Immunity for Iraqi Oil Dealings Raises Alarm
An executive order signed by President Bush more than two months ago is raising concerns that U.S. oil companies may have been handed blanket immunity from lawsuits and criminal prosecution in connection with the sale of Iraqi oil.
The Bush administration said Wednesday that the immunity wouldn’t be nearly so broad.
But lawyers for various advocacy organizations said the two-page executive order seemed to completely shield oil companies from liability -- even if it could be proved that they had committed human rights violations, bribed officials or caused great environmental damage in the course of their Iraqi-related business.
“As written, the executive order appears to cancel the rule of law for the oil industry or anyone else who gets possession or control of Iraqi oil or anything of value related to Iraqi oil,” said Tom Devine, legal director for the Washington-based Government Accountability Project, a nonprofit group that defends whistle-blowers.
Taylor Griffin, a Treasury Department spokesman, dismissed that interpretation, saying the president issued Executive Order 13303 to protect proceeds from the sale of Iraqi crude oil, which are supposed to go into a special fund that the United Nations set up in May to help rebuild the war-torn country.
“This does not protect the companies’ money,” Griffin said. “It protects the Iraqi people’s money.”
For instance, administration officials said, if an American energy company received a shipment of Iraqi crude, the money to pay for the oil would be off limits in any litigation. That way, they explained, the proceeds would be sure to find their way to where they belonged: the Development Fund for Iraq.
Administration officials said the intent of the executive order would become clear once regulations, now being drafted by the Treasury Department, were issued. “Rules are forthcoming ... that will deal with some of these issues in greater specificity,” Griffin said.
But Devine and others said the administration’s stated intentions were not borne out by the sweeping language in the executive order.
“Unless they offer a different, credible translation for plain English, it’s no solace that the administration meant something different,” Devine said.
According to the order, “any attachment, judgment, decree, lien, execution, garnishment or other judicial process is prohibited, and shall be deemed null and void, with respect to the following:
"(a) the Development Fund for Iraq and
"(b) all Iraqi petroleum and petroleum products, and interests therein, and proceeds, obligations or any financial instruments of any nature whatsoever arising from or related to the sale or marketing thereof, and interests therein, in which any foreign country or a national thereof has any interest, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons.”
The order defines “persons” to include corporations, and covers “any petroleum, petroleum products or natural gas originating in Iraq, including any Iraqi-origin oil inventories, wherever located.”
Betsy Apple, an attorney for Earthrights International, which brings lawsuits on behalf of alleged victims of human rights abuses abroad, said the scope of the order goes far beyond the way the Treasury Department has billed it.
“It’s very disingenuous to suggest that the only thing that’s being protected here are development funds for Iraq,” she said. “That’s trying to hide the fact that it’s the oil companies who are doing that work and generating those proceeds.”
Devine of the Government Accountability Project suggested that the wording of the order was so broad that it could apply to anything from exploration and production of Iraqi oil to advertising and sales at U.S. gas pumps.
“Let’s say I work at a Madison Avenue firm that engages in false advertising” as part of a campaign to market gasoline that was made from Iraqi crude, Devine said. The way the executive order is drawn, it appears that the ad agency “can lie to consumers as much as they want ... without any recourse by the Federal Trade Commission.”
Devine added that if an oil company employee working in Iraq was fired in retaliation for blowing the whistle on wrongdoing allegedly committed by his employer, the executive order could make it impossible for him to collect damages from the company.
Similarly, an operator of an oil tanker that suffered a major spill while hauling Iraqi crude could be immune from liability, thanks to the executive order, lawyers said.
“That oil was shipped out of Iraq and it’s protected,” Apple said. “The company that failed to ensure it was using up-to-date tankers is not going to be held accountable.... There is nothing that anybody can do for any recourse.”
Treasury Department officials said the order would not protect an oil company under such a scenario.
But Mariano-Florentino Cuellar, an assistant professor of international and administrative law at Stanford University, wasn’t so sure.
The executive order is “extremely broad,” Cuellar said. “If they were really trying to narrowly tailor this” to protect the Development Fund for Iraq, he said, it would have made more sense to spell out that a company is shielded from liability “inasmuch as that entity still owes money” to the fund.
Bush signed Executive Order 13303 on May 22. It then was published in the Federal Register, where it went largely unnoticed before being unearthed a few weeks later by Jim Vallette, a researcher with the nonprofit Sustainable Energy and Economy Network.
A lawyer for the American Petroleum Institute, the oil industry’s main trade group, said he wasn’t familiar with the executive order.
Jamin Raskin, a professor of constitutional law at American University, said the order appeared to improperly negate occupational safety laws aimed at protecting workers in the oil industry and to strip U.S. citizens of their right to sue.
He cited in particular the part of the order that says “judicial processes” are “null and void.”
That language “seems to destroy the prospect of any enforcement of civil or criminal liability,” Raskin said. “People are saying of Iraq, ‘It’s a jungle out there,’ and this order kind of makes that the law.”
Raskin said Wednesday he was heartened to hear that the administration was disavowing an expansive reading of the order. “This does remind me of the extremely broad language of the executive order with respect to military tribunals that the administration later sharply refined by regulation after public protest,” he said. “One can only hope that is what happens here.”