BP CEO Tony Hayward has been careful to say his company will pay for the "clean-up" from the oil spill -- meaning, not the damages. But if past disasters are any guide, the clean-up will be just a small fraction of the damages from the spill (the deaths, the damage of the oil to natural resources and the humans that depend on them, and more). Many media have commented that Hawyard is a “jerk”, but the who-pays-for-the-damages problem isn't really about Hayward and BP. Rather, it points out a weakness with our health and safety laws not unique to this case – they do not always demand and require that industry pay for the harm it causes society.
Hayward, in fact, has been answering in the only way that he legally can while still representing the shareholders of the corporation. Why? The law (specifically the Oil Pollution Act, passed after Exxon-Valdez) requires BP to “clean up” the oil spill itself, but caps economic damages at $75 million. What if BP decided it wanted to pay all of the damages, though? Corporate law, which defines the fiduciary responsibility of a Corporate Board as maximizing shareholder profit, would forbid the managers of BP from voluntarily offering to pay more than the law required (unless they could show that their public image would be so improved as to justify the cost). Doing so would risk shareholder derivative suits (which the company will likely face in any event).
I'd be happy to change the rules governing corporate responsibility, but a far easier solution would be to stop subsidizing the private interest at cost to the public. Because that is what liability caps and myriad other federal and state laws do.
Full textCPR Member Scholar Holly Doremus and fellow UC Berkeley School of Law Professor Eric Biber have penned an op-ed in today's LA Times arguing that the Administration's plan to split the Minerals Management Service in two in response to the BP oil spill disaster falls short of what's needed.
Write Doremus and Biber:
Full textThe political pressure to prioritize rapid development over safety won't evaporate if the MMS is split. The new safety agency would still be under the supervision of the Department of Interior, where it would have to compete with its bureaucratic sibling. Environmental and safety interests have been losing that competition for years. Giving them a new name and logo won't automatically change that outcome.
Second, environmental protection is not just a matter of enforcing a clear set of regulations as wells are being drilled or operated. The key environmental questions come much earlier, when the MMS decides where to offer leases, sells those leases and approves permits for exploration and development. That's when the fateful decision was made to allow oil production in ultra-deep waters, on the basis of what turned out to have been absurdly rosy predictions about the likelihood and magnitude of spills and about the efficacy of response measures. Under the administration's plan, those key decisions would remain with the leasing agency, not with the newly independent enforcement arm.
Cross-posted from Legal Planet.
As oil drifts on and offshore in the Gulf of Mexico, forcing the closure of wildlife refuges and more fishing grounds, Interior Secretary Ken Salazar has called a temporarily halt to new offshore drilling while his staff prepare a report on the disaster and even Republicans in Congress are calling for new investigation of the troubled Minerals Management Service.
Clearly, things didn’t go as planned on the Deepwater Horizon. Notwithstanding Rush Limbaugh’s wild accusations of environmentalist sabotage, no one has seriously suggested that the fire, the sinking of the rig, and the failure of the blowout preventer were anything but accidental. But that’s far from the end of the story. Accidents are not always unforeseeable or unpreventable. BP, its contractors, the Minerals Management Service, and the Coast Guard could have and should have foreseen the possibility of a blowout, but in typical human fashion they preferred a more rosy outlook.
From an environmental law perspective, perhaps the most depressing aspect of this disaster is the extent to which it seemed to catch everyone by surprise. We’ve long had regulations in place under the National Environmental Policy Act that are intended to force a more careful advance look. But that didn’t happen. Dan Farber is right to see this disaster as a call for better risk assessment for offshore drilling. But (as I know Dan is well aware), simply mandating worst case analysis or better risk assessment won’t make it happen. The Gulf oil spill highlights the slippage between the law and the reality of environmental analysis for offshore drilling. It is a story of institutional failure as much as of equipment failure, and the postmortem should include exploration of how the institutions might be improved.
The lesson to be drawn is not that NEPA review is useless. But environmental review as practiced in the US does have some important limits, and even where it could perform well it needs better implementation and oversight. I offer these tentative thoughts about lessons from the Deepwater Horizon for the law and practice of environmental review.
