4 page paper
57
BP GULF OF MEXICO OI L SPILL
John Wyeth Griggs *
Synopsis: The blowout of BP ‟s Macondo well in the Gulf of Mexico on
April 20, 2010, provided the first major test of the national oil spill containment
and response apparatus put in place by the Oil Pollution Act of 1990. News
media coverage of the blowout displayed a lack of awareness of th e Act or the
mechanisms it had put in place to respond to major oil spills. Many questions
raised by the media are answered or explained by the statute and its regulations.
This article discusses the Act ‟s provisions as they relate to the Macondo
blowout, its effectiveness in dealing with the spill, and the prospects for
amending the law.
I. The Macondo Blowout ................................ ................................ .............. 57
II. The Oil Pollution Act of 1990 ................................ ................................ .. 59
A. Who Is in Charge? ................................ ................................ ............. 59
B. Why W as the Government Slow to Respond? ................................ ... 62
C. Why Did It Take So Long to Stop the Spill? ................................ ..... 63
D. Is There a Cap on BP ‟s Liability? ................................ ...................... 67
E. Why W as BP ‟s Permission Required for Private Clean -up
Efforts? ................................ ................................ ............................... 69
F. To W hat Penalties Is BP Subject? ................................ ..................... 69
G. What Damages W ill BP Have to Pay? ................................ ............... 71
H. How W ill the Macondo Blowout Affect Deepwater Oil
Production? ................................ ................................ ........................ 74
III. Legislative Response ................................ ................................ ................. 76
IV. Concluding Observations ................................ ................................ .......... 78
I. THE MACONDO BLOWOUT
The blowout of British Petroleum ‟s (BP) Macondo well in the deep water
of the Gulf of Mexico was the largest accidental oil spill in the world, greater
than both the Ixtoc blowout off the coast of Mexico and the Exxon Valdez spill
in Alaska. 1 Eleven crew members of the Deepwater Horizon drilling rig w ere
killed, others were injured, the livelihoods of thousands of fishermen were
impacted, countless marine animals and organisms were destroyed, and marshes
and beaches in Louisiana, Mississippi, Alabama, and Florida were fouled. The
blowout dominated new s coverage from April 20, 2010, until the blowout was
* Managing Partner, Griggs & Adler, P.C. Mr. Griggs represents users of oil pipelines, utilities, and wholesale
purchasers of electric power in proceedings before the Federal Energy Reg ulatory Commission. Mr. Griggs is not involved in any of the litigation related to the Macondo blowout.
1. Tom Zeller, Jr., Estimates Suggest Spill Is Biggest in U.S. History , N.Y. TIMES , May 27, 2010, available at http://www.nytimes.com/2010/05/28/us/28flow.html (Exxon Valdez spilled some 11 million
gallons; Ixtoc some 140 million gallons); Joel K. Bourne, Jr., The Deep Dilemma , NAT‟L GEOGRAPHIC , Oct. 2010 , at 43. 58 ENERGY LAW JOURNAL [Vol. 32:57
finally capped on July 15, 2010. Hundreds of lawsuits have been filed. 2 There
have been hearings before a joint investigatory panel of the Coast Guard and the
Department of the Interior, 3 an investiga tion by a commission appointed by
President Obama, 4 and extensive Congressional hearings. 5
In the aftermath of the spill, resource damage assessment has begun, but
will take time to complete. Some 185,000,000 gallons (4.4 million barrels) of oil
were dis charged, 6 and, while clean -up efforts and natural processes appear to
have removed much of the oil from the water surface, the effects on the Gulf of
Mexico may last for decades. Media attention, once intense, is now focused
elsewhere. 7 The intensive med ia coverage raised many questions that were left
unanswered before the media moved on to other issues. Among these are
questions regarding who was in charge, delayed emergency response efforts, the
laxity of federal oversight, the culpability of the compa nies involved, 8 the impact
of the oil on the ecosystem, the use of dispersants, and the ability of the
environment to recover. Resolving the larger questions concerning resource
damage will take years and involve disciplines outside the law. It is not th e
purpose of this article to resolve these issues or assess blame for the spill.
