MCSOL CLE Oil Spill Presentation
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MCSOL CLE Oil Spill Presentation Presentation Transcript

  • 1. Deepwater Horizon Oil Spill Keith Turner Watkins Ludlam Winter & Stennis
  • 2. `
    • "As of Wednesday, the 85th day of the disaster, between 92 million and 182 million gallons of oil had spewed into the Gulf." Associated Press JULY 15 2010
      • equal between 2 million and 4 million barrels
  • 3.  
  • 4.  
  • 5. Past Oil Spills
    • Kuwait - 1991 - 520 million gallons
    • Mexico - 1980 - 100 million gallons 30,000 gallons a day into the ocean for a full year.
    • Trinidad and Tobago - 1979 - 90 million
    • Russia - 1994 - 84 million gallons
    • Persian Gulf - 1983 - 80 million gallons
    • South Africa - 1983 - 79 million gallons
    • France - 1978 - 69 million gallons
    • Angola - 1991 - more than 51 million gallons
    • Italy - 1991 - 45 million gallons The tanker continued leaking it's oil into the ocean for 12 years.
    • Odyssey Oil Spill - 1988 - 40 million gallons 700 nautical miles off the cost of Nova Scotia
  • 6.
    • US Production 2008
      • 6,734,000 barrels/day
    • US Consumption 2008
      • 19,498,000 barrels/day
  • 7.                                                                                                                                                                                                                                                                                                                             
  • 8. Who might be liable ?
    • BP is operator and owns 65%
    • Transocean as Rig Owner ?
    • Halliburton as a drilling contractor ?
      • (cementing the well)
    • Cameron as Well Blowout Manufacturer ?
    • Anadarko Petroleum owns 25%
    • Mitsui Oil owns 10%
  • 9. Oil Spill – Potential Federal Environmental Laws
    • Oil Pollution Act
    • Clean Water Act
    • Endangered Species Act
    • Clean Air Act
    • Marine Mammal Protection Act
    • National Environmental Policy Act
    • Migratory Bird Treaty Act
    • CERCLA
    • Solid Waste Disposal Act
    • Magnuson-Stevens Fishery Conservation and Management Act
  • 10. Other Relevant Statutes
    • Debarment
      • No future federal contracts
          • BP has sold over several billion dollars in fuel to US government in recent years
    • Alternative Fines Act
      • If find criminal action can double the penalties
  • 11. Oil Pollution Act
      • Who is liable
      • How is liability established
      • What are the potential damages
  • 12. OPA Liable Parties
    • Section 1001
      • Owner or Operator of the facility
      • Third Party
      • Responsible Parties (PRP) are defined for Offshore Facilities
        • Offshore Facilities – “Facility of any kind”
        • PRP are the lessee or permittee or holder of the right of use and easement
  • 13. OPA - Liability
    • BP as operator and owner - Yes
    • Transocean as Rig Owner ? - Yes
    • Halliburton as a drilling contractor ? - Yes
    • Cameron as Well Blowout Manufacturer ? Yes
    • Anadarko Petroleum owns 25% - ?
    • Mitsui Oil owns 10% - ?
  • 14. OPA
    • Section 1004 Limits of Liability (damage cap)
      • $75,000,000 for Offshore Facilities
      • Does not apply if:
        • “gross negligence or willful misconduct” or a “violation of an applicable federal safety, construction or operating regulations” by the responsible party, his agent, or employee or person acting under contract
  • 15. OPA
    • Section 1002 Elements of Liability
    • Potential recoverable costs and damages
      • Removal Costs
        • Incurred by federal or state
        • Incurred by other person if consistent with NCP
  • 16. OPA
      • Section 1002 Elements of Liability – cont.
      • Damages
      • Natural Resource Damage Claims
        • Recoverable by federal or state only
      • Property Damages
        • Owner or lessee
      • Lost Profits & Earning Capacity
  • 17. OPA
    • Section 1002 Elements of Liability – cont.
      • Damages
      • Loss of Subsistence Use of Natural Resource
      • Lost Government Revenue
        • Taxes, royalties, rents, fees, net profits
      • Increased or Additional Public Services
        • Fire, safety, health hazards
  • 18. Claims against Oil Spill Liability Trust Fund (OSLTF)
    • Removal costs incurred by the Coast Guard and EPA
    • State access for removal activities;
    • Payments to federal, state, and Indian tribe trustees to conduct natural resource damage assessments and restorations;
    • Payment of claims for uncompensated removal costs and damages;
    • Research and development; and
    • Other specific appropriations
  • 19. OPA
    • Section 1013 Claims Procedures
      • Claim requirements
        • OPA requires that you submit your claim to the responsible party (RP) before submitting your claim to the NPFC . You must give the RP 90 days to settle your claim. If after 90 days the RP has not settled your claim (or any time after the RP denies your claim in writing), you may then submit your claim to the NPFC.
        • President can allow claims directly to fund if PRP deny designation or can not determine source of oil
  • 20. BP Oil Spill Fund
    • Local, state, tribal and federal government claims not covered by $20,000,000,000 fund
  • 21. OPA
    • Section 1018 – State Authorities
      • OPA does not preempt state claims nor does the OPA damage limit language control
  • 22. Bay St. Louis Response
  • 23. OPA Claim ?
    • Will a long term decrease in property values and the resulting decrease in property tax collections become a recoverable damage under OPA?
  • 24. OPA Claim ?
    • How do we address cash transaction losses ?
      • “ At least $1.4 billion of income is likely kept off the books every year along this stretch of Texas, Louisiana, Mississippi, Alabama, and Florida – a system that’s prevailed for generations on well-worn docks and restaurant patios, far from the eyes of IRS agents.” Christian Science Monitor July 6, 2010
  • 25. Clean Water Act
    • Who is liable ?
