$75 Million Buys BP Six Years of Lobbying or One Giant Oil Spill

As you’ve no doubt heard, BP’s own liability for the damages the Deepwater Horizon spill will cause may be limited to $75 million (though it will have to pay for cleanup).

The federal government has a large rainy day fund on hand to help mitigate the expanding damage on the Gulf Coast, generated by a tax on oil for use in cases like the Deepwater Horizon spill.

Up to $1 billion of the $1.6 billion reserve could be used to compensate for losses from the accident, as much as half of it for what is sometimes a major category of costs: damage to natural resources like fisheries and other wildlife habitats.

Under the law that established the reserve, called the Oil Spill Liability Trust Fund, the operators of the offshore rig face no more than $75 million in liability for the damages that might be claimed by individuals, companies or the government, although they are responsible for the cost of containing and cleaning up the spill.

That’s obviously puny. But to give you a sense of just how puny it is, consider that, at its current levels of spending on lobbying, BP will spend as much every six years on politicians in DC.

BP is one of the most powerful corporations operating in the United States. Its 2009 revenues of $327bn are enough to rank BP as the third-largest corporation in the country. It spends aggressively to influence US policy and regulatory oversight.

In 2009, the company spent nearly $16m on lobbying the federal government, ranking it among the 20 highest spenders that year, and shattering its own previous record of $10.4m set in 2008. In 2008, it also spent more than $530,000 on federal elections, placing it among the oil industry’s top 10 political spenders.

But the puny amount for which BP will be liable for damages didn’t stop them from potentially trying to make their liability even punier. The early contracts it drew up to pay Alabama fishermen to help contain the spill included a $5000 damage limit, which presumably wouldn’t even cover the cost of a fishing boat.

Alabama Attorney General Troy King said tonight that he has told representatives of BP Plc. that they should stop circulating settlement agreements among coastal Alabamians.

The agreements, King said, essentially require that people give up the right to sue in exchange for payment of up to $5,000.

[snip]

By the end of Sunday, BP aimed to sign up 500 fishing boats in Alabama, Mississippi and Florida to deploy boom.

BP had distributed a contract to fishermen it was hiring that waived their right to sue BP and required confidentiality and other items, sparking protests in Louisiana and elsewhere.

Darren Beaudo, a spokesman for BP, said the waiver requirement had been stripped out, and that ones already signed would not be enforced.

Next time some DC politico gets $5000 from BP, I hope they reflect on the fact that that’s all BP wants to pay for putting a family’s entire livelihood on the line.

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44 replies
  1. harpie says:

    The money in that rainy-day fund didn’t come from a pot at the end of a rainbow.
    Once again, it’s The People who will pay for governmental/corporate malfeasance which they have almost no knowledge of and NO control over.

  2. b2020 says:

    off topic, but maybe of interest:

    Without explaining the months-long delay — something Congress should examine — the Federal Reserve on Friday finally released the transcripts of its rate-setting meetings in 2004.
    http://www.federalreserve.gov/monetarypolicy/fomchistorical2004.htm

    There’s some pretty damning stuff, some of which is directly relevant to Yellen’s upcoming Senate confirmation.
    If those responsible for the disastrous policy mistakes that led to the bubble and bust had either been driven from office or had the decency to quit, these transcripts would be little more than historical curiosities at this point. Which means they are much more than that, unfortunately.

    From
    http://cunningrealist.blogspot.com/2010/05/let-record-reflect.html

  3. jdmckay0 says:

    Alabama Attorney General Troy King said tonight that he has told representatives of BP Plc. that they should stop circulating settlement agreements among coastal Alabamians.

    Nauseating. :(

    from your Guardian link:

    While experiencing its highest profits in its corporate history, BP implemented budget cuts of 25% in 1999 and 2005 at each of its five US refineries. The safety board found a pervasive “complacency towards serious safety risks” at all of them.

    BP’s been doing that (reducing maintenance spending) on Alaskan operations for years, w/dozens of “incidents”… most of which have escaped both public and congressional scrutiny.

    Good opportunity for some entrepreneur to put Palin’s face on oil soaked coast photo, w/something like “Tea Party This”.

  4. PJEvans says:

    My personal opinion is athat all the people who were saying ‘drill baby drill’ should be drafted for cleanup crews in the Gulf. They wanted it so much, they can f*cking well deal with the consequences – the ones they pooh-poohed at the time.

