BP: Beyond Punishment
"I think it's part of this sort of blame-game society in the sense that it's always got to be somebody's fault instead of the fact that maybe sometimes accidents happen."
—Rand Paul, on Good Morning America, speaking about the BP oil spill
Of all the crazy-ass things Rand Paul has said during his brief, disastrous turn in the national spotlight, this is the most insidious. A week after Paul's comment, David Brooks made the same point a touch more artfully, chalking up the disaster to "the bloody crossroads where complex technical systems meet human psychology," the inevitable result of "living in an imponderably complex technical society."
Society must have seemed "imponderably complex" to those living through the Triangle shirtwaist factory fire, but luckily for us, activists of the day refused to simply say, "Shit happens" and move on.
Pace Paul and Brooks, the public wants to see BP held accountable, and with good reason: early indications are that the company is guilty of a host of mortal sins—from ignoring repeated internal warnings about its safety procedures to harassing workers who raised safety concerns. According to reports from the Guardian and NPR, after the fatal explosion BP sequestered the surviving workers at sea, refusing to let them contact their loved ones, and bullied them into signing forms that indemnified BP for the accident.
After some initial foot-dragging, the Obama administration finally seems to understand that justice demands an aggressive stance. Attorney General Eric Holder announced that the Justice Department is opening a criminal probe into the accident, which claimed the lives of eleven workers; then the White House came out in favor of a bill that would raise the $75 million liability cap on damages from the spill under the Oil Pollution Act of 1990. And, of course, President Obama famously told Matt Lauer that he's trying to figure out "whose ass to kick."
That's all well and good. But despite the public outrage at BP and the thirst for justice from the battered residents of the Gulf Coast, there's a decent chance BP will, like Exxon before it, escape fairly unscathed. The reason is the legal and social shift in how we approach punishment for powerful corporations—a shift that contrasts sharply with the trends in punishment for citizens, particularly those without money or power.
First, let's look at corporate accountability. Ideally, this is the kind of thing you'd want the government to pursue, but as has been dramatically demonstrated, the state's regulatory apparatus has, in many areas, been gutted or co-opted. Which leaves it primarily to private parties to pursue accountability through the courts. In tort law, damages are divided into two types: compensatory and punitive. The former are designed to compensate victims of negligence for their economic damages: lost income, property destruction, etc. Punitive damages are awarded above these compensatory costs as a means of, well, punishing the wrongdoer.
For a long time, conservatives and big corporations have hated punitive damages. The amounts are decided by juries, who have a tendency, when faced with stories of corporate malfeasance, to stick it to the bastards. In the 1980s conservatives began a legal assault on punitive damages, in "an effort coordinated very closely with the Chamber of Commerce," says Stanford law professor Jeff Fisher. "The first few fits and starts didn't work, but they kept hammering away."
In the 1990s enemies of punitive damages found the perfect case when an Alabama doctor sued BMW for having sold him a repainted new car without disclosing the repainting to him; a jury awarded him $4,000 in compensatory damages and $4 million in punitive damages. The Supreme Court found that the punitive damages violated the due process clause of the Fourteenth Amendment; but it didn't specify guidelines for the level of punitive damages that would run afoul of the Constitution.
Which brings us to the last catastrophic American oil spill: the 1989 Exxon Valdez disaster. Five years after the spill, an Alaska jury found Exxon guilty of reckless disregard for allowing a drunken sailor to steer its ship. Exxon paid $507 million in compensatory damages, and the jury assessed it $5 billion in punitive damages.
After several rounds of appeals, the courts cut that award in half. In 2008 the Supreme Court invalidated the award, stating that in the Exxon case, no more than a 1:1 ratio between compensatory damages and punitive damages was allowable. As Senator Patrick Leahy pointed out at a recent Judiciary Committee hearing on liability caps, the decision profoundly altered the incentives faced by firms like BP: "It reduced the consequences of their misconduct to a discounted cost of doing business. That's almost like saying, 'We're giving you a green light to do whatever you want to do.' I can't imagine why anyone would be surprised that...oil companies cut corners and compromised safety." (Leahy's colleague Sheldon Whitehouse has introduced a bill that would overturn the 1:1 cap for maritime law.)
Aside from the practical consequences of altering the incentive structure, the Exxon case and other statutory caps on liability present a deeper threat to the American moral fabric. Set against the increasingly punitive posture of the state toward its citizens over the past several decades, the arbitrary limits on punishment available to a party like Exxon make a mockery of equal justice under the law. Our criminal justice system is the most punitive of any industrialized democracy. We have 2.3 million people incarcerated, half of them for nonviolent property and drug offenses. At least two dozen states have three-strikes laws, and in some cases citizens can face life imprisonment for minor nonviolent offenses. In 2003 the Supreme Court upheld a fifty-year sentence for a California man caught stealing videotapes.
And things are even harsher for Americans unlucky enough to need succor from the state to survive, a k a poor people. Just one drug-related felony conviction can get you booted from welfare, or from public housing (though if you own a house, the IRS will still allow you your mortgage-interest deduction). Under federal law, a drug bust disqualifies a college student from all federal student aid. As a result, between 2001 and 2006 almost 200,000 students lost access to aid. The greatest Congressional champion of this unforgiving policy was Mark Souder, the Indiana Republican who resigned after revelations of his affair with a staff member. In his farewell speech, he took solace in the possibility of forgiveness.
A punitive society is not the best kind of society: there's a real virtue in forgiveness, in second chances. But for years we've been applying Rand Paul's "accidents happen" principle to those at the top while heaping blame, scorn and draconian punishment on those at the bottom. Punitive damages are capped for corporations, while punitive policies proliferate for citizens. This tears the social contract apart, and the only way to repair it is to apply the same principles of accountability up and down the social hierarchy. We should start with BP.