Corporate Immunity

$75 million dollars is currently the limit of liability for damage caused by oil spills. To describe this as a trivial sum, compared to the size of the corporations involved and to the actual damage that is being caused as a result of BP's Macondo well blowout, is not an exaggeration.

Carol Browner, formerly Administrator of the Environmental Protection Agency and now White House energy and climate advisor, says that there should be no cap on damages from oil spills. While "no kidding!" is a suitable response to her blindingly obvious remarks, changing the law will require hard work in the Congress to overcome the lobbying efforts of the oil industry.

Given that big oil's reputation is now even worse than that of politicians, peddlers of complicated derivatives, and used car salesmen, its lobbying efforts will likely result in little. Perhaps no more than the purchase of additional designer suits, and custom made shoes, for the denizens of K Street.

There are, however, real challenges to the passage of a properly reformed law on oil spill damages. Specifically, objections are already being heard from companies that are small in terms of the oil industry but really quite large by any objective standards. Their position is that, if they face unlimited liability, they will not be able to afford to drill in deep water and so should be spared full responsibility for their actions

Tough. Why should such smaller - but not small - companies receive special treatment at the expense of all of us?

Former Secretary of State Colin Powell's formulation of the [actually non-existent] Pottery Barn rule 'You broke it, you bought it' must apply to all offshore drilling regardless of the water depth. The size of the corporation is irrelevant while the grant of a permit to drill must, among many other things, be conditional upon adequate insurance to cover the possibility of very substantial damage to the environment, to infrastructure, and to the livelihoods of bystanders. Your correspondent does not have the knowledge to specify an adequate amount of insurance but suspects that it should be several billions of dollars.

A positive side effect of very large insurance policies would be that insurance companies would soon acquire significant expertise in the evaluation of such risks. Steam boiler explosions, common one hundred years ago, are now rare. Much of that can be attributed to the development of safety procedures and practices by The Hartford which was, and remains, the largest insurer in that field. There is no reason why the same process would not operate to reduce drilling risk.

There are bigger questions, however, posed by the present pathetically low limits on liability for damages caused by oil spills.

Why was the limit set so low? Who is running our country?

Are we, as citizens, and as contemplated by the Constitution, in charge? Or does the money wielded by Corporations, Unions, and other large associations such as the National Rifle Association or the Sierra Club provide the sort of control over our elected representatives that, were they to know about it, would set the Founding Fathers spinning in their graves.

Perhaps words once written by that A.J. Liebling will provide food for thought: "Freedom of the press is guaranteed only to those who own one." It is surely a certainty that more money equates to a larger press and, thus, to more influence.