There are two congressional representatives from Minnesota in the news for their role in the BP oil tragedy. They are James Oberstar and Michele Bachmann.
Their response to this American disaster provides a very clear insight into the important differences between them. That difference is made clearest by their own words.
From James Oberstar, serving in his 17th term in Congress, in his position as chair of the investigation into the BP spill, opened on June 9th with the following:
STATEMENT OF THE HONORABLE JAMES L. OBERSTAR
HEARING ON LIABILITY AND FINANCIAL RESPONSIBILITY FOR OIL SPILLS UNDER THE OIL POLLUTION ACT OF1990 AND RELATED STATUTES
June 9, 2010
Today, we will examine the issues of liability and financial responsibility for oil spills under the Oil Pollution Act of 1990 and other related statutes.
The liability, financial responsibility, and insurance issues surrounding the Deepwater Horizon disaster are complex. Estimates suggest that losses associated with this casualty could result in between $1 billion and $3.5 billion in claims. These damages will far exceed the liability caps that apply to offshore facilities, with a limit of $75 million. In fact, if these predictions prove accurate, damages will exceed the amount available in the Oil Spill Liability Trust Fund.
The tragedy of the Deepwater Horizon shows the need for a comprehensive review of the liability concepts in the laws now in effect. Existing laws were developed from centuries of maritime history to deal with damages to persons and property from accidents involving seagoing vessels. A vessel carries a known quantity of oil or other cargo. There is a reasonable basis for estimating the worst possible case of damages that would result from release of all of the oil. This, in turn, establishes a basis for a liability cap and setting levels of required insurance.
By contrast, the Deepwater Horizon disaster demonstrates that when we are dealing with a facility for drilling rather than a merchant vessel, the amount of oil that can be released is highly unpredictable and can be astronomical. Deepwater Horizon also demonstrates that the technology for deepwater drilling is much riskier and uncertain than merchant vessel technology.
In short, Deepwater Horizon shows us that we need to develop a financial and liability program based on the technological complexities and realities of deepwater drilling, rather than simply adding to the concepts developed for vessels.
In addition to liability issues, the Deepwater Horizon tragedy demonstrates that for deepwater drilling complete reliance on industry does not provide the safety regime we need. The Federal Government has allowed the drilling industry to self police through certification, engineering and design; it is time that we take back control over all safety issues associated with deep sea oil drilling operations.
The issues for consideration in this hearing include raising or eliminating the cap on liability under the Oil Pollution Act (OPA) for facilities and vessels, and raising the levels required for demonstration of financial responsibility. An important subsidiary issue is whether any changes should be applied retroactively to the Deepwater Horizon spill, and whether existing caps and insurance requirements are incorporated in existing leases and, if so, whether the government would be in breach of contract and liable for damages if liability or insurance requirements were raised.
With regard to the liability caps for facilities, one option is to remove the caps altogether. A major argument against liability caps is that these caps can reduce the incentives for operators to take steps necessary to ensure safety. In addition, liability caps that are well below the level of damages from a spill will mean that persons suffering damages will have to be reimbursed exclusively from the Oil Spill Liability Trust Fund; if there are not sufficient amounts available in the Trust Fund, the injured persons will either not receive compensation or will have to be compensated by general revenue from taxpayers.
The argument in support of liability caps is that, without caps, only the largest companies will be willing to drill in the deepwater and run the risk of huge damages. This could lead to less competition for drilling leases and lower proceeds to the Federal Government for selling these rights. Limiting drilling to the largest companies may result in less drilling and the supply of oil may be reduced.
Somewhat different factors are involved when we consider raising or eliminating the caps for vessels. If smaller vessels, such as tug barges carrying home heating oil, are subject to a major increase in expenses for insurance, there may be a loss of shipping capacity that would be detrimental to consumers. Moreover, the potential damages from a spill from a vessel are more predictable than the losses from an uncontained well. The amount of oil carried by a vessel is known, while the amount of oil that would be release by a spill such as the Deepwater Horizon is highly speculative scientific guesswork.
While the caps for facilities have not been adjusted since OPA was enacted, the caps for vessels have been raised by law and administrative action to adjust for inflation.
The Deepwater Horizon tragedy also demonstrates a need for change in the trust fund that backs up individual responsibility for damage. If the costs of cleaning up an oil spill and the costs of claims for damages resulting from the spill exceed the limits in OPA, the Oil Spill Liability Trust Fund is available to cover the costs. The Trust Fund is funded predominately by an eight-cents-per-barrel tax on crude oil received at U.S. refineries. The tax is paid by the refinery operators.
