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After The Deluge (of Oil)

May 12, 2010

The recent oil spill in the Gulf is plainly a catastrophe. After the unfortunate failure of BP’s effort to situate a dome over one of the leaks, all viable solutions seem to be still weeks away. The oil is currently leaking at an estimated rate of 5,000 barrels per day, meaning the spill is currently a bit less than half the size of the Exxon Valdez spill. Economically, the damage of the Gulf oil spill is likely to exceed the Valdez spill with the total eventual cost estimated as high as $14 billion.

After the most important task of actually stopping the leak, the next will be holding those who caused the catastrophe accountable and fairly redressing the damages the spill has created. It will be a long road – litigation over the Valdez spill ended in 2008 after almost 20 years with a Supreme Court ruling that significantly reduced the damages paid by Exxon Mobil – and various recent development have showed that, while BP has said it will pay “all legitimate claims,” legitimacy can be a slippery concept. Some of the recent developments that could affect the eventual litigation:

  • In the immediate aftermath of the spill, BP circulated settlement offers to Gulf Coast residents of “up to $5,000” in exchange for a waiver of the right to sue, some of them as part of contracts with the fisherman who BP hired to clean up the spill. Despite Alaska’s less vibrant economy, plaintiffs in the Exxon Valdez suit were paid $15,000, meaning that this would likely be a great deal for BP and a not-so-great deal for the spill victims. Alabama’s AG asked BP to stop circulating the settlements, saying that residents should “seek appropriate counsel” before signing anything. Unfortunately, given the current economic times and the oil companies’ ability to extend litigation far into the future, $5,000 may be the best deal some Gulf Coasters can get, even if it’s nowhere near adequate compensation.
  • Transocean, owners of the Deepwater Horizon rig, allowed/encouraged/coerced rig workers to sign waivers stating that they were not hurt in the accident and were not witnesses to the accident after they had spent hours floating in the Gulf, on life boats or rescue and before they had been able to go home or see their families. Some reports have said that workers were not able to leave the hotel where they were brought after the accident without signing the waivers. These waivers have already been used to defend the companies against lawsuit as PBS’s story (click through for video) about rig worker Christopher Choy documents.
  • In the Louisiana Legislature, a bill is currently being debated that would revoke to universities where law clinics sue the government. The main target of the bill is Tulane’s Environmental Law Clinic, which could very well be involved future litigation involving the spill. Law clinics provide access to the justice system to low-income people who have no other means for having their complaints heard. The passage of the bill would make it more difficult for low-income people in Louisiana to seek just compensation for the damages of the spill.
  • On the bright side, legislation is currently percolating in Congress that would raise the liability cap on oil spills to $10 billion from the current (amazingly low) limit of $75 million. Whether the legislation can pass the Senate gauntlet is another question and difficulties regarding whether the law will need to be retroactive could also hamper lawmakers efforts to make BP and its partners pay their fair share.
  • The LA Times and NPR also have reports on the legislative and legal issues (respectively) surrounding the spill.

As should be expected of any business, the oil company’s will do everything in their power, fair or not, to protect their bottom line. Concerns for their public image will compel the companies to pay a certain amount but only vigorous and committed litigation will force them to pay adequate compensation for the damage they have caused. Unfortunately, some damage will be irreversible. The negative effects of the Exxon Valdez spill are still being felt on Prince William Sound and the surrounding coastline 20 years later. Local populations of sea otters, killer whales and other animals have not fully recovered while other species including the Pacific herring, an important fish for local fishing town, are classified as “not recovering.”

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