Menendez: Lift the Liability Cap on Oil Firms

Posted July 22, 2010 at 4:04pm

For three months, we all watched in disgust as oil gushed freely into the Gulf of Mexico — and many families became motivated to change our energy ways.

Three months from now, will that feeling of disgust be a distant memory? Will the push for oil company accountability be placed on the back burner? Will the motivation to change the way we produce energy have subsided?

We should hope that the answer to all of these questions is no. If the lessons from this disaster are quickly forgotten, it will be a bad omen for devastated Gulf Coast communities and for our nation’s 21st-century economic and environmental security.

For coastal families that make their living off the Gulf’s waters and beaches — and that have seen their livelihoods drowning in a slick of oil — letting the disaster recede from memory will jeopardize their ability to be made economically whole again. Under the glare of the media spotlight, the pressure has been on BP to pay for all economic damages resulting from the spill.

The Obama administration secured the company’s agreement to put $20 billion in an independent escrow fund that could be used to pay economic liability claims. However, it was made clear that the fund sets neither a floor nor a ceiling for the amount of claims to be paid.

At any time, BP could invoke its legal limit of $75 million in liability, which all oil companies enjoy. That would leave thousands of Gulf Coast families facing billions of dollars in losses, and it would leave the taxpayers — or nobody — to pick up the tab.

This is why I have introduced the Big Oil Bailout Prevention Act, which would do away with the ridiculous $75 million liability cap for oil companies. The legislation, which has passed the Senate Environment and Public Works Committee, is written to be retroactive, so that damage from the Deepwater Horizon disaster is covered.

By holding oil companies that spill fully accountable for all economic damage they cause, we would ensure that coastal families and businesses will be protected and that taxpayers won’t be stuck with the bill. We will also ensure that, after a spill is stopped and the television cameras are packed up and taken away, the law will be on the side of coastal communities, not oil companies. In addition, we will help instill the discipline needed in the oil industry to ensure that it never cuts safety corners in the future.

Media attention is fleeting, and to rely on it to hold a polluter’s feet to the fire is an unsustainable and uncertain proposition. In the immediate aftermath of the 1989 Exxon Valdez disaster, the responsible company said all the right things about paying for damages. However, when press attention faded, the litigation began — all the way to the Supreme Court. The court ruled that Exxon was responsible for a reduced amount of liability almost 20 years after the spill. It was far too late for many families to reclaim their livelihoods.

The broader concern for all Americans is that letting the memory of this disaster fade will allow the legitimate questions it raised about our energy future to fade as well. Along with the horrific images of an unchecked oil gusher 5,000 feet below the Gulf’s surface, families were given informative and revealing press reports about our oil dependence.

For years, the oil industry spread the myth that technology has made oil drilling — including deep-sea drilling — almost foolproof. This disaster showed that deep-sea drilling is, in fact, a recent and risky endeavor that has been pushed by oil companies and the government alike. The American people learned that there in fact is no such thing as a “Too Safe to Spill” oil rig.

The public learned a lot about the Minerals Management Service and the comically lax enforcement of drilling safety regulations. It learned of the coziness between the oil companies and the federal officials charged with regulating them and how the line distinguishing the two has been blurred beyond recognition.

The public also learned that despite all of the talk in Washington, D.C., about transitioning away from dirty fuels of the past toward clean energy sources, taxpayers have been subsidizing enormously wealthy oil companies to explore and produce oil along our coastlines. They learned that some of the richest corporations in the world enjoy tax loopholes, worth at least $20 billion over the next 10 years.

All of these issues — brought into relief by the spill — have sparked varying levels of public outrage and concern. They certainly concern me, which is why I continue to fight against drilling along the Atlantic coast and why I have authored separate legislation to break the cozy relationships between oil regulators and the industry and to close oil tax loopholes.

This spill, along with sky-high gas prices in recent years, has caused more Americans than ever to think deeply about the consequences of sinking more resources and political support into dirty fuel sources that are subject to volatile price swings. They have begun to think more deeply about driving energy-efficient vehicles or using public transportation — and about supporting policies that will make clean energy sources more abundant and affordable.

In other words, for the past three months, as the Gulf of Mexico has been tarred, many families have been more focused than ever on changing the type of energy we use and changing the way our nation coddles the oil industry. This is an opportunity for us to think about clean, limitless sources of energy and the jobs that can be created from it.

If we allow ourselves to forget the outrage, desperation and sadness caused by this disaster, we will be cheating ourselves of a more stable and prosperous future. If we fail to heed the lessons of very recent history, we will be doomed to repeat it.

Sen. Bob Menendez (D-N.J.) is the chief sponsor of the Big Oil Bailout Prevention Act.