    • sporkovat says:

      My personal opinion is athat all the people who were saying ‘drill baby drill’ should be drafted for cleanup crews in the Gulf.

      but the President you supported and worked for has actually reversed a standing ban and opened new areas to offshore drilling:

      Reversing a ban on oil drilling off most U.S. shores, President Obama announced an expansive new policy that could put oil and natural gas platforms in waters along the Atlantic coastline, the Gulf of Mexico and part of Alaska.

      powerless nincompoop Palin supporters mindlessly chanting “drill baby drill” haven’t actually done any harm – the Democrat President you supported and will likely vote to re-elect has.

      so, who should be out there with detergent scrubbing rocks then?

    • seabos84 says:

      ONLY if they are exempt from minimum wage laws, overtime laws – I want them paid 4 bucks a week, and I want them to work 13++ hours a day, 7 days a week.

      rmm.

  5. klynn says:

    A settlement that low will not even cover the annual loss and this impact will last for 30-50 years plus?

    The Gulf is also one of the world’s most fertile seafood grounds, teeming with shrimp, oysters, mussels, crabs and fish. It supports a $1.8 billion industry second only to Alaska.

    “The cost to Louisiana’s fishing industry could be $2.5 billion and the impact on tourism along Florida’s Gulf coast could be $3 billion, estimated Neil McMahon, analyst at investment firm Bernstein.

    and…

    Recreational fishing generates about $1 billion in retail sales a year, according to the state.

    and…

    “Louisiana produces more than 30 percent of the nation’s domestic seafood and leads the nation in production of shrimp, crawfish, blue crab and oysters. We are committed to keeping the nation in supply of our seafood. In addition to the seafood that continues to be landed on docks, our suppliers have inventory in stock that is available,” added Smith.

    1 billion will not even be a drop in the bucket.

  6. fatster says:

    According to the WSJ, a particular shut-off switch required by Brazil and Norway is not required by US regulators. Why? Drilling companies protested and “A 2001 industry report argued against the shut-off device.” LINK.

    And what else happened ‘way back then? Cheney’s Energy Task Force, comprised of many of the usual suspects.

    • klynn says:

      Oh boy. THAT should be a diary fatster. Add in a timeline of all the lobbying against regulation…It would be a kicker.

      Or maybe EW will bite at the prospect of a timeline post that would involve Cheney Energy task force and the craziness at MMS.

      • klynn says:

        And, I would throw into that timeline the development of the Brazilian and Norwegian regulatory progress for the shut-off switch. Since 1993 in Norway and 2007 in Brazil.

        • klynn says:

          Hey, I wonder why something like a sweet crude oil coagulant has not been invented or used to slow the flow of oil, pull the spill together into a smaller spill? I am not a petro scientist so I have no idea why this idea has not gone any further.

          Seems like a concept worth exploring. Doesn’t CELOX buy time with human blood loss? Are we not dealing with a hemorraging oil deposit?

          I know, crazy.

          • fatster says:

            Don’t know chemistry, so can’t comment beyond saying, naively, that coagulant approach sounds great. Particularly compared to what these greedy, grasping #*@!)$s are actually using.

          • bmaz says:

            It is being tried and it is toxic and presents its own problems and unintended consequences that could well be worse than the problem. It is quite possible that would save the beaches and destroy a good swath of the oceanic ecosystem where the coagulated shit settles.

            • klynn says:

              I am surprised that it would have such a bad impact if it is made with boiled linseed oil.

              Again, I am not a petro scientist.

              From what I have read, the sweet crude does not settle, it just slows the spread and makes clean-up faster. But I may be reading about something different from what is being used. The articles I read stated it makes skimmers more effective because less water is skimmed and more oil gets retrieved.

                • klynn says:

                  Oh yes, the dispersants are extremely toxic. Nature coagulant I think is used by Shell in Norway and appears to be quite effective.

                • fatster says:

                  and klynn.

                  Corexit is also discussed in that article I inked to @ 19. Who authorizes use of this stuff? Would the US EPA, for example, have the authority to say what can or cannot be used on the US coastline? Thnx.

      • harpie says:

        And if we don’t have enough in that rainy day fund, maybe we can suction some lipo from the DoD budget.

  7. earlofhuntingdon says:

    The cost of a fishing boat? How about barely enough to cover the cost of good net? Agreements such as those BP is allegedly peddling should be void as against public policy. But these states are largely in the hands of Republican governors and legislatures, so expect little help there. (Alabama is still home to some of Karl Rove’s best clients and, what with all eyes looking forward, not back, Obama hasn’t yet even cleaned house in one of the most potentially corrupt USA offices in the DOJ.)

