What BP Oil Catastrophe Legal Damages Could Look Like
Posted May 4, 2010
News reports today state that British Petroleum (BP) is stepping up to the plate and agreeing to clean up the mess it made in the Gulf. It’s not like BP had any choice.
The federal Oil Pollution Act (OPA), enacted after the Exxon Valdez spill in 1989, imposes strict liability on parties such as BP for an oil spill from an offshore platform. “Strict liability” in this sense means that no one needs to prove that BP was careless or negligent in order to recover damages under the OPA. Importantly, BP’s liability for cleanup costs under the OPA is unlimited.
By contrast, BP’s liability for other damages, such as property damage or lost profits from businesses affected by the spill, are limited under the OPA to $75 million. A proposal has surfaced in the Senate to raise this limit to somewhere in the billions; it’s not clear whether an increase in this liability limit would apply to the current situation in the Gulf. Damages for personal injury or wrongful death are not covered, or limited, by the OPA.
If you’re thinking that $75 million isn’t what it used to be, the check that BP will need to write for economic and property damage can be larger. The OPA expressly does not preempt claims under state law or common law. A potential problem for plaintiffs in those non-federal claims is that they may need to prove negligence, but the flip side is that there is, in general, no cap on damages.
The parties to litigation under the OPA and state law tend to fall into two groups: governmental bodies and private citizens. The federal government has remedies directly under the OPA, including federal cleanup costs and costs for natural resource damages such as injuries to marine mammals and seabirds. Typically, a state Attorney General will bring suit for loss of state resources, cleanup costs incurred by the state, or loss of recreational use of beaches and state waters. Some state laws also provide for fines on a per gallon basis. If the Exxon Valdez situation is any guide, we can expect to see class action cases brought on behalf of businesses that have lost profits and property owners whose land has been damaged or lost value because of the spill.
As a society, we don’t have to put up with situations like these. We need to transition to an economy based on renewable energy instead of oil. There is no such thing as a sunlight spill.
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