How to Plug the Legal Loophole that Caused the Gushing Hole in the Gulf

British Petroleum and the U.S. government can’t figure out how to cover up an underwater oil leak that’s spewing tens of thousands of gallons of oil day into the formerly rich fishery off the Gulf coast of Louisiana.

But between the two of them, they’ve done a masterful job of covering up a hole in public policy that allows risky businesses in every sector to take chances that can inflict irreversible harm on the environment.

The out-of-control oil spill is an object lesson in the results of over 30 years of U.S. certainty about the “risk management” and “cost benefit analysis” approach to regulating iffy technologies of all kinds. Since the 1990s, the U.S. successfully exported its approach to most of the world through the World Trade Organization. The European Union and some within the United Nations holding out for the “better safe than sorry” precautionary principle of risk regulation were scorned as technological sissies who risked holding back economic development and progress.

Now that a global audience is watching a show proving the inability of corporations to manage risks, analyze costs and benefits or safeguard economic development and progress, maybe the debate about strategies for giving the public a say about risky businesses can gush up to the surface. As that happens, I predict that Europe will displace the U.S. and WTO as standard setters for regulating uncertain and dangerous projects in the future.

The Gulf gusher is often ranked as damaging as the notorious Exxon Valdez spill of 1989, a standard comparison that mainly shows how under-reported oil spills have been over the decades. Between 1970 and 2009, according to Pambazuka News writer Horace Campbell’s recounting of U.S. Coast Guard and other estimates, approximately 1.7 billion gallons of fossil fuels have spilled into world waterways from damaged tankers or rigs. The history of the oil industry is the history of spills waiting to happen.

BP’s accident record isn’t out of keeping with the industry. It was fined $87 million for neglect following a Texas refinery explosion in 2005. It was hit with $20 million in criminal penalties following fuel spills from leaky pipes across Alaska in 2006.

Despite this record of longstanding and ongoing mismanagement of a dangerous product by both the industry and BP, oil exploration has been regulated with a light touch. The Deepwater Horizon rig used to pump BP’s Gulf oil well was built in South Korea, registered in Switzerland and flew the flag of the Marshall Islands, a country of 60,000 people in the middle of the Pacific Ocean. Nothing suspicious about a company that avoids home country regulation that way, I suppose. At any rate, the rig’s device to prevent a blowout from the underwater well was built and installed without government inspection.

That device was Plan B, and no Plan C was either required by government licensers (drinking buddies with the companies reports are now indicating) or provided by any companies involved. What , me worry?

The history of government and corporate irresponsibility around risky behaviours goes back to at least the 1880s, when the U.S. Supreme Court gave corporations the same rights as individuals. This meant, among other things, that new technologies, like any other persons, were innocent until proven guilty; the burden of proof was put on the people who wanted to limit the technology to protect health or the environment.

Some hundred years later, U.S. president Ronald Reagan required that all proposed regulations of corporations come with proof of the costs and benefits of limiting corporate rights, thereby launching the lucrative industry of cost-benefit analysis. This and other devices have come to be trumpeted in the U.S. as “science-based regulation.” Most of the science comes from autopsies of those killed by untested technologies.

By contrast, the United Nations and Europe began moving in the direction of what’s now called the “precautionary principle,” which holds that it’s better to be safe than sorry when dealing with the introduction of the likes of asbestos, genetic engineering, the combining of multiple chemicals, and other untested technologies. The burden of proof is on the proponent, who must establish that the product or process is safe, and that methods to deal with accidents are readily at hand.
The European Commission of the European Union codified this approach in 2000, and controversially applied it to limit and prohibit imports and production of genetically modified seeds, hormones and foods.

The U.S and Canada took the Europeans to the court of the World Trade Organization, which ruled against Europe for infringing on the trade rights of corporations. The WTO insists on U.S.-style “science-based” regulations.

Canada has followed the U.S. in lockstep despite a 2001 report it commissioned from the Royal Society of Canada on regulations for the bio-tech industry. Experts who wrote the Royal Society report recommended that government regulators should not assume any new product is safe “unless there is a reliable scientific basis for considering it safe.”

Over the last few months, we have seen at least three U.S. events confirming the wisdom of that approach. The Gulf oil spill has captured all the attention. But President Obama’s cancer panel has just issued a report linking pesticides and other widespread and loosely-regulated chemicals to cancer, while the Environmental Protection Agency has at last conceded that toxic chemicals in combination can be worse than the sum of their parts. All three events confirm that environmentalists were wiser than both new tech promoters and government regulators who followed the industry say-so.

It’s said that the Gulf oil spill will become the “Chernobyl” of offshore oil drilling, linking it in the public mind to horrific damage and making it impossible for the industry to locate in any places where citizens can organize. To be effective, citizen power will need to be supported by government regulations that respect their legitimate concerns. That means that precautionary legal approaches, on par with those promoted by the United Nations and European Union, will start to set the new world standard.


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  1. [...] environmental leader Wayne Roberts calls the precautionary principle the “plug for the legal loophole that caused the gushing hole [...]

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