On July 2, the U.S. Justice Department announced a settlement of the civil claims relating to the April 20, 2010, BP Deepwater Horizon explosion in the Gulf of Mexico. The fines, to be paid by BP over an 18 year period, total $18.7 billion, the largest such fine in U.S. history. However, environmentalists are saying that BP is getting off easy and should be paying much, much more.
The fines, which still need to undergo public review and court approval, break down as follows:
—$5.5 billion in total Clean Water Act fines;
—$7.1 billion for ecological and wildlife harms and restoration,
—$5.9 billion to settle claims by state and some local governments for economic damages; and $600 million for other claims, including claims for reimbursement of Natural Resource Damages Assessment costs and other federal expenses.
The Deepwater Horizon explosion and oil spill was found by U.S. Federal Judge Carl Barbier to be caused by gross negligence. Thus under the Clean Water Act, they are liable for as much as $4,300 per barrel of oil spilled. Scientists for the government have argued that 4.19 million barrels spilled. Based on this figure, the CWA fines alone would total $18 billion. However, the judge decided that actually, in his opinion, it was only 3.19 million barrels, thus significantly reducing the maximum CWA fine to $13.7 billion; and as can be seen the total CWA fines assessed were much less.
Under the agreement, BP is paying $7 billion for Natural Resource Damages the Gulf back to its prior condition, on top of $1 billion already committed. However, this is a gross underestimate of the cost of restoration. The National Wildlife Federation estimated that the NRDA fines should actually total $31 billion.
BP is pretty happy with the settlement. BP’s chief financial officer, Brian Gilvary, said in a press release, “The impact of the settlement on our balance sheet and cashflow will be manageable.”
This settlement defies the logic of environmental law. The purpose of fines for causing environmental destruction through gross negligence is not only to rectify the damages caused—it is to serve as a deterrent to future disasters. If this settlement doesn’t hurt BP, if it is “manageable,” how then does it serve to deter? BP can just chalk it up to the cost of doing business.
At the same time, however, this settlement shows why ultimately, capitalism cannot protect the environment. The existence of environmental protection laws is a product of mass struggle and represents important and necessary reforms. However, when push comes to shove, the intent of these laws was subverted in the process of reaching a settlement; the judge blatantly intervened to ease the pain of the punishment for BP, leading to a fine which, while record-setting, is not big enough to actually restore the damage nor serve as a deterrent to massive ecological disaster. To save the environment, we need socialism, a rational, planned system in which the government and courts will put human needs and sustainable, clean development as the highest priorities.