Currently, the Trust Fund has a balance of approximately $1.6 billion, with a cap on expenditures from the Trust Fund of $1 billion and $500 million for natural resource damages. The House has passed legislation to raise the tax on crude oil to 34 cents per barrel and to raise the caps on Trust Fund expenditures to $5 billion, with $2.5 billion for natural resource damages per incident. Still, the Coast Guard has informed us that it will run out of money to fight this disaster possibly next week because it will have exhausted the $100 million advance provided from the Trust Fund.
On May 13, 2010 Transocean filed a complaint in Federal court in Houston to limit its liability to about $26.7 million under a little-known statute – the Limitation of Liability Act of 1851. The Department of Justice has since filed a motion opposing Transocean’s petition. (enlarged type, my emphasis - note MILLIONS limit, compared to the $20 BILLION escrow fund negotiated by President Obama.)
The 1851 Act was put into place before ship owners had access to insurance to encourage American ship owners to invest in shipping, and to put the American shipping industry on an even footing with its competitors in Europe. The 1851 Act allows ship owners to limit their liability to the value of the vessel and her cargo.
Certainly, the claims for personal injury and death and economic losses that are coming forward and will continue to come forward as a result of the Deepwater Horizon casualty will far exceed the value of the rig or whatever was owed to Transocean by BP and others.
The history of the 1851 Act suggests that it was bad law from the start. Among other criticisms, Gilmore and Black noted in 1975 in The Law of Admiralty:
No doubt when more obscure statutes are drafted, the Congress will draft them, but it is difficult to believe that any future body of law makers will ever surpass this extraordinary effort … The only safe thing to do with such a statute is to repeal it.
As we reexamine existing liability laws, we should consider revisions to such laws as the Death on the High Seas Act and the Jones Act, which prevent persons injured on vessels from recovering non-economic damages generally available under tort law.
I look forward to the testimony of each of our witnesses and I thank you all for coming.
_______________________________________
Their response to this American disaster provides a very clear insight into the important differences between them. That difference is made clearest by their own words.
From James Oberstar, serving in his 17th term in Congress, in his position as chair of the investigation into the BP spill, opened on June 9th with the following:
STATEMENT OF THE HONORABLE JAMES L. OBERSTAR
HEARING ON LIABILITY AND FINANCIAL RESPONSIBILITY FOR OIL SPILLS UNDER THE OIL POLLUTION ACT OF1990 AND RELATED STATUTES
June 9, 2010
Today, we will examine the issues of liability and financial responsibility for oil spills under the Oil Pollution Act of 1990 and other related statutes.
The liability, financial responsibility, and insurance issues surrounding the Deepwater Horizon disaster are complex. Estimates suggest that losses associated with this casualty could result in between $1 billion and $3.5 billion in claims. These damages will far exceed the liability caps that apply to offshore facilities, with a limit of $75 million. In fact, if these predictions prove accurate, damages will exceed the amount available in the Oil Spill Liability Trust Fund.
The tragedy of the Deepwater Horizon shows the need for a comprehensive review of the liability concepts in the laws now in effect. Existing laws were developed from centuries of maritime history to deal with damages to persons and property from accidents involving seagoing vessels. A vessel carries a known quantity of oil or other cargo. There is a reasonable basis for estimating the worst possible case of damages that would result from release of all of the oil. This, in turn, establishes a basis for a liability cap and setting levels of required insurance.
By contrast, the Deepwater Horizon disaster demonstrates that when we are dealing with a facility for drilling rather than a merchant vessel, the amount of oil that can be released is highly unpredictable and can be astronomical. Deepwater Horizon also demonstrates that the technology for deepwater drilling is much riskier and uncertain than merchant vessel technology.
In short, Deepwater Horizon shows us that we need to develop a financial and liability program based on the technological complexities and realities of deepwater drilling, rather than simply adding to the concepts developed for vessels.
In addition to liability issues, the Deepwater Horizon tragedy demonstrates that for deepwater drilling complete reliance on industry does not provide the safety regime we need. The Federal Government has allowed the drilling industry to self police through certification, engineering and design; it is time that we take back control over all safety issues associated with deep sea oil drilling operations.
The issues for consideration in this hearing include raising or eliminating the cap on liability under the Oil Pollution Act (OPA) for facilities and vessels, and raising the levels required for demonstration of financial responsibility. An important subsidiary issue is whether any changes should be applied retroactively to the Deepwater Horizon spill, and whether existing caps and insurance requirements are incorporated in existing leases and, if so, whether the government would be in breach of contract and liable for damages if liability or insurance requirements were raised.