    • emptywheel says:

      CSM, in its coverage of the $5000 waivers, noted that on a good way one of these fisherman wakes in $10,000. Of course, BP was offering less than that to help protect the shore.

  8. klynn says:

    In 1997, Safavian and Grover Norquist founded a lobbying firm, the Merritt Group, which was renamed Janus-Merritt Strategies (and is sometimes referred to as “Janus Merritt” or simply “Janus”). The tenor of the firm was fiercely ideological. “We represent clients who really do have an interest in a smaller federal government,” Safavian told Legal Times in a 1997 interview. “We’re all very ideologically driven, and have a bias in favor of free markets.” He went on: “We’re not letting people who offer us money change our principles.”

    The firm’s clients included businesses like BP America, the U.S. division of British Petroleum. There were foreign companies like the Corporacion Venezolana de Cementos and Grupo Financiero Banorte. There were gaming interests, including Indian tribes: the Saginaw Chippewa – a client the firm shared with Jack Abramoff, the Viejas band of Kumeyaay Indians, and the National Indian Gaming Commission.[1] Safavian also registered as a lobbyist for the government of Pakistan, the government of Gabon, and Pascal Lissouba, the former president of the Republic of the Congo.

    and just to keep it even…

    Tony Podesta, Podesta Group. A Chicago native who came to Washington in 1970 to work for Common Cause, Tony Podesta has a practice that’s changed in recent years. Once associated with high-tech and media clients, he recently was hired by British Petroleum, whose pipeline problems and refinery fires have created regulatory and public-relations issues. Podesta has quietly been guiding BP through congressional hearings.

    He also represents Lockheed Martin and General Dynamics, trying to sell Congress and the Pentagon on another version of their Stryker troop-transport vehicle. During the Clinton administration, it didn’t hurt that brother John was White House chief of staff.

    When Republicans came to power, the former Ted Kennedy aide deftly partnered with Republican strategist Dan Mattoon, a pal of then-Speaker Dennis Hastert’s. Mattoon hired Hastert’s son to work with him. With Nancy Pelosi now Speaker, Mattoon, the younger Hastert, and Podesta split up earlier this year. Podesta and his team of 23 lobbyists are said to collect $12 million to $15 million in annual billings.

    And here is good info from last year.

    And this group is interesting.

  9. earlofhuntingdon says:

    I would add that fishing grounds, coastlines, etc. are all public resources, the loss of which should also be compensated to the federal government on behalf of the American public, over and above compensation paid to individual families who used them for their livelihood.

    This angle should be fertile ground for a year’s worth of investigative reporting. Bush and Cheney devoted enormous resources in all areas reachable by the federal government to cap or remove liability for corporate conduct.

  10. jdmckay0 says:

    I read in NYT print this morning (pg 1/14 I believe) that BO promised local fisherman, and also said in some speech that BP would pay for all this and their losses as well.

    I think ‘da prez should spend more time reading EW every morning, maybe help him get his facts straight on a few things.

  11. jdmckay0 says:

    From today’s WSJ print:

    Rig Owner Under Scrutiny

    The board of Transocean Ltd., owner of the drilling rig where 11 workers died last month, eliminated executive bonuses last year over concerns about the company’s safety practices.

  12. librty says:

    Nalco’s (NLC) CEO J. Erik Fyrwald told CNBC this morning that his company is increasing production of its oil dispersant for BP (BP) after oil giant released news that it has tested the chemical manufactured by Nalco Holding and has authorized it’s use on a larger scale. Nalco’s dispersant attaches itself to oil and weighs it down to the ocean floor. This oil-busting chemical works in the same way dish soap breaks apart oil in water.

    Anybody with an ecological or biological background have any idea what affect 5, 10 or 20 million gallons of Light Crude laying on the bottom of the Gulf will have?

    • Larue says:

      Anybody with an ecological or biological background have any idea what affect 5, 10 or 20 million gallons of Light Crude laying on the bottom of the Gulf will have?

      Well, I’ve seen thoughts there are possibly 6 Billion Gallons of oil in the Tiber Field, from whence this disaster is erupting.

      At 200,000 (or more should the source area erupt and rupture further) gallons daily, times minimum 3 months to slow or stop it . . . barring further incident where a relief drill site goes badly and erupts, too, WTF, let’s just say there’s potential AT BEST CASE for 18 Million Barrels. At worst case? Le’ts call it 1 BILLION Gallons, all sitting on the Floor Of The Gulf IF they can get a chemical into the mix.

