BP Oil Spill Update Rhon Jones Beasley, Allen, Crow, Methvin, Portis & Miles, P.C.
It’s been a year and a half since the Deepwater Horizon sank and 200 million gallons of oil gushed into the Gulf. Where are we now?
BP Oil Spill Update: Topics • Environmental, Health, and Economic Impacts • Gulf Coast Claims Facility • Multi-District Litigation
Commission Findings on the cause and scope of the oil spill • Jan. 11, 2011: The National Oil Spill Commission released a 372-page report on the Gulf oil disaster. • Findings: • “The Macondo disaster was not inevitable” • “All of the technical failures at Macondo can be traced back to management errors by the companies involved in the incident.”
Environmental Impact • Over 200 million gallons of oil gushed into the Gulf • Over 1.8 million gallons of dispersants used • 665 miles of coastline contaminated • 86,985 square miles were closed to fishing at the peak of the crisis
Environmental Impact • Damage to Numerous Environments/Habitats • Oil in salt marshes • Layer of dead animals and oil 4 inches thick along the Gulf sea floor • Plumes affect fish and marine mammals • Oil slicks on the surface • Submerged tar mats lurking off the coast • Oil and tar balls on beaches
The Truth about Dispersants From the recently released report “The Chaos of Clean-up” • Toxicity testing shows that a mixture of Corexit 9500 and Number 2 fuel oil is more than four times as toxic as Number 2 fuel oil alone and nearly ten times more toxic than Corexit alone • Additionally, comparison of toxicity testing results for dispersants listed on the Product Schedule show that Corexit 9500, when mixed with Number 2 fuel oil, is the dispersant that is most toxic to silversides (an estuary fish tested under required protocols) and the second least effective at dispersing South Louisiana crude oil.
Environmental Impact • Much of the ongoing work to determine the spill’s environmental impact is being conducted through the Natural Resource Damage Asssessment, or NRDA. • NRDA is a process used by federal agencies, states, and Indian tribes to evaluate impact • The NRDA is broken up into Technical Working Groups, or TWGs, that evaluate impacts to specific aspects of the environment (ie, Deepwater Communities, Shoreline, Submerged Aquatic Vegetation, etc.) • The NRDA determines damages to be paid by responsible party and develops restoration plans
No Quick Answers • Difficult to assess the complete environmental impact of such a large scale disaster • Scientists must study impacted species for multiple generations to assess the impacts of oil on survival, reproductive ability, and population dynamics NRDA TWG group taking samples from oiled marsh in Louisiana
Health Impact • Various groups are working to determine the health hazards associated with oil and dispersant exposure • The National Institute of Health Environmental Sciences has awarded the University of Florida, Tulane, LSU, and UT-Galveston several million dollars each to fund their own impact studies. • These independent studies are monitoring the physical and psychological impacts of the spill on Gulf Coast residents and cleanup workers
Health Impact • The Tulane study in particular is doing a study on pregnant women to determine if the oil spill had any negative health impacts. • The fear among some is that pregnant women and women of child-bearing age could be most susceptible to any adverse effects. • “Pregnant women are always a population of concern when there are environmental exposures. The developing fetus may be vulnerable to even small doses of contaminants,” said Dr. Maureen Lichtvelt, chairwoman of environmental policy for Tulane University, which is conducting the study.
BP’s involvement • Since the spill, BP has been aggressively recruiting all the top scientists in a attempt to control and manipulate the scientific studies. • Recently, Greenpeace, an environmental group, obtained and published emails from Russell Putt, a BP environmental expert, explicitly discussing how the company could control and “influence” scientific research in the Gulf.