Rather, the purpose of this article is more modest and limited: to address those
questions that relate to the adequacy and effectiveness of the existing legal
regime for resp onding to offshore oil spills.
2. Over 400 suits have been consolidated in the federal district court for New Orleans, presided over by
Judge Barbier. In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, No. 2:10 -MDL -02179 -CJB -SS, 20 10 WL 3269206 (E.D. La. Aug. 10, 2010).
3. Deepwater Horizon Joint Investigation (Sept. 11, 2010),
http://www.deepwaterinvestigation.com/go/site/3043/. The due date for the report of the joint investigation panel was extended to March 27, 2011. Harry R. Weber, Fed Panel Gets 60 -Day Extension on Spill Report,
ASSOCIATED PRESS , Oct. 25, 2010, available at http://www.ktiv.com/Global/story.asp?S=13386062.
4. Nat ‟l Comm‟n on the BP Deepwater Horizon Oil Spill and Offshore Drilling (May 22, 2010),
http://www.oilspillcommission.gov (last updated Feb. 18, 2011).
5. The House Committee on Energy and Commerce held ten days of hearings in May, June , and July of
2010, and the House passed a bill on July 30, 2010, H.R. 3534, that would impose restrictions on deepwater drilling. H.R. 3534, 111th Cong. (2010). See also Committee on Energy and Commerce, Hearings, http://republicans.energycommerce.house.gov/hearings/hearingdetail.aspx?NewsID=7933 (last visited Jan. 28,
2010). A companion bill to the House bill was introduced in the Senate, S. 3663, but is unlik ely to be enacted in the current session of Congress. Steven Mufson, Concerns About the Big Spill Might Already Be Drying Up , WASH . POST , Sept. 30, 2010, at AA 01.
6. Current estimates include the official government estimate of 172,000,000 gallons, and an estimate by Columbia University of 185,000,000 gallons. Seth Borenstein, Study Shows Latest Government Spill
Estimate Right , ASSOCIATED PRESS , Sep t. 23, 2010, available at http://abcnews.go.com/Technology/wireStory?id=11710745. An earlier DOE estimate pegged the total amount of the spill at 206 million gallons. Joel Achenbach, Oil Spill Dumped 4.9 Million Barrels into Gulf of Mexico,
Latest Measure Shows , WASH . POST , Aug. 3, 2010, http://www.washingtonpost.com/wp - dyn/content/ar ticle/2010/08/02/AR2010080204695.html.
7. Mufson, supra note 5.
8. Issues of culpability will be determined in other forums. Claims in the cases consolidated in federal
court in New Orleans allege violations of state and federal law by BP, Transocean, Ltd. (owner of the Deepwater Horizon drilling rig), Halliburton Energy Services, Inc., and others. Typical of the actions is Buras v. BP PLC , which alleges negligence and wantonness in the operation of the drilling rig, negligence and
defective design an d manufacture of the rig and of the blowout preventer, and negligence in the cementing of the well. Buras v. BP PLC, No. 3:10 -cv-00369 -JJB -SCR (M.D. La. May 26, 2010). 2011] BP OIL SPILL 59
II. THE OIL POLLUTION ACT OF 1990
The current regulatory framework for oil spill response to a large degree
reflects reactions to earlier oil spill disasters. The Exxon Valdez spill in March of
1989 led to the enactment of the Oil Pollution Act of 1990 (OPA 90 or the Act). 9
OPA 90 amended section 311 of the Clean Water Act, 33 U.S.C. §1321, which
was enacted after the 1969 Santa Barbara blowout. The Port and Tanker Safety
Act of 1978, which also amended section 311, was a reaction to the Argo
Merchant tanker spill off Nantucket in 1976. OPA 90 was the capstone of a
fifteen year legislative effort to “consolidate and rationalize the oil spill response
mechanisms under various federal laws ” that was pushed to completion in
reaction to Exxon Valdez. 10 OPA 90 provides a comprehensive legal framework
that establishes federal management and control of oil spills, and federal control
of containment, removal, recovery and clean -up efforts. It holds each
“responsible party ” liable for the costs of containment, clean -up, and damages
sustained as a result of the spill. It creates a single, unified fund called the Oil
Spill Liability Trust Fund to pay clean -up and removal costs of up to $1 billion,
and it creates stronger enforcement authorities, penalties, spill prevention
countermeasures, and response mechanisms. 11 Answers to many of the
questions raised by the media can be gleaned from OPA 90 and its implement ing
regulations.