      And if not on the floor, on the surface of the Gulf. One big dead zone in 6 months to a year, perhaps?

      And I’m being gentle with a worst case scenerio . . . . . wonder how many gallons it WOULD take to destroy the entire Gulf, and what a Dead Gulf would mean for the rest of our planets oceans? Or poles?

      Frightening stuff, already. And very little to assuage the soul in coming months.

      • librty says:

        hey Larue

        Looks like they have the dispersant now and are injecting it into the crude at the outflow of the riser pipe. see this comment (and the links)

        They’re sending it to the bottom now, right from the riser.

        (and I would have thought, with my minimal biology minor, that containing the oil, corralling it at the surface until it could be removed would have been far superior for the environment than sending it to the bottom or up onto the beaches. but I’m just an engineer and when I called the EPA, they provided BP’s phone number) (and I aint making that up)

      • TalkingStick says:

        I think it’s worse even than that.

        Wherever the oil is in the water column but especially bottom, it gets eaten by microscopic animal types who get eaten by the crawlers and shell fish and by free swimmers who get eaten by bigger free swimmers and birds. IOW the ecosystem distributes the oil and or its components all over the whole Gulf and, already the size seems to me to indicate, far beyond the Gulf.

        • librty says:

          Ts – this sucker is going to kill the ecosystem(s)

          I only have a minimal of school in biology (a minor) but I can’t think of any other outcome. This thing needed to be capped within 48 hours, every available resource, industrial and military needed to be put on it, our best minds in the industry and science working on it.

          It doesn’t appear that anything was done other than to say, BP will pay 75 million for cleanup.

          The ‘O’ is a failure, utter and complete

  13. Larue says:

    And mind my manners, yet another great read Mz. Wheeler, thank you and thanks to some great comments and links above.

  14. librty says:

    so, who should be out there with detergent scrubbing rocks then?

    and that’s the good scenario. How the hell do we clean the floor of the Gulf, where they’re sending the light crude now …

    oh wait a minute, I remember a joke once about a thousand of something … at the bottom of the ocean

    • sporkovat says:

      I don’t know that joke, but this is not a joke:

      In what could represent the biggest expansion of offshore energy exploration in half a century, Obama announced that he will open the door to drilling off Virginia’s coast, in other parts of the mid- and south Atlantic, in the eastern Gulf of Mexico, and in waters off Alaska.

      hey thanks ‘progressives’! this is the kind of thing that Democrats pretend to oppose when a Republican is in the White House, but since they know they can take their base utterly for granted they jam through these policies and faithful, long-suffering (D)’s vote for them again and again.

  15. TalkingStick says:

    Ts – this sucker is going to kill the ecosystem(s)

    You know I think you may be right. (sigh)

    Though I think the damage was done by letting these people drill their deep wells without a plan for blow outs like this other than the less expensive shut off valve system. Not that Obama is all that swift about anything in the real world but by all accounts the technology still has to be invented.

    That’s fine and exciting for a few guys out in space like on Apollo 13.- but not in the middle of the world’s food supply.

    You encourage little kids to play basketball but you don’t let them do it in the living room.

    • librty says:

      Though I think the damage was done by letting these people drill their deep wells without a plan for blow outs

      got that right

      you encourage little kids to play basketball but you don’t let them do it in the living room.

      How nicely put. I listened to a radio interview today, a fellow that was on the rig when it exploded. And he sort of said that, they’re drilling at such depths now, encountering things (like the 30,000 psi gas pressure that appears to have disabled the BOP) they’ve never seen or experienced before.

      • papau says:

        The world’s deepest oil platform is the floating Independence Hub which is a semisubmersible platform in the Gulf of Mexico in a water depth of 2,414 meters (8,000 ft).

        They know the problems – yet fight against Norwegian level regulations. They should forfeit all assets to cover the costs of that decision when it blows up in their face – blows up in our face – there should be no “bailout of the oil companies”.

        But just as Gibbs showed today by claiming he did not know about liability limits Bush41 had put into the law – we do not discuss the Cheney secret meeting to promise no regulation – the Obama folks are owned by the corporations.

        And they wonder why many of the left are just staying home at election time these days – 800,000 staying home and thereby electing Senator Brown in Mass. Yep – Rahm/Obama are correct – the left has no place to go. But when the parties are both corporate parties, there is little need to go anywhere.

        • librty says:

          They know the problems – yet fight against Norwegian level regulations. They should forfeit all assets to cover the costs of that decision when it blows up in their face – blows up in our face – there should be no “bailout of the oil companies”

          I commented several times yesterday and the day before. Advocating for the nationalization of BP for their attack against mankind, against the planet and to pay for any cleanup that’s possible.

