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It's not surprising that Tony Hayward, BP's chief executive, and a handful of other senior executives, are being criticized for their response to the Gulf oil spill. Insufficient action, a lack of transparency, stonewalling, poor response coordination, and excessive finger pointing are some of the reasons for the criticisms. Only recently has BP (BP) begun using less ambiguous words to describe what happened and to describe the kinds of claims it is likely to pay out of its new $20 billion fund. Most likely, these earlier, more cautious approaches were designed to assuage the concerns of the lawyers, who know that even a harmless gaffe can be taken out of context and used in court. We live in litigious times.
Liability issues surrounding the spill are affecting the cleanup, too. Whereas BP and its drilling and oil-rig partners are most likely the legally responsible parties under the 1990 Oil Pollution Act, companies and nonprofits with technical expertise, which might be able to help, lack legal resources or protection and are wary of wandering into what is sure to be a legal equivalent of a 100-mile slick. By lending a hand to staunch the flow of oil, these organizations could find themselves in the midst of legal battles that are all but certain to follow. Rather than help, they are much more likely to watch and wait.
The threat of expensive legal bills has a chilling effect. According to the Clean Water Act (first enacted in 1972 but modified and revised since), penalties for spilling oil into U.S. waters can be as high as $4,300 a barrel. This penalty was put in place to deter companies from taking a lackadaisical approach to safety in the aftermath of the 1989 Exxon Valdez disaster, which polluted areas of the coastline of Alaska and killed wildlife. Settling all the suits generated by the Exxon Valdez took 20 years and cost tens of millions of dollars in legal fees.
While BP and its partners are likely the only companies that would face fines under the Clean Water Act—and those fines could be dauntingly high, given the millions of barrels that have already been released—there are other penalties do-good companies might be wary of. For example, if a company trying to help stem the spill was thought to have disrupted the migration pattern of birds in the process, it could be prosecuted under the Migratory Bird Treaty Reform Act of 1998. Similarly, if a company involved in the cleanup were perceived to have harmed an endangered species, it could also be held liable. Add to these other possible penalties from state environmental laws. Indeed, more than 200 lawsuits have already been filed over the Gulf oil leak.
Powerful punishments are often needed to stop bad behavior. But in some ways, the current situation is more akin to deterrents gone wild. Companies that want to help should not sit on the sidelines scared of being dragged into a legal morass.
We know that fear of long and expensive legal wrangling can cast a chill on even good behavior. We have known this for years. In some states, for example, threats of legal action created situations in which doctors were reluctant to help injured strangers for fear that malpractice lawsuits would be brought against them if something went wrong.
These fears were well-founded. In more than a few instances, doctors who tried to help injured people were sued by the families of those people. These doctors had to defend themselves and their reputations for doing the right thing. As a result, when someone shouted, "is there a doctor in the house?" hardly a hand went up. It took the advent of Good Samaritan laws to protect doctors and others if they help out in an emergency.
To encourage good companies with specialized expertise to raise their hands in the midst of a disaster like the Gulf oil spill, we need the corporate equivalent of Good Samaritan laws. If companies with knowhow were free from the worry of expensive, reputation-destroying lawsuits, more of them might be working side by side with BP, lending their expertise in an effort to achieve common purpose to save the Gulf.
The costs of the Gulf disaster are high and getting higher. The last item we should add to that bill is the cost of all the nuisance lawsuits that are sure to follow. Companies that lend a hand need to be protected.