Saturday, March 17, 2012

Limiting Liability for Oil and Nuclear Disasters

March 16, 2012 p. B3 Wall Street Journal

"Chevron corp said Thursday that oil was seeping from ocean floor near its operations off the coast of Brazil, the second such leak in recent months... The new seep amounts to less than a barrel of oil a day..."

Majia here: In November Chevron had a major leak in the same spot. The WSJ article contained a picture of the November oil slick and it was large.

The article explains that Brazilian regulators are not happy with Chevron and issued a formal warning that the company hadn't fulfilled safeguards requested in response to the Nov 7 leak.

In 2011 I posted about Brazil's dis-satisfaction with Chevron's behavior

I've also posted about Chevron's legal efforts to avoid compensating indigenous people in the Amazon who were poisoned by Texaco's blatant environmental crimes (Chevron acquired Texaco and assumed those liabilities but has fought them tooth and nail)
I wonder what liabilities Chevron holds for environmental damage in Brazil? A quick search suggests Brazil has a well-established legal framework for environmental crimes so perhaps Chevron can be sued for deliberately failing to implement required safety features.

Often "developing" and "emerging" economies do not have strong environmental laws.

Many citizens injured by US corporate misdeeds in other countries have brought lawsuits against the corporations in US Courts using the US Alien Tort Act.
The New York Times: [excerpted] “On Tuesday, the Supreme Court heard arguments in Kiobel v. Royal Dutch Petroleum over whether corporations can be sued for human rights violations overseas. The plaintiffs filed suit in the United States under the Alien Tort Statute, a law enacted by Congress in 1789, that empowers the federal courts to hear cases by foreigners bringing a civil suit for wrongs committed “in violation of the law of nations.”

But filing a lawsuit in the US may be disappointing for those injured by US oil (and nuclear) corporations.

A year after the BP Gulf oil spill, oil firms were still shielded from full liability in the US.

A Year After Gulf Tragedy, Offshore Oil Companies Still Shielded by Liability Limits
Marian Wang ProPublica, April 19, 2011
[excerpted] "When the Deepwater Horizon disaster killed 11 men at sea last April and set off the worst oil spill in U.S. history, the tragedy exposed a number of weaknesses—not least of which were decades-old laws that limited the liability of major players.

The Oil Pollution Act capped the amount BP owed in damages for the spill at $75 million—a legal limit that, under public pressure, BP ultimately volunteered not to invoke. 

Majia here: The BP oil spill is still being litigated so it is possible BP will end up paying much more than the legal limit. One can imagine that US oil companies are carefully monitoring settlements.

Large corporations will not limit their exposures to risks so long as they are freed from the assuming the full costs of their externalities. 

Laws such as the Oil Pollution Act and the Price Anderson Act (which limits nuclear plant liabilities) reinforce risky behavior by shifting costs of risks to communities

Japan is currently in the process of joining a nuclear compensation pack that would limit liability for any citizens in any countries harmed by their nuclear disaster. 

Limited liability also allows the banksters to continue with their reckless behavior
If we want corporations to behave we must make them fully responsible for ALL of their externalities (their social, environmental, and economic costs).

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