One Year Later BP Still Not “Making It Right”
BP Must Make an Immediate Down Payment on Future Restoration Funding
SOURCE: AP/US Coast Guard
One year ago the Deepwater Horizon oil disaster caused immeasurable damage to the Gulf Coast and the people who live and work there. Unfortunately on the first anniversary of the spill those ecosystems and communities are still suffering. Solutions from both Congress and the parties responsible for the spill are slow moving or nonexistent. It is time for action to restore this vital region in the short term and start building lasting solutions to bring economic and ecological stability to the Gulf Coast over the coming decades.
A group of trustees including federal agencies are responsible for determining the extent of damage done to the Gulf via a Natural Resource Damage Assessment, or NRDA, a process likely to drag on for several more years. Of course, the communities and sensitive environmental areas in the Gulf need their remediation to begin immediately.
In this regard, legislation proposed by Sen. David Vitter (R-LA) and Congressman Jeff Landry (R-LA) is on the right track. It would require BP and other responsible parties to prove their commitment to the long-term restoration of the Gulf by making an immediate down payment on the fines that will no doubt come as a result of the NRDA process so the real recovery process can begin.
More comprehensive solutions are also needed. Last February the Center for American Progress and OxFam America convened a roundtable of policy experts, scientists, business leaders, and community advocates from the Gulf region as well as officials from the administration and relevant federal agencies. We discussed solutions that achieved both short-term job creation and ecological remediation while moving toward a long-term vision of a safer, healthier region with a more stable and diverse economy.
CAP and OxFam’s accompanying report, “Beyond Recovery,” explored strategies to assist the Gulf region in transitioning to a more sustainable future. The report highlighted the need to redirect the region’s economic engine away from fossil fuels while simultaneously protecting and healing the coast through large-scale wetlands restoration projects.
The report built on the recommendations of Navy Secretary Ray Mabus and the president’s Gulf Coast Restoration Task Force and proposed that Congress direct 80 percent of any fines administered through the Clean Water Act from the Deepwater Horizon disaster toward a Gulf Coast Recovery Fund to finance restoration projects.
We also recommended that Congress establish a Gulf Coast Recovery Council that included relevant federal agencies and the five Gulf state governors, along with an independent citizens advisory council that would provide a bottom-up perspective to restoriation strategies. The council would develop a comprehensive and inclusive plan to restore the region’s ecosystem and begin diversifying the Gulf Coast economy away from volatile and destructive fossil fuels.
Despite the urgent need for action, however, these and other restoration recommendations have not gained any significant foothold in Congress. We think that after a year it is high time to hold BP accountable for helping restore the region, and we need to begin to promote ecological as well as economic recovery in the Gulf starting with the recommendations laid out in CAP’s report.
Opportunity from crisis
Meanwhile, the Gulf Coast continues to feel the impact of the spill. The National Wildlife Federation reports this month that 3,000 miles of beach and wetlands were contaminated by oil from the BP disaster. Much of the cleanup effort has only scratched the surface and new “tar balls” wash on to the shores every day. Wildlife experts with the National Audubon Society continue to warn that the health of a variety of threatened and endangered migratory species is at risk in the Gulf.
This makes an already dangerous situation even worse. In the 20th century alone nearly one-third of the Gulf’s wetlands were lost. That’s the equivalent of a football-field-sized land mass every 38 minutes. Without large-scale restoration the Gulf region is on track to lose a land mass the size of Rhode Island by 2050.
Protecting the Gulf Coast is an economic imperative as much as an environmental one. According to an analysis by Earth Economics the wetlands provide up to $47 billion in benefits every year. In part this is because they serve as a critical buffer between harsh storms and flooding. One acre of wetland can hold up to 1 million gallons of water during a flood and 3.4 miles of wetlands can reduce a storm surge by one foot, significantly reducing disaster risk.
A healthy ecosystem is also crucial to the $2.4 billion commercial fishing industry in the Gulf of Mexico. Likewise, the vibrant $23.2 billion tourism industry in the Gulf relies on healthy wetlands and beaches to survive. Following the BP spill overall tourism and consumer spending in the Gulf states’ coastal economies fell by 40 percent in June 2010.