NEPA can’t catalyze some of the thinking we should want, because that thinking needs a larger forum. NEPA sets up a project-by-project approach to environmental review. It’s hard to see the cumulative effects of a variety of actions from that perspective, as the Council on Environmental Quality recognizes. More than that, NEPA is an awkward tool for comparing a proposed action with very different approaches to achieving the same goal. One goal of offshore drilling in the Gulf, for example, is to reduce dependence on foreign oil. That’s a laudable goal with environmental as well as national security implications since, as Melinda Taylor recently pointed out, “the transportation of crude in tankers from the Middle East and elsewhere is responsible for 45 percent of the oceans’ oil pollution.” But its a goal that is just as well served by any method of conserving or generating energy.
Full textThis post is written by CPR President Rena Steinzor and CPR Policy Analyst James Goodwin.
President Obama appointed Lisa Jackson to head the Environmental Protection Agency (EPA) on December 15, 2008. Confirmed by the Senate on January 22, 2009, she is a Cabinet-rank member of the Administration and the first African American to serve as the public face of environmental protection for any administration. Whether she wears an EPA baseball cap and windbreaker to tour the waterfront of her native New Orleans, now threatened by the BP oil spill, or she sits in the witness chair with television lights in her face to testify before any one of the dozen congressional committees claiming a piece of her agency, Jackson rises or falls on her own merits. And she has mostly been rising, driving her 18,000 member staff to new levels of activity and invention.
How lamentable, then, that her first notable reversal was administered not by Mother Nature, Congress, the economy, or even her own mistakes, but rather by an unnamed squad of number-crunching economists working in the bowels of Peter Orszag’s Office of Management and Budget (OMB), and specifically within the Office of Information and Regulatory Affairs (OIRA), headed by Cass Sunstein. And what a nasty reversal it was. Taking a page out of the George W. Bush Administration’s playbook, the economists decided to second-guess Jackson’s judgment on how to deal with 1,000 or so leaking, unstable coal ash dump sites threatening communities across the country. A few days after announcing its proposal to the public, EPA at last gave us a peak behind the curtain of obscurity OIRA had erected around months of intensive industry lobbying, posting a red-lined version of the toxic coal ash regulatory proposal it sent over to the economists last October.
Full textCross-posted from IntLawGrrls.
Today's New York Times update on the Deepwater Horizon disaster opens with BP’s failed efforts to control the remaining two leaks via concrete, or remote control robots. Strangely, the article makes no mention of the missing remote shut-off valve called an acoustic switch. This $500,000 device might well have prevented this whole catastrophe. But, the United States does not require that deepwater oil rigs install an acoustic switch, and BP and Transocean decided to forego it. The United States considered requiring these switches in 2000, but Bush administration nixed the idea after industry pushback. My guess is that Vice President Cheney's secretive Energy Task Force had a hand in that, but since the Task Force operated entirely behind closed doors, we may never know the truth of how the United States made this ill-considered choice. Apparently, the Times does not consider the fact that this device, which is required in other major off-shore drilling countries, like Norway and Brazil, didn't make the company's cost-benefit cut, to be part of “all the news fit to print”.
With that critical piece of information missing, the Times tells us a tale of plucky engineers trying innovative solutions that, by gosh, just might work. The article is full of solemn quotes like "as so many other response efforts so far have shown, engineering problems that can be solved on the ground can prove perilously stubborn 5,000 feet underwater." The coverage has a "Gee, who could have guessed" quality that is extremely disturbing.
Full textCross-posted from Legal Planet.
The National Environmental Policy Act (NEPA) is the nation’s look-before-you-leap environmental law, intended to make sure that we understand what environmental problems we might result before we act. To that end, federal agencies must prepare an environmental impact statement (EIS) before they take, authorize, or provide funding for actions that may have significant adverse environmental impacts. Useful as NEPA analysis is, the Deepwater Horizon disaster vividly illustrates the need to fix one of its shortcomings.
The White House’s Council on Environmental Quality (CEQ) oversees NEPA compliance. It has issued regulations prescribing how agencies should prepare EISs and what should be in those documents. The regulations are almost unchanged since they were originally issued during Jimmy Carter’s presidency, with one conspicuous exception. Where the impacts are uncertain or unknown, the regulations used to require that the EIS “include a worst case analysis and an indication of the probability or improbability of its occurrence.” Sensible as it sounds, that requirement was renounced in the Reagan administration in favor of a vague call to evaluate “reasonably foreseeable” environmental impacts, including low-probability but potentially catastrophic impacts, “provided that the analysis of the impacts is supported by credible scientific evidence, is not based on pure conjecture, and is within the rule of reason.”