      • How is liability established
      • What are the potential damages
    • Section 309 and 311
  • 26. CWA
    • Section 309 Liability – any Person that causes a Discharge of a Pollutant from a Point Source to the Waters of the US
  • 27. CWA
    • Section 311 Liability
      • Discharge of Oil or Hazardous Substances into or upon the Navigable Waters of the US
      • Different definition of discharge than Section 309
      • Seeping a discharge ? Under 309 but not 311?
  • 28. CWA
    • Section 311(b)(7) Civil Penalties
      • $32,500/day or $1,100/barrel
        • If a result of gross negligence or willful misconduct can be up to $4,300/barrel
    • Section 309(d) Civil Penalties
      • Statutory $25,000/day (now $32,500/day)
  • 29. CWA – Section 311 Penalties
    • Up to 182 Millions gallons = 4,333,333 barrel
      • $4,766,666,300
      • If gross negligence or willful
        • $18,633,331,900
        • Largest to date $4.6 billion (under 309) – but not all fines
  • 30. CWA Section 309 Penalties
    • 85 days x $32,500 = $2,762,500
      • If several Discharges determined could be multiplied or will feds consider single source?
  • 31. CWA – 309 or 311
    • Government must chose – can not use both enforcement statutes
  • 32. CWA – Criminal Liability
    • For a CWA Section 1319(c)(1), the government would only have to show negligence, which is a fairly low threshold for criminal liability.
    • For a CWA Section1319(c) violation, the maximum fine is $25,000 a day and up to one year in prison for a conviction based on negligence, or
      • $50,000 a day and up to three years in prison for a conviction based on conduct shown to be done “knowingly.”
      • “ knowingly endangerment ” could result in $250,000 ($1,000,000 for corp) and not more than 15 years
  • 33. Endangered Species Act
    • 6 endangered species in the gulf
      • Fish, turtles and mammals
  • 34.  
  • 35.  
  • 36. ESA – Civil Liability
    • Knowingly violates which includes a taking
      • Taking is “harass, harm, pursue, …..kill, …..”
      • Harm can mean to force a species from its habitat
    • Up to $25,000 per violations
  • 37. ESA – Section 11 Criminal Liability
    • Any person knowingly violates
      • Up to $50,000 or one year imprisonment
  • 38. Migratory Bird Treaty Act
    • Protects migratory birds and makes it illegal to harm some 836 species of birds as well as their nests and eggs includes the brown pelican.
    • Fines can be up to $15,000 per violation.
    • Criminal Liability
  • 39. Marine Mammal Protection Act
    • ESA approach for mammals
      • Up to $10,000 for each violation
      • Up to $20,000 and one year imprisonment if knowingly
    • 125 Marine mammals protected
    • 28 protected species in the gulf
  • 40. Comprehensive Environmental Response, Compensation and Liability Act (“CERLCA”)
    • “Hazardous Substance” excludes crude oil and any fraction thereof
    • But the National Contingency Plan (“NCP”) is created within Section 106
      • Dispersants regulated under this authority
  • 41. “ EPA Chief Calls for More Authority Over Dispersants” Greenwire July 15, 2010
    • U.S. EPA Administrator Lisa Jackson today urged Congress to take up legislation strengthening her agency's authority over oil dispersants in the wake of the Gulf of Mexico gusher, calling for more testing and disclosure of the chemical ingredients in the controversial spill-fighting products.
    • Up to 1,800,000 gallons used in BP spill
  • 42. Solid Waste Disposal Act
    • How should the clean up waste be disposed ?
        • Classification of the waste
        • Disposal of “liquids”
        • BP control of disposal locations
  • 43. Local Waste Disposal
    • "It's like someone dumping this stuff in our front yard and apologizing for it, picking it up and then turning around and dumping it in our backyard," said Harrison County supervisor Marlin Ladner.
        • July 2, 2010 Biloxi Sun Herald
  • 44. Magnuson-Stevens Fishery Conservation and Management Act
    • primary law governing marine fisheries management in United States federal waters.
    • Authority to limit fishing in the impacted areas
  • 45.  
  • 46. Clean Air Act
    • Prior violations at BP facilities can be considered in penalty calculations
  • 47. National Environmental Policy Act
    • Not a regulatory act but a procedural requirement
    • Many accuse MMA from not complying full with NEPA during the well permitting process
  • 48. Other thoughts
    • Should the federal government have any liability because:
      • it “is in charge”?
        • "The American people should know that from the moment this disaster began, the federal government has been in charge of the response effort," President Obama May 27, 2010
      • US Army Corps of Engineers time frame to m ake decisions on spill control actions ?
      • Allowed BP to “control” local and private responses by requiring BP approval on spill control methods etc ?
  • 49. Other thoughts
    • Who should have liability for the any damages arising from the dispersants ?
  • 50. Other thoughts
    • Does the state have any liability because it
      • Relied upon BP for clean up and did not use its own resources until many days into the response ?
        • “ Haley Barbour claimed that oil was not a big threat to the people of the Gulf Coast . Now, with oil hitting his state's beaches for the first time since the start of the BP spill , the Republican governor says his state isn't prepared for the spill and needs more help.” June 28, 2010 ABC NEWS
  • 51. Other thoughts
    • What level of response is deemed acceptable – is there liability for not using all available resources ?
      • One of the most advanced oil clean up ships remains idled in Alaska because BP decided in late June to not bring it to the gulf – (BP claims the time to bring it down was too long so they purchased the ships cleanup equipment – but only 3 weeks ago)
  • 52.