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A Project of The Annenberg Public Policy Center

Phony ‘Big Oil Bailout’ Claims

In a highly competitive race for an open U.S. Senate seat in Missouri, Secretary of State Robin Carnahan accuses Republican Rep. Roy Blunt of supporting a “Big Oil bailout” and sticking the taxpayers with the cleanup costs. We find the charges to be false.

In two similar videos in a fundraising solicitation appearing on her website and e-mailed to her supporters, the Democratic candidate misstates and distorts Blunt’s position on corporate liability stemming from the oil spill in the Gulf of Mexico. Both videos take Blunt’s May 18 speech to the St. Louis Regional Chamber and Growth Association out of context. Both videos focus on Blunt’s statement that “the current liability cap, unless there’s some criminal activity that no one’s aware of, is gonna be the current cap.” From that, Carnahan leaps to the false conclusion that Blunt wants to limit how much British Petroleum pays for the cleanup to $75 million and stick taxpayers with 99.6 percent of the cost, mislabeling that a “bailout.”

The videos also seek to tie Blunt’s position on the cleanup costs to his campaign contributions from energy companies, without any evidence that the donations have influenced the congressman.

The first video, released May 20 and titled “Congressman Blunt’s Big Oil Bailout,” claims “Blunt refuses to make them pay the billions in damage they’ve caused.”

But Blunt was merely explaining the current law, which is the Oil Pollution Act of 1990. The law — which was approved by the House and Senate in August 1990 without a single “no” vote — provides that “holders of leases or permits for offshore facilities, except deepwater ports, are liable for up to $75 million per spill, plus removal costs.”

The Carnahan campaign provided a full transcript of Blunt’s speech that shows Blunt had prefaced his statement by emphasizing the need to understand the law because there are “going to be liability issues out there that you need to be thoughtful about.” It’s misleading to characterize leaving current law intact as a “bailout.” The Oxford English Dictionary defines a bailout as “an act of giving financial assistance to a failing business.” Simply put, a “bailout” requires action, and there is no proposal to provide oil companies with any economic relief.

Carnahan’s video also exaggerates Blunt’s sympathy for BP — at the expense of taxpayers — when it quotes only this portion of his May 18 speech: “If you have an accident, is an accident an accident or is it only the responsibility of the one company it happens to?” But the full transcript shows Blunt was wondering whether all oil companies should share the risk, not whether taxpayers should foot the bill because it was a mere accident.

The video emphasizes the word “accident” by also splicing in Blunt’s comment that “accidents can happen” from an interview that same day on local radio station KMOX. Blunt certainly speculates that the recent Gulf spill may be an accident, but the full quote is: “Accidents can happen; we’ll see if this was an accident, or if this was negligence.” And in that same radio interview, he also says that BP will be held responsible for the damages. In response to the question, “Will you be working to ensure that the responsible parties will have to pay this and their damages and their cost on this won’t be capped?” Blunt responded: “Sure, I think that’s exactly what everybody should expect. I think that’s what should happen.”

In fact, two days after his speech to the St. Louis business group and his radio interview, Blunt sponsored the Oil Spill Response and Assistance Act — a companion to a Senate bill already introduced by Republicans from two Gulf Coast states, David Vitter of Louisiana and Jeff Sessions of Alabama. Both bills extend oil companies’ liability in the event of a spill to $150 million or four quarters of the company’s profits, whichever is greater. Both would be retroactive to April 15, 2010, so the current Gulf of Mexico spill would be covered.

Fuzzy Math on Taxpayer Costs

After the Carnahan video misrepresents Blunt’s position on liability, it makes this unfounded charge: Blunt’s failure to hold BP responsible for the spill will cost Missourians $268 million.

