Damages from the BP Spill
July 23, 2010The BP oil spill has adversely impacted the lives and businesses along the Gulf Coast and beyond. People have lost jobs and certain ways of life are gone for years if not generations. One of the first questions asked is who will be responsible for the harm caused by this disaster. While there are several companies who may end up being help accountable, the more appropriate question is will those affected be able to recover for the monetary damages they have suffered. The subject of damage caps has received a lot of attention recently because of the size and scope of the oil spill. While there are caps on damages under certain statutes they will not work to limit the ultimate liability of certain companies.
The primary statute at issue is the Oil Pollution Act of 1990 (OPA). The OPA was enacted in 1990 in response to the Exxon Valdez oil spill in Alaska. The principal purpose of the OPA is to compensate any party suffering damages from discharges of oil or hazardous substances. The OPA is designed to provide protection for the environment as well as to aid the victims of oil spills.
To establish liability under the OPA only two elements must be proven: (1) that there is a discharge of oil or covered oil-related substances, and (2) that the discharge either went into navigable waters or poses a substantial threat to navigable waters of the United States. If a plaintiff proves these elements, he will recover all damages covered by the OPA that result from the discharge.
The OPA provides four classes of damages:
1. removal costs;
2. damage to real or personal property owned or leased by the claimant;
3. damages to natural resources that the claimant used for subsistence; and
4. economic damages because of damage to property or resources even if the claimant did not own or lease the damage property (this covers damage to or impairment of earning capacity).
The OPA provides a cap on the damages against a responsible party relating to an offshore facility. The general rule is that the total liability of a responsible party is capped at the total of all removal costs plus $75,000,000.00. However, the OPA provides two exceptions to the cap on damages: (1) gross negligence or willful misconduct; or (2) the violation of an applicable Federal safety, construction, or operating regulation by the responsible party or someone acting on behalf of the responsible party.
In addition, the OPA does not preempt state law and the damages that flow from state law claims. Therefore, claims to recover damages resulting from the spill will not necessarily be limited to the caps set forth in the OPA.