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Tuesday, January 11, 2011

National Commission on the BP Oil Spill Pulls No Punches in its Final Report

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling has released its long-awaited report on last year’s calamity in the Gulf of Mexico and reaches powerful conclusions about the causes of the disaster, including that "[t]he explosive loss of the Macondo well could have been prevented."

The commissioners explicitly tackle the root causes of the disaster, which they trace to "a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry."

The human and economic consequences for the victims of the spill in the Gulf region are discussed in the report, as well, and are the subject of Alliance for Justice’s recent First Monday film, Crude Justice, which details the difficult legal environment facing those seeking compensation for the damage done to their lives and livelihoods, either in the courts or through BP’s Oil Spill Liability Trust Fund.

Of particular interest is the finding by the commission that,

...oil spills cause a range of harms, both economic and environmental, to individuals and ecosystems. The Oil Pollution Act makes the party responsible for a spill liable for compensating those who suffered as a result of the spill—through property damage, lost profits, and other economic injuries—and for restoring injured natural resources. The Act also provides an opportunity to make claims for compensation from a dedicated Oil Spill Liability Trust Fund. The Oil Pollution Act, however, imposes limits on both the amount for which the responsible party is liable, and the amount of compensation available through the trust fund. In the case of the Deepwater Horizon spill, BP (a responsible party) has placed $20 billion in escrow to compensate private individuals and businesses through the independent Gulf Coast Claims Facility.

But if a less well capitalized company had caused the spill, neither a multi-billion dollar compensation fund nor the funds necessary to restore injured resources, would likely have been available.

It is critical that compensation to victims be paid in full, and that the process for receiving compensation is swift and efficient. The Commission offers recommendations that would increase assurances that responsible parties are able to compensate victims (and at the same time strengthens incentives to prevent accidents in the first place), and that the Oil Spill Liability Trust Fund provide any compensation not provided by responsible parties. It also recommends a close review of the Gulf Coast Claims Facility process to determine its effectiveness in adjudicating compensation claims and its value as a model for future Spills of National Significance.

The commission’s specific recommendations related to compensation for victims include a general need to "increase existing limitations on responsible party liability," and a call for Congress to "significantly increase the liability cap and financial responsibility requirements for offshore facilities."

Overall, the commission includes 31 recommendations in its 382-page report, covering all aspects of the disaster and its aftermath, including:

  • Improving the Safety of Offshore Operations

  • Safeguarding the Environment

  • Strengthening Oil Spill Response, Planning, and Capacity

  • Overcoming the Impacts of the Deepwater Horizon Spill and Restoring the Gulf

  • Promoting Congressional Engagement to Ensure Responsible Offshore Drilling

These comprehensive and uncompromising findings deserve the immediate attention of Congress, the regulatory agencies, and the American people so that victims of this and any future calamity can receive full compensation, and to dramatically reduce the risk that such an event will ever recur.

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