A. Who Is in Charge?
Prior to the passage of OPA 90, it was unclear who among various federal,
state, and local officials and private parties had primary responsibility for
responding to a major oil spill. To remedy this, section 4201 of OPA 90 clearly
requires that the federal government take control imme diately in order to insure
that containment, removal, and remediation measures are undertaken in a timely
and orderly fashion. 12 Federal responsibility resides with the EPA for spills on
land and with the Coast Guard for offshore incidents, such as the BP blowout.
As the authorized federal agency, the Coast Guard was required to assume
control of the spill response and to designate the party or parties responsible for
the spill, and hence the party or parties liable for removal and clean -up costs. 13
The Coa st Guard assumed supervisory control of the response to the spill at
the outset, but the fact that the Coast Guard was in charge was not consistently
the perception of the media. The confusion relates in part to the fact that BP was
the primary “responsib le party ” under OPA 90, and in that capacity shared
responsibility for controlling the spill. 14 The “responsible party ” for an offshore
9. RUSSELL V. RANDLE , OIL POLLUTION DESKBOOK 3 (Envtl. L. Inst. eds., 1st ed. 1991). M uch of OPA 90 is codified at 33 U.S.C. §§ 2701 -2762 (2006), and certain provisions are codified elsewhere, including
33 U.S.C. § 1321 (2006).
10. Randle, supra note 9, at 3.
11. Id.
12. Oil Pollution Act, 33 U.S.C. § 1321(c)(2) (2006).
13. Id.
14. U.S. GOV‟T ACCOUNTABILITY OFFICE , GAO -11-90R, DEEPWATER HORIZON OIL SPILL : PRELIMINARY ASSESSMENT OF FEDERAL FINANCIAL RISKS AND COST REIMBURSEMENT AND NOTIFICATION
POLICIES AND PROCEDURES , at 1 (Nov. 12, 2010) ( “The U.S. Coast Guard‟s National Pollution Funds Center (NPFC) designated two BP subsidiaries - BP Exploration and Production and its guarantor, BP Corporation 60 ENERGY LAW JOURNAL [Vol. 32:57
facility includes “the lessee or permittee of the area in which the facility is
located .”15 BP ‟s status as a “responsible party ” was clear from the outset, and
BP accepted that responsibility. 16 In addition, on May 15, 2010, Secretary
Napolitano and Secretary Salazar sent a letter to BP ‟s CEO, Tony Hayward,
reiterating that as a responsible party, BP is accountabl e for the cleanup of the
spill and all the economic loss caused by the spill. 17 OPA 90 makes the
responsible party not only responsible for “removal ” costs, penalties, and
damages, but also makes that party subject to orders of the Coast Guard to take
reme dial action to contain the spill and conduct removal operations. 18 While the
Coast Guard may not have among its personnel technicians skilled in the arts of
deepwater drilling, the Coast Guard has authority under OPA 90 to requisition
equipment and skilled personnel from private industry, including the responsible
party, and put them to work in responding to the blowout. 19 Consistent with
OPA 90, BP remained on site throughout the duration of the spill, albeit its
personnel were assisted by other personnel assigned by the Coast Guard, and BP
carried out the Coast Guard ‟s directions in bringing the blowout under control.
