Exxon Valdez lawyer takes BP to task over damages
On most matters, especially those with a certain level of controversy, you’re either an optimist or a cynic.
This BP oil spill, though, is the rare story that might make you both. At every sign of progress, even the most romantic Gulf Coast idealist has a sense of the lingering “… but” that’s ready to drop, and with BP, it’s often a huge, Mo’Nique-sized “but.”
So it’s with no short amount of trepidation people are discussing the cap that was successfully applied to the massive BP leak last week, a sign that gushing oil may finally have stopped. Yet that’s just a fix to new oil, and there’s a host of problems – long, long-term problems – that need to be sifted through from the 300 million-plus litres of oil already out there.
And who best to measure and oversee those long-term problems than Gerald Nolting, the Minneapolis-based litigation master that’s got some serious experience with oil spill damages?
Nolting, the man who won $1.3 billion from ExxonMobil for victims of the company’s infamous Exxon Valdez spill in 1989, has begun to unofficially take BP to task over its proposed $20 billion fund administered to pay out claims stemming from the Gulf of Mexico spill.
Most importantly, Nolting wants to know how BP hopes to contain damages to $20 billion in what Forbes.com calls “Year One of a financial tragedy that may play out over decades.”
“In the Exxon case we had five years of data between the spill and the trial,” Nolting says. “You’re going to have beaches oiled for the first time (in the Gulf Coast) a year from now.”
Indeed, the general theme regarding BP damages claims is this: we still don’t know. Commercial fishers, for example, have been urged not to sign any restitution papers with BP because we can’t say for sure how far the spill’s toxic reach will be. The idea being, who’s to say new losses from today’s spilled oil won’t crop up seven, eight years down the road?
While Nolting hasn’t officially announced he’ll involve his firm, Faegre & Benson, in BP’s victim litigation, the abundant question marks surrounding the economics of the oil spill only highlight how much is still be learned.
And while we’re here, we don’t yet know what kind of penalty will be levied on BP itself for the spill. Here are the three fine scenarios I outlined for BP back in May:
1. The "Slap On The Wrist": This repayment is the clear-cut favourite for BP because pre-existing liability rules for oil spills top out at $75 million. That would mean, if BP is found not to have exhibited gross negligence in the spill, it would only be on the hook for $75 million, no matter the total clean-up/fallout costs.
2. The "Stocks": Since the spill, legislation has been introduced inside U.S. courts to raise the aforementioned liability cap by more than 100 times. “I believe that we have a system in dire need of repair,” said one Democratic politician opposed to the $75 million cap. The U.S. Justice Department admitted yesterday that Congress could retroactively impose a $10 billion liability cap on BP for damages from the growing oil spill, and that the oil corporation would “likely lose if it challenged the higher cap in court,” according to Reuters.
3. The "Full Monty": A bit of a stretch, but something entirely plausible. Based on a clause within the U.S. Clean Water Act, BP could – in theory – be fined a huge sum for every barrel of oil spilled into the Gulf. How huge? Try $4,300 per barrel. By that calculation, BP would already owe about $6.2 trillion in fines so far from its spill, according to estimates Wednesday. Such a penalty might have little chance of catching on, but you can’t say for sure it’s out of the cards.
Knowing what we know now, which do you think is fair?
By Jason Buckland, MSN Money
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