With regard to the liability caps for facilities, one option is to remove the caps altogether. A major argument against liability caps is that these caps can reduce the incentives for operators to take steps necessary to ensure safety. In addition, liability caps that are well below the level of damages from a spill will mean that persons suffering damages will have to be reimbursed exclusively from the Oil Spill Liability Trust Fund; if there are not sufficient amounts available in the Trust Fund, the injured persons will either not receive compensation or will have to be compensated by general revenue from taxpayers.
The argument in support of liability caps is that, without caps, only the largest companies will be willing to drill in the deepwater and run the risk of huge damages. This could lead to less competition for drilling leases and lower proceeds to the Federal Government for selling these rights. Limiting drilling to the largest companies may result in less drilling and the supply of oil may be reduced.
Somewhat different factors are involved when we consider raising or eliminating the caps for vessels. If smaller vessels, such as tug barges carrying home heating oil, are subject to a major increase in expenses for insurance, there may be a loss of shipping capacity that would be detrimental to consumers. Moreover, the potential damages from a spill from a vessel are more predictable than the losses from an uncontained well. The amount of oil carried by a vessel is known, while the amount of oil that would be release by a spill such as the Deepwater Horizon is highly speculative scientific guesswork.
While the caps for facilities have not been adjusted since OPA was enacted, the caps for vessels have been raised by law and administrative action to adjust for inflation.
The Deepwater Horizon tragedy also demonstrates a need for change in the trust fund that backs up individual responsibility for damage. If the costs of cleaning up an oil spill and the costs of claims for damages resulting from the spill exceed the limits in OPA, the Oil Spill Liability Trust Fund is available to cover the costs. The Trust Fund is funded predominately by an eight-cents-per-barrel tax on crude oil received at U.S. refineries. The tax is paid by the refinery operators.
Currently, the Trust Fund has a balance of approximately $1.6 billion, with a cap on expenditures from the Trust Fund of $1 billion and $500 million for natural resource damages. The House has passed legislation to raise the tax on crude oil to 34 cents per barrel and to raise the caps on Trust Fund expenditures to $5 billion, with $2.5 billion for natural resource damages per incident. Still, the Coast Guard has informed us that it will run out of money to fight this disaster possibly next week because it will have exhausted the $100 million advance provided from the Trust Fund.
On May 13, 2010 Transocean filed a complaint in Federal court in Houston to limit its liability to about $26.7 million under a little-known statute – the Limitation of Liability Act of 1851. The Department of Justice has since filed a motion opposing Transocean’s petition. (enlarged type, my emphasis - note MILLIONS limit, compared to the $20 BILLION escrow fund negotiated by President Obama.)
The 1851 Act was put into place before ship owners had access to insurance to encourage American ship owners to invest in shipping, and to put the American shipping industry on an even footing with its competitors in Europe. The 1851 Act allows ship owners to limit their liability to the value of the vessel and her cargo.
Certainly, the claims for personal injury and death and economic losses that are coming forward and will continue to come forward as a result of the Deepwater Horizon casualty will far exceed the value of the rig or whatever was owed to Transocean by BP and others.
The history of the 1851 Act suggests that it was bad law from the start. Among other criticisms, Gilmore and Black noted in 1975 in The Law of Admiralty:
No doubt when more obscure statutes are drafted, the Congress will draft them, but it is difficult to believe that any future body of law makers will ever surpass this extraordinary effort … The only safe thing to do with such a statute is to repeal it.
As we reexamine existing liability laws, we should consider revisions to such laws as the Death on the High Seas Act and the Jones Act, which prevent persons injured on vessels from recovering non-economic damages generally available under tort law.
I look forward to the testimony of each of our witnesses and I thank you all for coming.
_______________________________________
In contrast, Michele Bachmann MISSED the vote on June 10th to Amend the Oil Pollution Act :
This legislation would allow the Obama administration to withdraw more money from the Oil Spill Liability Trust Fund in order to better respond to the Gulf of Mexico oil accident. The Senate approved the bill the previous day by voice vote, and the president is expected to sign it.
But Bachmann did find time to make this stupid statement, among her many interviews anywhere but in her home state, or on the job:
"The president just called for creating a fund that would be administered by outsiders, which would be more of a redistribution-of-wealth fund. And now it appears like we’ll be looking at one more gateway for more government control, more money to government. If there is a disaster, why is it that government is the one who always seems to benefit after a disaster, and that’s of course what cap-and-trade would be."
