As millions of barrels of oil began pouring into the Gulf of Mexico in April 2010, Democratic lawmakers began asking the question: what was the proper amount of money that the company responsible for the spill should have to pay?
This wasn't some sort of philosophical exercise. Oil companies pay money into the Oil Spill Liability Trust Fund to help cover the costs of major disasters. But under the Oil Pollution Act of 1990, a company responsible for a spill is liable for only $75 million in economic damages, provided it didn't exhibit "gross negligence." The federal government picks up the next $1 billion.
Since it quickly became evident that the cost of damages to the Gulf would far exceed those figures, a group of senators, led by Robert Menendez (D-N.J.), tried to change the law. They proposed raising the $75 million cap on liability to $10 billion.
The bill was dubbed the "Big Oil Bailout Prevention Unlimited Liability Act." Introduced during the peak of anger over the spill and amid legitimate fears over how long the oil would continue to flow unabated, it seemed as though there was a fairly reasonable chance it would pass. When President Barack Obama not only endorsed the measure but also argued for eliminating a cap altogether, its prospects improved further.
It never even made it to an up-or-down vote. Republican senators and several oil-state Democrats -- pitching symbolic, watered-down alternatives -- filibustered the bill's consideration. A separate attempt to use unanimous consent was blocked as well.
Opponents made the same argument each time. Increasing the economic liability for offshore drilling would, as Sen. Lisa Murkowksi (R-Alaska) insisted, end up empowering the "biggest of the big oil" companies by discouraging the small ones from taking the risk.
The "biggest of the big oil" companies did oppose the bill, but for different reasons. The American Petroleum Institute, an umbrella organization for the industry, testified against it, calling it arbitrary and warning that it would "threaten the
viability of offshore operations" and "significantly reduce U.S. domestic oil and natural gas production."
Meanwhile, several of API's highest-profile members lobbied lawmakers on the bill, according to records compiled by the Center for Responsive Politics. The list included Exxon, Royal Dutch Shell and Anadarko Petroleum. It also included BP, the company directly responsible for the disastrous spill and, in turn, the legislative push to change liability law.
That BP lobbied lawmakers on the penalties companies faced for spills, as it faced penalties for causing a spill itself, underscores how even the most embattled company often sees Congress as a worthy investment. BP spent $8.43 million in 2011 on efforts to influence legislation. While that total fell far short of the nearly $16 million it spent on lobbying in 2009 -- much of it on working to defeat cap and trade legislation -- it represented a $1 million uptick from 2010 levels. It was also about .0324 percent of the company's $26 billion in profits from last year: a small price to pay to ensure the preferred legislative outcomes for the firestorm it ignited.
“It really is outrageous that after being responsible for the largest oil spill in our nation’s history, BP spent more than $8 million on D.C. lobbyists to try, among other things, to escape any effort to shut off the spigot of taxpayer subsidies,” Menendez told The Huffington Post.
Two years after the disaster on the Deepwater Horizon, BP's lobbying efforts indeed appear to have paid off. The New York Times recently reported that the company has five rigs drilling in the Gulf, "making it one of the most active drillers there." When the Obama administration held an offshore auction last December, granting leases for 20 million acres of federal water, BP successfully bid on 11 available drilling blocks. And while the company personally waived the $75 million cap and recently announced it will pay $7.8 billion to compensate those harmed by the Gulf spill, ProPublica reported "the amount is significantly less than many had expected and does not appear to require BP to spend any money that it had not already agreed to pay."
The quick bounce-back has been driven, in part, by a political climate that has increasingly encouraged a return to the status quo. Several bills have been introduced in Congress that were designed to upend the moratorium that the Obama administration placed on offshore drilling after the Deepwater Horizon disaster. Others were crafted to expand and encourage the leasing of more land for drilling.
On all of them and many others, BP lobbied, often employing some of the most prestigious firms on K Street. In 2011, it paid The Duberstein Group $400,000 to lobby the national commission that investigated the spill, as well as to lobby on "issues related to offshore drilling and the Deepwater Horizon accident," according to lobbying disclosure files. BP also retained the firm to help with hearings on the Gulf disaster and to respond to "Executive Branch actions re these issues." BP paid Stuntz, Davis & Staffier $90,000 to help encourage Congress to reverse "President Obamas Offshore Moratorium Act" and advance "provisions to encourage domestic oil production." It paid The Podesta Group -- led by Tony Podesta, brother of Obama transition chief John Podesta -- $320,000 in 2011 to help with hearings on the spill and to push legislation that would restart offshore land leasing.
BP didn't just find itself spending hefty sums on legislation related to the Gulf spill. The company fought efforts to close tax loopholes that it and others in the oil industry enjoy. It paid Covington & Burling LLP $450,000 to help ensure that sanctions being placed on Iran exempted a BP-led natural gas project, according to disclosure reports. It also paid the firm Fierce, Isakowitz & Blalock $60,000 in the second quarter of 2011 alone to influence the implementation of new legislation on derivatives.
None of it was illegal.
"BP is committed to providing America with energy security. And like many companies with U.S. operations, we engaged in lobbying and file quarterly lobbying reports per government regulations. These reports are publicly available and speak for themselves," BP spokesman Scott Dean told the Huffington Post. "As part of our routine engagement on a broad range of issues, we provided information to lawmakers on the consequences of legislation."
But good government groups couldn't help but notice the opportunistic timing of BP's re-emergence as a player in the influence-peddling game.
"When the spotlight was on their crude oil spilling into the Gulf, they slowed down their political giving in Washington," said David Donnelly, national campaigns director of the Public Campaign Action Fund. "But when people forgot about it, they put their foot on the gas."
The Big Oil Bailout Prevention Unlimited Liability Act remains stalled in Congress with virtually no prospects of reconsideration, let alone passage. But it's unfair to say that in the two years since the spill, BP and other oil companies have had a free ride. An Obama administration official noted that because of reforms put in place, companies hoping to drill off shore must now demonstrate a containment capacity for oil spills, meet requirements for well design and comply with workplace safety standards.
With those reforms in place, more than 115 shallow water permits in the Gulf of Mexico and 323 permits for deepwater activities at 98 wells have been approved. The country is thirsting for oil, making debates about economic damage liability seem passé.
"The Gold Rush in the Gulf is back on and BP is one of the companies leading the charge, with a lot of help from Congress and the Obama administration," said Alex Formuzis, a spokesman for the Environmental Working Group. "The pace with which the oil companies are moving to increase deepwater drilling off our shores seems to suggest the worst oil spill to foul U.S. waters is a distant memory."
UPDATE: BP's head of communications, Geoff Morrell, notes that the company itself has devoted far more money to spill cleanup and recovery than the $75 million cap and than the $7.8 billion reported settlement. This includes $14 billion responding to the spill and $8 billion on claims (most of that from the $20 billion account it set up to deal with those claims)
"Altogether that means we will have spent about $30 billion on the spill," Morrell emails, "an extraordinary manifestation of commitment to the Gulf and to the US…where we have invested $52 billion (aside from spill costs) over the past five years…making us the largest energy investor in America by far."
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Posted: 03/12/2012 9:03 am Updated: 03/12/2012 3:31 pm