Full textThe system of checks and balances devised by the Framers of the Constitution 220 years ago was all about the sharing of power. In practice, it makes for a messy flow chart, and lends itself to lots of inside-the-Beltway conversation about who’s in, who’s out, who’s winning and who’s losing. But as messy as the how-a-bill-really-becomes-a-law flow chart is, the structure within the White House itself usually features one constant: When the President says jump, staffers ask how high.
Every now and again, however, things get turned on their head, and the forces of bureaucracy manage to thwart Presidential will. That dynamic appears to be at work right now in the White House Office of Management and Budget, where Obama appointees Peter Orszag and Cass Sunstein, the director of OMB and Administrator of the Office of Information and Regulatory Affairs, respectively, seem to be operating in defiance of an Executive Order by President Obama. On March 17, 2010, several of my fellow CPR Board Members and I wrote to White House counsel Robert Bauer asking him to investigate Orszag and Sunstein’s clear violation of decisions made by this President with respect to regulatory review.
The most troubling practice is OIRA’s assertion of authority to review guidance documents from regulatory agencies, which include speeches, advice letters, electronic mail exchanges and other efforts to advise regulated parties about how to comply with regulations. OIRA typically reviews major regulations, and has an Executive Order authorizing it to do so, but guidance documents are another matter. This huge extension of OIRA’s field of operation was first established in the waning days of the George W. Bush Administration with the issuance of Executive Order 13,422. The Bush EO’s extension of this authority was criticized by progressives as an example of brazen overreaching that could paralyze the federal government’s efforts to regulate everything from financial services to pollution.
Full textIn response to a question at a National Press Club appearance on Monday, Lisa Jackson said that the EPA would be finalizing an action plan on BPA in the "very near future."
As I noted here in January, the EPA had announced in September that it would be releasing action plans on a number of chemicals, including BPA, but when the first group of plans was released in late December, BPA was not among them. I raised a red flag because EPA had sent six draft chemical action plans to White House's Office of Information and Regulatory Affairs (OIRA) on December 14, OIRA hosted a meeting with BPA industry lobbyists a week later, then the BPA action plan was absent from the list of plans released on December 30. OIRA had no business reviewing the chemical action plans in the first place since they are not regulatory actions covered by EO 12,866.
Last week, Sen. Chuck Schumer put some pressure on EPA and OIRA, asking Administrator Jackson for a written explanation regarding the “confounding decision” to hold back the BPA action plan. Now that the BPA action plan has been released from OIRA’s grip (Inside Story, 3/4/10) and delivered to EPA for publication, what can we expect it to say?
Full textThis post, by Sarah Vogel, is cross-posted from The Pump Handle.
If you thought the scientific debate about bisphenol A was over or even quieting down, you haven’t been reading the latest issues of Toxicological Sciences. (What are you doing with your spare time?) Last month in an editorial piece published in the journal, Richard Sharpe queried: “Is It Time to End Concerns over the Estrogenic Effects of Bisphenol A?” His answer was an unequivocal ‘yes’, based on the latest study from Ryan et al. (published in the same issue) that found no reproductive effects from bisphenol A exposure in rats. The study, according to Sharpe, “throws cold water on this controversy.”
Not so fast. On Wednesday, February 17, 2010, the journal published a second letter to the editors, “Flawed Experimental Design Reveals the Need for Guidelines Requiring Appropriate Positive Controls in Endocrine Disruption Research,” by Fred vom Saal and 23 other researchers. In a position quite contrary to Sharpe’s, the letter pointed to an important design flaw in the study.
This latest iteration of the controversy is about a fundamental and persistent challenge in the research on bisphenol A and other endocrine disrupting chemicals—what is the appropriate study design. Issues of animal selection, route of exposure, animal feed and housing, and appropriate use of positive controls all point to the complexity of studying extremely low levels of endocrine disruptors.
Full textThe Milwaukee Journal-Sentinel had its latest article on BPA this weekend, this time looking at the role of the December 22 meeting between the industry and OIRA. Writer Meg Kissinger contrasts the forceful EPA statements on BPA from last year with the lack of an EPA action plan on the chemical now. As for the documents presented to OIRA at the meeting,
The Journal Sentinel reviewed the list and found 13 of the 19 papers and presentations cited were paid for by the BPA industry. The funding source for the authors of two other papers could not be determined. Only one was written by a scientist without ties to the industry.
Perhaps it's not surprising. But it bears noting that this is what's going on over there.
Full text