BP Spill: How the Gulf Coast Claims Process Makes Us Less Safe
While BP became Washington's whipping boy in the wake of the Gulf oil spill, it appears political leaders used only words rather than sticks and stones. According to an article published by The Donovan Law Group, the victims' compensation process both greatly reduces BP's liability in possible lawsuits and guarantees continued operation of BP drilling in the Gulf. By setting up the Gulf Coast Claims Facility, a victims' compensation office working in parallel to the claims process established under the 1990 Oil Pollution Act, BP has managed to settle with over 150,000 claimants for an average of a mere $2,500 per settlement. In order to receive this lump sum, claimants had to agree to forgo their right to sue BP for any effects of their negligence. Furthermore, the funds that will constitute the much-trumped up $20 billion victims' compensation escrow fund are constituted of future revenues from BP's US gas and oil drilling. This compensation process is a parody of justice.
The ways in which BP escapes fitting punishment for criminal negligence in this case are crafty and astounding. By setting up the redundant claims office, several important provisions of OPA are circumvented for those unlucky enough to apply for compensation there rather than through OPA. The GCCF payment is a one-time event, whereas no OPA payment can preclude further payments from the liable party so that victims are fully compensated. Under OPA, no payment can prevent claimants from suing to recover the full value of their possibly life-long loss. This is a particularly important part of the process because threat of lawsuit is one of the only deterrents a corporation has in such cases from violating safety regulations. (The lower the total of the risk calculation, number of victims x cost per victim, the more unsafe operations can be afforded.) Finally, the fact that BP, whose 2010 Q1 market cap was $177 billion, will set up a probably never to be used escrow compensation account from future profit means that the company has nothing to fear from the US government. Government fines, the only other deterrent of lax safety, are a non-factor.
Sadly for oil platform workers, costal residents, and all citizens, the elimination of the two main deterrents of poor safety practices will result in a less safe oil production system. Unsafe practices are now proven to be inexpensive to defend. As we have seen with the shameful performance of the Mineral Management Service, the organization in charge of enforcing safety rules at oil rigs, existing regulations can be easily skirted and regulators often perform their duties poorly. New, stricter safety legislation can soon be forgotten too, but the memory of financial scars will last. Unlike the livelihoods of thousands, it appears that BP has made it out of the worst oil spill in US history unscathed.
Photo courtesy of Geograph.
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