If anything has the ability to cut through the clutter in our 24/7 frenetic news cycle, it’s Wall Street. Say what you will about the capital markets, but the way that investors react to important news is a pretty good reality check. This week, there was a major development in the quest for just compensation for the 2010 BP oil spill, the ongoing crisis that sparked the creation of this blog roughly five years ago. On the brink of what was certain to be an adverse ruling from a federal judge, BP has agreed to pay a record penalty to restore the Gulf Coast environment that it nearly destroyed.
If approved by a federal judge, Thursday’s deal would conclude a monumental legal showdown over the Deepwater Horizon disaster, which killed 11 crew members aboard the drilling rig and caused the largest oil spill in U.S. waters.
The agreement would avert years of litigation over the environmental impact of a spill that leaked millions of barrels of crude into the Gulf of Mexico over the course of 87 days and coated hundreds of miles of sensitive beaches, marshes and mangroves with oil.
The settlement would add at least $10 billion to the roughly $44 billion BP has already incurred in legal and cleanup costs, pushing its tab for the spill higher than all the profits it has earned since 2012.
The largest environmental penalty in American history is the only acceptable result for what was also the largest environmental crime in American history. But was it enough? BP’s lawyers were the ones under the most pressure to make this deal because the price for spewing at least 4 million barrels of oil, and possibly more, actually could have been much higher.
Indeed, based on prior rulings about the amount of oil that spilled during 2010, BP was in line for a fine under the Clean Water Act of $13.7 billion, but that portion of the deal was just $5.5 billion — or barely more than 40 cents on the dollar. This despite that fact that — with new incidents of dolphins deaths, with clean-up workers still facing debilitating illnesses, with empty nets in shrimp boats and with tar balls still washing up on our beaches — the full extent of the BP-caused damage remains to be seen.
Although BP’s fines seem an astronomical sum, Wall Street obviously crunched the numbers and considered this deal the best possible outcome to keep the British oil giant as a successful functioning company. Shares of stock in BP rose by a whopping 5 percent on news of the deal. Indeed, the agreement was never intended to land a crushing blow to BP’s fortunes; to the contrary, Washington and a string of state capitals along the Gulf Coast are essentially partners with the firm. They will now get billions for wetlands restoration and for other favored projects, but only if they allow BP — despite its checkered safety record — to drill, baby, drill for years to come. The company told investors this past week it has 20 major projects in the works. The deal was structured in a way — payouts over an extended period, with less of the payment as a fine, which would not have been tax deductible — to ensure that BP’s shareholders will still receive dividends.
The BP settlement shows something else: A stunning confirmation of the trend in which money becomes a substitute for real accountability. Let us never forget that while the BP oil spill was a monstrous environmental crime, it was also a negligent homicide, claiming the life of 11 workers who worked on the rig. Yet no one has truly been held personally accountable, despite the massive evidence that BP cut corners on the Deepwater Horizon rig and ignored multiple warnings of the catastrophic explosion that eventually occurred. (A handful of indictments of mid-level employees have not yet resulted in a conviction, except for one that was tossed on appeal.)
A system where officials are allowed to essentially buy their way out of accountability also makes a mockery of the idea that justice is a form of deterrence that will prevent this type of disaster from occurring yet again. Writes the sage political analyst Charles Pierce at Esquire: “I guess corporations really aren’t people, after all. They’re so much more than that.”
That said, the deal is done. Now the challenge is on our leaders to spend the BP money wisely, to truly allocate the money to projects such as wetlands restoration, to help restore our buffer against the next big hurricane that will surely hit the Gulf. In my home state of Louisiana, leaders will probably be tempted to divert the money away from environmental projects and into fixing the budgetary fiascos created by our outgoing Gov. Bobby Jindal. Put another way, the fight for the future of the Gulf is entering a new phase.
Read more from the Wall Street Journal on the BP settlement news: http://www.wsj.com/articles/bp-agrees-to-pay-18-7-billion-to-settle-deepwater-horizon-oil-spill-claims-1435842739
Check out an analysis of the settlement from Esquire’s Charles Pierce: http://www.esquire.com/news-politics/politics/news/a36163/bp-oil-spill-settlement/
Learn more about our team’s work in exposing BP’s 2010 falsehoods in my new book, Crude Justice: How I Fought Big Oil and Won, and What You Should Know About the New Environmental Attack on America: http://shop.benbellabooks.com/crude-justice
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