It doesn’t have to be this way. We can enhance and protect the Gulf’s ecology while also strengthening the economy of the region. The Environmental Defense Fund found that each $1 million in investment in wetlands restoration can create 29 new jobs. Similarly, a study by the U.S. Army Corps of Engineers estimates that a $2 billion investment in Louisiana’s “Coast 2050” project, a plan developed in 1998 to address the dramatic loss of wetlands in the state which had already been underway for decades. Such activity would yield about 28 jobs per $1 million spent, including both direct jobs and jobs in related industries.
Responsibility and accountability
BP and other responsible parties must be forced to follow through on their promise to “make this right” and fully compensate for the damage done to individuals, businesses, and the fragile ecosystem of the Gulf region.
At the White House’s request BP established a $20 billion escrow fund to manage the claims process. But shortly thereafter the company claimed a nearly $10 billion tax credit as a result of costs incurred during the cleanup process.
Despite the administration’s insistence that BP bear the entire cost of the unprecedented clean up it looks like taxpayers will be picking up half the bill. The galling payouts don’t end there, either. Transocean gave its top executives safety bonuses in December 2010 for achieving “the best year of safety performance in our company’s history” despite the explosion of their rig that killed 11 people and set off the largest oil spill in U.S. history.
And Ken Feinberg and his firm, Feinberg Rozen, which was hired by BP to manage the claims process, negotiated themselves a raise while families and businesses throughout the region are still reeling. They are now being paid $1.25 million a month.
Further, per the deal the company made with the White House, BP has made clear that it will be ending compensation proceedings for individuals and businesses by 2013 even though Texas A&M’s Harte Research Institute for Gulf of Mexico Studies recently concluded that “Realistically, true loss to the ecosystem and fisheries may not accurately be known for years, or even decades.”
BP is also liable for significant penalties under both the Clean Water Act and NRDA. Citing gross negligence, federal prosecutors in Louisiana have the intention and legal authority under the Clean Water Act to charge BP as much as $4,300 for each of the more than 400 million barrels of oil spilled into the Gulf of Mexico despite the oil giant’s discovery of a loophole in the wording of the act that could dramatically reduce its Clean Water Act liability should the company successfully exploit it.
It is imperative that these funds be invested in meaningful, long-term recovery projects, not lump sums passed out indiscriminately and with very little oversight. The recent attention given to “spillionaires,” or residents who may be taking unfair advantage of the claims process, only further emphasizes the need for appropriate oversight and strategic spending.
Our call for the establishment of an independent citizens’ advisory council would provide the ideal deliberative body to ensure the money goes into appropriate restoration projects. It would be made up of the people most affected by the spill who would allocate and oversee Clean Water Act funds effectively.
Additionally, it is our recommendation that BP and the other responsible parties be required to make an immediate down payment on the NRDA process—a bureaucratic snarl of regulations that is likely to take years to unravel—and be prevented from using the court system to delay their obligation while the inevitable legal challenges are pending.
Despite BP’s claim that they’ve set aside hundreds of millions of dollars for restoration projects there is very little pressure on the oil company to actually invest those funds into rebuilding the Gulf. New Orleans’s WWLTV points out that a year after the spill only one such project is underway in Mississippi—and nothing is happening in Louisiana, the state arguably hit hardest by the disaster.
The dire state of the recovery process highlights the need for BP to prove its true commitment to the Gulf Coast region by making a substantial down payment on the extensive restoration and rehabilitation work that lies ahead. BP knows it will be fined under the Clean Water Act and through NRDA. It’s just a question of when and how much they will be forced to pay.
The enduring environmental, economic, and human impact of this unprecedented disaster is extremely difficult to gauge, and the extent likely won’t be known for several years. Regardless, BP and other responsible parties need to acknowledge their obligation by acting now, and they need to be held accountable every step of the way.
Jorge Madrid is a Research Associate and Kiley Kroh is Associate Director for Ocean Communications at American Progress.
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