          Sell their assets. We’re going to need the money

  16. papau says:

    The gulf stream is just to the east of the current oil slick – in a few days it will start carrying the slick around Florida and up the coast, perhaps destroying all fishing on the East coast (perhaps not – but with EPA allowing chemicals that kill rather than insisting on Norwegian approved safe chemicals – I am not certain any in this administration will be as worried about this problem as they are worried about making BP happy).

  17. seabos84 says:

    A Critical FLAW in good government / pro community arguments against BP scum –

    THE CO$T$ AREN’T KNOWN.

    due to the lack of skills in accounting, math, finance, statistics, engineering, science in the good government / pro community world,

    NO ONE seems to have at their fingertips what the costs of the Norwegian /better standards cost per barrel of oil => gallon of gasoline or liter of heating oil or kilo of raw plastic.

    We have the same problem with identifying the costs of mining safety regulations which when ignored / abused … killed 29 miners on 5 April – how much does that mine safety stuff add to our weekly and monthly electric bill?

    We have the same problem with identifying the costs of refinery safety stuff, which may have contributed to 7 workers being killed in Anacortes WA. on 2 April (3 were killed ‘quickly’, the other 4 died from burns over the next few days / weeks)…

    The righties own and master the too EFFECTIVE lies about gubber-mint interference wrecking jobs and sending us into poverty cuz some pinhead lawyers and bureaucrats are busy making work for each other –

    and our side can only wave around Tomes of Truth which, OBVIOUSLY, ain’t that effective against stopping raygun-cheney-ism.

    I guareentee you all that if the few pennies of expense a day, or the few pennies expense a common unit of consumption per day or month –

    IF these few pennies or few dollars numbers where PUSHED into people faces –

    IF people’s faces were pushed into these numbers –

    HEY, YOU STUPID SELFISH CHEAPSKATE IGNORANT FUCK –
    YOU WANT YOUR BEACH, YOUR RIVER WRECKED?
    YOU WANT YOUR BROTHER OR SISTER OR AUNT OR FATHER KILLED BY THESE FUCKERS,
    ALL SO YOU CAN SAVE 4 CENTS A GALLON?

    THEN YOU SHOULD VOTE FOR THESE LYING STEALING FASCISTS
    YOU STUPID SELFISH CHEAPSKATE IGNORANT FUCK –

    how’s that for inspirational … will it get me a sinecure at the k-school?

    rmm.

  18. seabos84 says:

    A Critical FLAW in good government / pro community arguments against BP scum – THE CO$T$ AREN’T KNOWN.

    due to the lack of skills in accounting, math, finance, statistics, engineering, science in the good government / pro community world, NO ONE seems to have at their fingertips what the costs of the Norwegian /better standards cost per barrel of oil => gallon of gasoline or liter of heating oil or kilo of raw plastic.

    We have the same problem with identifying the costs of mining safety regulations which when ignored / abused … killed 29 miners on 5 April – how much does that mine safety stuff add to our weekly and monthly electric bill?

    We have the same problem with identifying the costs of refinery safety stuff, which may have contributed to 7 workers being killed in Anacortes WA. on 2 April (3 were killed ‘quickly’, the other 4 died from burns over the next few days / weeks)…

    The righties own and master the too EFFECTIVE lies about gubber-mint interference wrecking jobs and sending us into poverty cuz some pinhead lawyers and bureaucrats are busy making work for each other – and our side can only wave around Tomes of Truth which, OBVIOUSLY, ain’t that effective against stopping raygun-cheney-ism.

    I guareentee you all that if the few pennies of expense a day, or the few pennies expense a common unit of consumption per day or month
    – IF these few pennies or few dollars numbers where PUSHED into people faces
    – IF people’s faces were pushed into these numbers

    – HEY, YOU STUPID SELFISH CHEAPSKATE IGNORANT FUCK
    – YOU WANT YOUR BEACH, YOUR RIVER WRECKED?
    – YOU WANT YOUR BROTHER OR SISTER OR AUNT OR FATHER KILLED BY THESE FUCKERS, ALL SO YOU CAN SAVE 4 CENTS A GALLON?
    – THEN YOU SHOULD VOTE FOR THESE LYING STEALING FASCISTS YOU STUPID SELFISH CHEAPSKATE IGNORANT FUCK

    – how’s that for inspirational … will it get me a sinecure at the k-school? rmm.

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