BP/GCCF Predictions • The GCCF and BP predict that most of the Gulf will fully recover by 2012, with oyster beds recovering by 2014 • These predictions are based on the report of Wes Tunnell, a marine biologist at Texas A&M • Tunnell’s report acknowledges that “establishing an exact recovery time is entirely impossible”
Signs that the Gulf’s recovery may not be as speedy as BP predicts • Tropical Storm Lee caused tarballs to wash ahore along the Gulf • One Gulf Shores beachgoer said that after walking down the beach on Labor Day, she had to “scrub her feet with soap and a washcloth” because of the tar • Oil sheens have been spotted coming up near the plugged Macondo well, leading to speculation about whether the well is leaking again Oil sheen surfacing near plugged Macondo well
Scientific Predictions • Dr. Samantha Joye of UGA predicts that it will take 10 years to fully determine the impact of the spill • Dr. Joye also thinks that it will be 2012 before we really start to see the effect on the fisheries • Remembering Exxon Valdez: the collapse of the herring population did not occur until four years after the spill Herring samples taken in 2010 as part of a three year study to determine why the herring population never recovered from the post-Exxon Valdez collapse
Economic Predictions • Perception damages may linger long after the Gulf is declared “clean” • “A review of disasters affecting tourism destinations reveals that the impact endures beyond the resolution of the crisis itself due to brand damage and ongoing traveler misperceptions” Oxford Economics study
Types of Claimants • Personal Injury • Fishermen • Business Losses (Restaurants, Hotels, Etc.) • Property (Lost rent and loss of value) • Lost Wages (Individual claimants) • Government Entities
Types of Claims • Oil Pollution Act (OPA) Private Claims • Damage to Real or Personal Property • Damage to Profits or Earning Capacity • Loss of Subsistence Use of Resource • OPA Government Claims • Destruction of Natural Resources • Loss of Tax Revenue • Cost of Increased Public Services • Robins Dry Dock Claims • Tort Claims
2 Tracks to Recover Damages • Gulf Coast Claims Facility (GCCF) • Administered by Ken Feinberg • Interim and Final Claims • Multi-District Litigation (MDL) • MDL No. 2179 • E.D. of Louisiana • Judge Barbier
GCCF • Oil Pollution Act (OPA) mandates that responsible party accept claims • Initial BP Claims Facility Failed • BP Execs selected Feinberg to administer $20B Fund • GCCF Opened on August 23, 2010
GCCF Options • Emergency Advance Payment • Ended Nov 23, 2010 • Interim Claim • Past damages, no release of legal rights • Quick Pay Final Claim • Eligible if received emergency or interim • Release legal right • Full Review Final Claim • Past and future damages, waive legal rights
The GCCF changes the Rules…again • Interim Claims • Originally a business or employee could file interim claims quarterly without having to show that they made more in 2011 than they did in 2010. • Now any business wishing to make a claim for 2011 must show a 5% increase over 2010. • “We want to at least see some economic growth over 2010 to show you’re doing your best to improve your business,” says Feinberg • Feinberg says the 5% should not be difficult to prove, since according to his analysis the area’s economy has grown 10-15% from last year
GCCF Statistics • Total Claimants: 532,086 • Total Paid Claimants: 206,171 • Emergency: 169,189 • Interim: 25,135 • Quick Pay: 122,378 • Final: 46,636 Note: There is overlap with these categories • Claimants represented by Attorney: 54,138 Numbers as of Sep. 1, 2011
GCCF is Not Independent • Feinberg routinely claimed that the GCCF was independent of BP • On Feb 2, 2011, Judge Barbier found that the GCCF was NOT independent of BP • Mandates of the Order • GCCF cannot contact represented claimants • GCCF cannot claim to be independent • GCCF must notify claimant of right to counsel • GCCF cannot give legal advice • GCCF must disclose option to join MDL
MDL 2179 Judge Carl Barbier • Test trials are under consideration for 2011 • The test trials will give everyone involved a better idea of what kinds of damages can be expected • The Limitation Trial is set for February 2012 • Short Form Joinder • Answer to Transocean Limitation (Apr. 20 Deadline) • Claim in Transocean Limitation (Apr. 20 Deadline) • Complaint (Assert Claims in Master Complaint)
MDL 2179 Judge Carl Barbier • UPDATE: Judge Barbier recently released an Order on various Motions to Dismiss the B1 Master Complaint • The B1 class is made up of private plaintiffs • The Order determined that: • The Deepwater Horizon was a vessel, and thus maritime law applies substantively • The incident occurred on the Outer Continental Shelf so the OCSLA applies • Adjacent state law will not be allowed as surrogate federal law • State law (statutory and common) is preempted by maritime law, notwithstanding OPA’s saving provisions. • OPA does not displace General Maritime law Claims against non-Responsible parties, but it does displace GML claims for responsible parties as to procedure • Punitive Damages are available for GML claims against RP’s and non-RP’s • Proximate cause is not required by the OPA (BP tried to say the “results from” language in the statute created a proximate cause requirement)
Thank you. • Rhon Jones • Rhon.Jones@beasleyallen.com