The campaign based this figure on the work of David Kotok, chairman and chief investment officer of Cumberland Advisors, who projects that the total cost of the spill could start at $12.5 billion. The Carnahan campaign’s back-of-the-envelope math merely divided $12.5 billion by U.S. taxpayers and multipled that by the number of Missouri taxpayers. But here’s the problem: Kotok told us that his estimate includes the cost of cleanup and, under the Oil Pollution Act of 1990, the responsible companies pay for all clean-up costs. The Carnahan campaign falsely says “BP’s bill for cleanup is just $75 million.” An overview of the law on the Environmental Protection Act website says the “responsible party” would pay for “all removal costs plus $75,000,000.” So, BP’s bill will far exceed $75 million. The $75 million cap applies to economic damages — such as lost income by fishermen, resort owners and others whose livelihoods have been affected — as Blunt was alluding to in his speech. (The cap does not apply at all in cases of gross negligence.)

Also, BP said in a May 26 press release that “it will pay legitimate claims for loss and damage caused by the spill.” The Obama administration has said there is no need to change the liability cap retroactively, in light of BP’s comments, though it does support future reform. “BP has recognized its obligation as to fully compensate all those bearing damages in the current oil spill,” Associate Attorney General Thomas Perrelli told members of the Senate Energy and Natural Resources Committee on May 25. “For the future, we need to change the legal framework to ensure that there’s no arbitrary cap on corporate responsibility for a similar major oil spill.”

All this leads Carnahan to the flawed conclusion in the second video that Blunt supports a taxpayer “bailout” of the oil industry.

That video, posted May 27, is called “28 Days Later … Congressional Blunt Refuses To Say No To Bailout for Big Oil.” It goes on to say: “Congressman Blunt’s spokesperson refuses to say whether he will support a Big Oil Bailout.” The Carnahan campaign cites a May 13 Politico article as its source, but the congressman’s spokesman Rich Chrismer hardly refuses to comment. Instead, he takes a hard line. “Anyone who is found to be at fault should pay every penny they are responsible for,” Chrismer told Politico.

Buying Influence?

In both videos, Carnahan seeks to tie Blunt’s actions to his campaign donations. The first video correctly points out that Blunt is “among the top ten all-time recipients of BP money in the House of Representatives.” According to an e-mail from the nonpartisan Center for Responsive Politics, Blunt received $13,500 from BP employees and the company’s political action committee since running for office in 1996, ranking him 9th among House members. Both videos also correctly claim that Blunt received “more than a million dollars from oil and energy interests.” Over Blunt’s congressional career, the center reports he has received $1,188,698 from those in the energy and natural resources industry. But there is no proof that these contributions influenced Blunt’s actions and no evidence that Blunt’s actions are designed to help BP or hurt taxpayers.

The campaign contributions are just part of a misleading narrative built on out-of-context quotations, a flawed understanding of the Oil Pollution Act of 1990, and an inaccurate use of the word “bailout.” We can expect to see more of this during this year’s midterm elections. Why? Senate Democrats, led by Sen. Robert Menendez of New Jersey, introduced a bill May 4 called the Big Oil Bailout Prevention Liability Act, which seeks to retroactively raise the liability limit from $75 million to $10 billion. Republican Sen. Lisa Murkowski of Alaska — a supporter of off-shore drilling — spoke against the Democratic bill on the Senate floor as potentially discouraging smaller companies from off-shore drilling. She blocked it from advancing, for now, and has been pegged as a supporter of a “Big Oil Bailout” by the TrueMajority.org, a project of the liberal group US Action.

TrueMajority.org has started a letter-writing campaign that accuses Murkowski of spearheading a Republican attempt to limit BP liability to “about the first five days of the cleanup and put taxpayers on the hook for everything else.” This not only mischaracterizes the Oil Pollution Act of 1990 but also the senator’s position. Like the Obama administration, Murkowski has taken the position that “BP as the responsible party will ensure that claims are paid.” Far from sticking taxpayers with the cost, Murkowski has introduced legislation to increase the Oil Spill Liability Trust Fund to protect against future spills and to expedite the claims process for those affected by the oil spill.

— Michael Morse, with Kelsey Ferguson