If we had a BP here

Issues of low liability caps very relevant

BP has already spent over a billion dollars in trying to clean up the Gulf of Mexico spill and, with it no closer to success, estimates are the final clean-up bill could be around $14 billion or so, all of which will have to be paid by the company — as US President Barack Obama has said, BP created the problem and BP will pay for it. The issue after this is what about the civil liability — payments, for instance, for the loss in tourism earnings due to the oil spill? This could potentially run into several tens of billions of dollars but whether BP will pay this is now the billion-dollar question since the current cap on such liability is, hold your breath, $75 million (and some made fun of the Rs 500 crore cap in the Civil Liability for Nuclear Damage Bill!). Which is why there is a Bill in the works to raise this cap to $10 billion. Assuming the Bill goes through, there will be the inevitable fight over whether this can be applied retrospectively. The oil lobby has also begun working on the post-clean-up scenario — a House Representative has been quoted as saying there wasn’t a single decision taken by either BP or its contractors which hadn’t been approved/acknowledged by federal officials. In other words, all the blame, and damages, can’t be laid at BP’s door. Indeed, it is because of this that several US lawmakers are working on another tack, to prove BP was criminally negligent — hence all the questions on why BP shortened the process of laying the cement pipes and their testing — since if this is found to be true, the civil cap of $75 million becomes irrelevant.

All of this makes one wonder what happens if there is a similar blowout in India; indeed the problem is not restricted to the oil sector, it applies to most industrial projects. While the lack of clear-cut liabilities means that all matters have to be decided by the state and other pollution control boards, this also means endless delays. Apart from the years it took to settle the liability issue in Bhopal, and the protest over Dow makes it clear it isn’t quite settled even now, the fact is that the site still hasn’t been cleaned up so many decades later — in the US case, though there is the issue of civil/criminal liability, there is no doubt that BP has to pay for the cleaning up. Just as the government has come around to the view that the liability cap needs to be hiked in the nuclear Bill, it’s time to do some thinking on the industrial side and then come up with a Bill that defines civil liability payments that can be made immediately — any payments beyond this can then be the subject of litigation later. Since all industrial projects involve oversight by the state, any claim for damages will also be subject to whether regulators took appropriate action when required and whether or not they went along with all the plans of the industries under their charge — if they did, damages are that much harder to ask for. This requires immediate strengthening of regulatory boards so that they actually perform their duties. Private sector firms cannot be made to pay for the damage they cause if government bodies act as their handmaidens.