's contracts to sell fuel to the military but prohibit BP from leasing or renewing drilling leases on federal land. In the worst cast, it could also lead to the cancellation of BP's existing federal leases, worth billions of dollars.
In the past decade environmental accidents at BP facilities have killed at least 26 workers, led to the largest oil spill on Alaska's North Slope and now sullied some of the country's best coastal habitat, along with fishing and tourism economies along the Gulf.
"In 10 years we've got four convictions," [former debarment attorney Jeanne] Pascal said, referring to BP's three environmental crimes and a 2009 deferred prosecution for manipulating the gas market, which counts as a conviction under debarment law. "At some point if a contractor's behavior is so egregious and so bad, debarment would have to be an option."
It's doubtful that the EPA will make any decisions about BP's future in the United States until the Gulf investigation is completed, a process that could last a year. But as more information emerges about the causes of the accident there - about faulty blowout preventers and hasty orders to skip key steps and tests that could have prevented a blowout - the more the emerging story begins to echo the narrative of BP's other disasters. That, [former EPA debarment official Robert] Meunier said, could leave the EPA with little choice as it considers how "a corporate attitude of non-compliance" should affect the prospect of the company's debarment going forward.
British Petroleum lags the rest of the oil industry in terms of safety, and in light of the firm's repeated failure to mend its ways, something drastic needs to be done.  For a number of reasons, administrative, agency-level action may be the only way to do it. 

While BP has pledged to pay all costs associated with the cleanup and economic damages, the reality is that oil spill punitive damages are currently limited to $75 million dollars, an amount equal to less than 2 days of profit for the company. With the daily cost of the disaster climbing to as high as $33 million, its obvious that the existing cap is totally inadequate.  With British Petroleum's first quarter profit for 2010 totaling $5.9 billion, the company has the resources to cover costs, but without the force of law behind it, the promise to address the spill and compensate those whose livelihoods have been damaged is a thin one.  There will be pressure on company leadership from shareholders as the cleanup bill mounts, and without the force of law, the assurance to pay is nothing more than a policy easily reversed by BP's board of directors.

Two attempts have been made in the Senate to retroactively increase the cap on spill liabilty, but they were blocked, respectively, by Republican Senators Lisa Murkowski of Alaska and James Inhofe of Oklahoma.  Both lawmakers argued that increasing the limits of liability would be bad for competition, since smaller companies wouldn't be able to support the financial risks.  Missing from this argument, of course, was any discussion of the fact that this means it's okay for any oil company - large or small - to inflict more than $75 million in damage and simply walk away.  Considering the magnitude of the profits enjoyed by companies like BP, this argument is both a bad joke and confirmation that Mrs. Murkowski and Mr. Inhofe couldn't be more clearly in the pockets of the petroleum industry.

The unfortunatey reality is that there is probably no alternative to pressing BP to clean up its mess.  Unlike disasters involving earthquakes, floods, fires and even military attack, federal and state governments simply are not experienced in the resolution of deep water oil well blow-outs.  The EPA could make a show of "taking over," but would then almost certainly turn around and hire the very same people who are working to stop the deadly billow of pollution into the Gulf of Mexico.

As bad as things are, however, there is still one way they could be even more awful: Rand Paul, newly-nominated, libertarian GOP candidate for one of Kentucky's Senate seats, could be in charge.  According to Mr. Paul, we should be a lot more sympathetic to British Petroleum:
What I don't like from the president's administration is this sort of, 'I'll put my boot heel on the throat of BP' ... I think that sounds really un-American in his criticism of business... I think it's part of this sort of blame-game society in the sense that it's always got to be somebody's fault instead of the fact that maybe sometimes accidents happen.
I'm not sure how that jibes with the libertarian mantra of personal responsibility - or rather, I am certain that it doesn't - but it's a reminder that, while we have every right to be deeply frustrated and angry about BP's damage to the Gulf of Mexico, there are still some people capable of making a horrible situation worse.

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