Calculating BP's Liability
Litigation following the oil spill will likely be as unprecedented as the disaster itself.
Monica Potts | June 17, 2010 | web only
American Prospect
As oil continues to flow into the Gulf of Mexico from the Deepwater Horizon rig explosion, litigation has already begun. According to the New York Times, about 200 people have already filed lawsuits in various courts around the country for claims ranging from deaths on the rig during the explosion to shareholders claiming loss from plunging stock.
The figure most frequently discussed in the news is $75 million -- the cap on BP's liability under a 1990 law passed after the Exxon Valdez disaster that covers economic and punitive damage claims made in federal courts. The company has said it plans to disregard the cap without tapping into a federal trust fund designed to help people whose claims are denied, and has put $20 billion in an escrow account at the president's urging. It says it has already paid $84 million to individuals and businesses.
The last large-scale domestic oil spill was Exxon Valdez in 1989. Determining liability was complex -- and that spill took place in a remote, sparsely populated bay. The court cases involving Exxon Valdez were not fully resolved until the Supreme Court heard Exxon Shipping Co. v. Baker in 2008. As an immediate response, Congress passed the 1990 Oil Pollution Liability and Compensation Act, which, among other things, gives states the ability to collect from companies for natural-resource damage and gives individuals who are directly affected the right to make claims directly to the company. All claims for damages made under the 1990 act are capped at $75 million. The law also set up a trust fund to pay claims companies involved in oil spills decline to pay. Sen. Robert Menendez of New Jersey has proposed raising the cap to $10 billion in the wake of the BP spill.
(More here.)
Monica Potts | June 17, 2010 | web only
American Prospect
As oil continues to flow into the Gulf of Mexico from the Deepwater Horizon rig explosion, litigation has already begun. According to the New York Times, about 200 people have already filed lawsuits in various courts around the country for claims ranging from deaths on the rig during the explosion to shareholders claiming loss from plunging stock.
The figure most frequently discussed in the news is $75 million -- the cap on BP's liability under a 1990 law passed after the Exxon Valdez disaster that covers economic and punitive damage claims made in federal courts. The company has said it plans to disregard the cap without tapping into a federal trust fund designed to help people whose claims are denied, and has put $20 billion in an escrow account at the president's urging. It says it has already paid $84 million to individuals and businesses.
The last large-scale domestic oil spill was Exxon Valdez in 1989. Determining liability was complex -- and that spill took place in a remote, sparsely populated bay. The court cases involving Exxon Valdez were not fully resolved until the Supreme Court heard Exxon Shipping Co. v. Baker in 2008. As an immediate response, Congress passed the 1990 Oil Pollution Liability and Compensation Act, which, among other things, gives states the ability to collect from companies for natural-resource damage and gives individuals who are directly affected the right to make claims directly to the company. All claims for damages made under the 1990 act are capped at $75 million. The law also set up a trust fund to pay claims companies involved in oil spills decline to pay. Sen. Robert Menendez of New Jersey has proposed raising the cap to $10 billion in the wake of the BP spill.
(More here.)
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