The Royalties Model


As the White House contemplates what some reports say is a $20 billion fund for claims from the BP spill, a Maine congresswoman has introduced legislation for another funding source: Royalties on the spilled oil.

After all, reasons Chellie Pingree, a Democrat who made national news last year when she was one of a half-dozen House members who re-introduced the public option on health care long after others thought it dead, BP leased the oil rights from the United States – it’s not our fault that they screwed up and pumped it into the Gulf.

So Pingree has introduced a bill that would force BP to pay those royalties. She thinks some of the money, estimated in the hundreds of thousands of dollars, might be used to pay for environmental aspects of alternative energy sources like wind or tidal power … stuff states like Maine have in abundance.

Of course, this is yet another reason to toss out the wildly low-balled BP spill estimates and replace them with credible estimates from independent, third-party experts.

“Not only does BP need to pay for the incredible economic and environmental damage they’ve done,” Pingree said in a June 14 announcement. “They also owe the American people for the millions of gallons of oil they have spilled into the Gulf of Mexico.”

Also from the announcement: “Oil companies pay royalties on oil they collect and sell from offshore wells but current law allows federal agencies leeway and requires a finding of negligence when deciding whether to charge BP royalties for the spilled oil. Pingree’s bill, the Spilled Oil Royalty Collection Act, removes those conditions and requires BP to pay for all the oil that comes out of the damaged well.”

“It’s simple—BP drilled that well and they are responsible for the spilled oil,” Pingree said. “They shouldn’t be able to find a legal loophole that gets them off the hook.”

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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