One representative from Minnesota, James Oberstar, is long serving, in his 17th term of office. The other, Michele Bachmann, is in her 2nd. I think this is an excellent example of who is politicizing a national disaster for their own gain, and utterly failing to represent their constituency in government; and who is doing the actual job they were elected to do with care, fairness, and distinction.
One representative from Minnesota, James Oberstar, is long serving, in his 17th term of office. The other, Michele Bachmann, is in her 2nd. I think this is an excellent example of who is politicizing a national disaster for their own gain, and utterly failing to represent their constituency in government; and who is doing the actual job they were elected to do with care, fairness, and distinction.
It is obvious why Oberstar is re-elected repeatedly, with usually around 60% of his vote; while Bachmann cannot manage even 50%, and relies on an enormous amount of donations from outside the state of Minnesota for her campaigns. With this kind of performance, why would anyone reasonable, in her own district, fund her election - or vote for her?
The contrast is as obvious as day and night, black and white.
Today's Oberstar update, (in contrast to the continuing stupid and irresponsible language and actions of Bachmann)
ReplyDeleteThank you for sharing with me your support for legislation aimed at ensuring that victims of damages caused by the Deepwater Horizon oil spill are compensated for their loss. I appreciate hearing from you.
On June 9, Senator Leahy introduced the Environmental Crimes Enforcement Act (ECEA), S. 3466. This legislation would make it mandatory for those convicted of criminal acts under the Clean Water Act to appropriately compensate victims of environmental disasters.
This bill has been referred to the Senate Judiciary Committee for consideration. No similar bill has been introduced in the House of Representatives.
On June 1, Attorney General Eric Holder announced that the Department of Justice is pursuing both civil and criminal charges against BP for its role in the Deepwater Horizon catastrophe.
You may be interested to know that several House and Senate Committees, including the one I chair, the House Committee on Transportation and Infrastructure, have held hearings focusing on the spill, and legislation has been introduced on the issue of raising, or possibly eliminating, the liability cap on companies for losses incurred by private parties. Additional legislation has been introduced that would eliminate the cap on punitive damages.
It is also worth noting that BP has agreed to pay $20 billion, over the next four years, into an account that would help cover financial losses of individuals and businesses due to the oil spill.
Rest assured that I will keep your support of S. 3466 in mind should I have the opportunity to vote on this or similar legislation. It is critical that we hold BP responsible for compensating the victims of this spill.
If you would like to receive periodic e-mail updates on this or other issues before Congress, please visit my Web site, www.house.gov/oberstar, and go to "subscribe."
Well I haven't really researched it but according to Bart Stupak, who chairs one of the committees involved with this,the liability limit is not an issue. The liability limit only applies if the company drilling was following all safety requirements and regulations, as soon as they step outside one the limit goes away. I think that BP paying $20 billion is a good incentive for other companies to follow the safety regulations, had BP been following all of them the pricetag would have been much less than $20 billion and there is a good chance the whole thing would not have happened. I don't think it would be fair to go back and change the cap retroactively. In criminal cases it is unconstitutional to change the penalty after a person is convicted or to make something a crime after they have done it, changing the cap retroactively would be dangerously close to the same thing and if what Stupak says is true it would also be unneccessary.
ReplyDeleteAs for Oberstar I agree we need to look at the laws but I think we need to wait. Wait until all the facts are in, exactly what happened? Why didn't regulators catch violations? Why didn't the safety engineers who warned of problems have the authority to fix them? Why were they overruled on stopping the pumping out of the mud? It is very possible the laws in place are more than sufficient but were not enforced. So rather than new laws we need better enforcement.
There is a very clear problem that these oil drilling rigs and their attendant equipment are being considered to be, under inland and ocean marine laws, as vessels-- like boats. Clearly that was never the intent or anticipated at the time laws like the 1851 Act were enacted.
ReplyDeleteFurther some of these laws appear to be just bad, and were considered bad laws well before this brought the problems to a proverbial head.
I will leave it to our esteemed ToE to comment on the legalities of removing caps from civil laws, particularly marine law.
Caps figured and damages allowed under law figured prominently in the Exxon Valdez, and many of those who were damaged by that negligent act were NEVER compensated. As in died uncompensated a decade or more later.
There are some very bad preliminary indications about this incident, and clearly BP had some pretty poor compliance well before this problem, with the 15 deaths in Texas.
Other countries - Canada, Norway, and most others - are perfectly able to manage better regulation like the drilling of relief wells simultaneously with the main well, and companies continue to drill there, and there are still reasonable profits and more importantly - greater safety.
I think Stupak is wrong; time IS of the essence, or so the reports from the people, including some of the Republican governros, of the affected states have asserted.