Fouling the Nest

[credits: Dan Swenson, The Times-Picayune]

"This animation of the Gulf of Mexico oil spill was created using actual overflight information and forecast models from the NOAA and Unified Command.

The red dot is the location of the Deepwater Horizon oil well, which exploded on April 20, releasing oil into the Gulf near the Louisiana coast that has yet to be contained. Eleven rig workers died in the explosion.

The animation begins Aprill 22, the day the first image of the spill via flyover was released."

I'm heartsick. And angry.

Here's why. Let me introduce you to some new words. 'Waiver' 'Indemnity' 'Reorganization'.

After what may turn out to be the worst human-caused environmental/ecological disaster in U.S. history, the explosion of the Deepwater Horizon deep-water oil drilling rig off the coast of Louisiana in the Gulf of Mexico (here's the timeline of events), we read that BP, the lessee of the oil rig, is seeking waivers from coastal residents. The oil giant is offering up to $5000 to residents of Alabama if they give up their right to sue the company. Apparently, the AG of Alabama put the kibosh on this maneuver. No word yet about residents in Lousiana, Mississippi, Florida, or Texas.

BP knows that the real disaster—the one to their bottom line—is yet to come. And this is their first line of defense. It will not be their last.

Other maneuvers are starting to take shape, even as the giant oil spill heads toward the fragile wetlands that protect the city of New Orleans from storm surge and the pristine beaches of the Emerald Coast—America's third coast. [Full disclosure: As my regular readers know, I make an annual pilgrimage to the Gulf of Mexico, St. George Island, a barrier island off the coast of Apalachicola, FL. Pictures of its beauty are just a few posts down from this one. I love this place.]

BP, on its website, is already starting to shuck off the blame.

'"We are responsible, not for the accident, but we are responsible for the oil and for dealing with it and cleaning the situation up," Hayward said. He said the equipment that failed on the rig and led to the spill belonged to owner Transocean Ltd., not BP, which operated the rig.'

Transocean, the rig's owner, a Caymans Island company, is the world's largest offshore drilling contractor. Halliburton, the oil services company that sponsored Dick Cheney's political ascendancy which, by all rights, should be a Dubai company, is apparently involved as well in the maintenance of the rig.

Here's how it will go down: there will be tons of lawsuits, civil and possibly criminal. It will take years, if not decades, to organize and coalesce them; class actions will have to be certified, individual actions will be merged, etc. BP and the others will use their phalanxes of lawyers to fight each and every maneuver tooth and nail—much the way the Republicans fought the health care reform bill—delaying everything, conceding nothing, not even dates for depositions and meetings. They will seek extensions of each and every deadline. At every opportunity, the lawyers will take 'interlocutory appeals' which stop the entire process until an appellate court decides some small matter. Everything will be a fight. And lawyers will rake in tons of money. And no one will see a penny of damages for years and years.

Then, once a gazillion procedural hurdles have been surmounted—again, after years and years of wrangling—issues of who's really liable will start to be addressed. Halliburton, Transocean, and BP will turn on each other. Blame will flow as freely as the oil from the bottom of the Gulf. Some small company which supplied a pump or a winch or a derrick and which can't afford so much legal activity will be found to be the ultimate culprit. Or some sub-contractor which supplied labor or tools and equipment or some other service (say, consulting) to the bigs will have been found negligent. And their contracts with the bigs will have indemnification clauses. Responsible parties will be absolved of liability.

In the meantime, the corporate shell game will get underway. Companies in the industry will merge and reorganize. New entities will form. Some will be subsidiaries, some shells, some holding companies. Profits will flow to some of the reorganized companies and liabilities to others. The profitable companies will continue on about their business and the companies that assumed the liabilities will mysteriously fold.

If there is any liability left at the end of this process, then, and probably only then, the company or companies taking the biggest hits will turn out to have 'caps' on their liability (even though they didn't put caps on their well!) or will file for bankruptcy or reorganization so that they won't have to pay off those debts—or at least only have to pay a part of them.

The bigs will probably share some portion of liability, but it will only be contributory. And they will make PR hay about how they've done their civic duty. Meanwhile, their managers—the ones who made the fatal decisions that led to the negligence and liability that caused this disaster (such as the failure to install an acoustic switch or pressure shutoff valve—will have moved on to other ventures and other companies or retired wealthy.

And the damages? Well, some clean-up and containment costs will certainly be a part of the damages incurred by the bigs. But it will be minuscule in comparison to the total costs of this disaster.

Who will pay the costs of the shrimpers, fishermen, oysterers, etc. who've lost their livelihoods? Who will pay to remediate and reconstruct the lost wetlands? Who will pay for the lost revenue due to the decline and demise of area tourism? Who will pay for the devastated cities', parrishes', counties', states' economies? Who will pay to repopulate the fish, sea turtles, dolphins, whales, sea birds, and other wildlife destroyed by this environmental catastrophe? Who will pay to rebuild their habitats? And what will happen if, as some have predicted, this giant oil slick gets caught up in the Gulf Stream and meanders around Florida and up the East Coast fouling everything in it path? Who will be liable for those costs?

Probably NOBODY.

And EVERYBODY.

BP and Halliburton and the oil industry, in general, are some of the biggest whiners about government regulation (see this post about Tax Time and the Tea Party 'movement' and the Koch brothers), but as soon as something goes wrong they want the government to step in and save the day. And hey, let's not forget that eleven people died in the initial explosion. Add those lives to the 29 miners who died in the West Virginia coal mining disaster to begin tallying the costs of our society's reliance on carbon-based and fossil fuels and those industries' recent successes in obtaining deregulation and lax enforcment of safety regulation during the Bush administration.

This Gulf disaster will turn out, once again, to be another case of corporate welfare: socialize the risk, privatize the reward. We taxpayers will wind up paying the vast majority of consequential damages from this disaster and the big oil and oil services companies will continue trying to game the system and squeeze every drop of profit they can from our public natural resources.

BP, Transocean, and Halliburton will get off by paying as little as they possibly can, and if that amount becomes too great, they will simply reorganize and go on about their business under another name.

And by that time, once this disaster is off the front pages of the news, the political chorus of 'Drill, Baby, Drill' and 'Drill Here, Drill Now' will perk back up. Never forget: this was one of the primary themes of the 2008 Republican National Convention, Sarah Palin, John McCain, Rudy Giuliani, Michael Steele all chanted this refrain.



Nor is President Obama blameless in this. Less than one month before the explosion, he caved to the oil industry's pressure and opened up even more areas for offshore drilling. We can only hope he will reconsider.

It's enough to make you sick.