The tension in the relationship between the government and BP was
addressed in the reports of the President ‟s Commission. 20 The responsible party
is, on the one hand, made liable for damages caused by the spill and is subject to
civil and criminal penalties, and, at the same time, is often required to work
under federal direction to bring the spill under control and conduct c lean -up and
remediation operations. That the responsible party is both an adversary and a
partner may be confusing to the general public but is a direct result of the
incongruent obligations imposed by OPA 90.
At the core of OPA 90 ‟s approach to oil spill containment and response is
the National Contingency Plan (NCP). 21 The NCP establishes an organizational
structure with national, regional, state, and local components, and integrates the
responsibilities of sixteen federal agencies and state and local gov ernments. 22
The purpose of this structure is to create a “unified command system ” that
involves the responsible party “to achieve an effective and efficient response .”23
The NCP pre -designates a National Response Team, Regional Response Teams,
North America, Inc. - and five other companies as “Responsible Parties” for Deepwater Horizon oil spill related claims.” ).
15. 33 U.S.C. § 270 2(a). An offshore facility is defined in 33 U.S.C. § 2701(32)(C).
16. If a designated party refuses to accept responsibility and is , after investigation , determined to be
responsible for the spill, then additional penalties can be invoked for failure to accept responsibility, including liability for up to three times the cost of the federal response and clean up. Oil Pollution Act of 1990 § 4201,
33 U.S.C. § 2704 (c)(2).
17. Drilling Down on America’s Energy Future: Safety, Security, and Clean Energy, Hearings Before
the Subcomm. on Energy and Env’t, H . Comm. on Energy and Commerce , 111th Cong. 3 (2010) ( Attachment A – Chronology of Deepwater Horizon Events ) [hereinafter Hearings ].
18. 33 U.S.C. § 2702.
19. Id. § 1321(c)(2)(B).
20. NAT‟L COMM ‟N ON THE BP DEEPWATER HORIZON OIL SPILL AND OFFSHORE DRILLING , Decision Making Within the Unified Command 10-16 (Staff Working Paper No. 2, Oct. 6, 2010 ), available at
http://www.oilspillcommission.gov/sites/default/files/documents/Updated%20Unified%2 0Comma nd%20Work ing%20Paper.pdf ) [hereinafter NAT‟L COMM ‟N].
21. 33 U.S.C. § 1321(d); 40 C.F.R. pt. 300, subpt. D (2010).
22. 40 C.F.R. § 300.175(b) (2010).
23. Id. § 300.105(d). 2011] BP OIL SPILL 61
an On -Scene Coordinator, a Unified Area Command, a National Incident
Commander, and Area Committees. 24 The Unified Area Command includes a
federal On -Scene Coordinator, a state On -Scene Coordinator, and the
responsible party, and in the event of an oil spill, the feder al On -Scene
Coordinator takes charge of the Unified Area Command to orchestrate the
appropriate response. If a spill is classified to be of “national significance, ” then
a National Incident Commander takes over. Area Committees develop area
contingency p lans, and Regional Response Teams develop plans for a regional
response. 25
After an oil spill, the following sequence of events occurs under the NCP.
First, the party discovering the spill notifies the National Response Center
(NRC). 26 Second, the NRC infor ms the federal On -Scene Coordinator. 27 Third,
the federal On -Scene Coordinator investigates the spill and coordinates and
directs all containment and removal actions at the site. 28 Fourth, if the federal
On -Scene Coordinator so elects, a responsible party ma y be directed to conduct
containment and removal activity subject to oversight by the federal On -Scene
Coordinator. 29
The Coast Guard ‟s initial response to the BP blowout was handled by its
On -Scene Coordinator, Captain Joseph Paradis, who set up an Incide nt
Command Post in Houma, Louisiana. 30 When the Unified Command was
activated, Admiral Mary Landry became the On -Scene Coordinator, and a
second Incident Command Post was opened at BP offices in Houston, Texas. 31
On April 29, nine days into the event, the Coast Guard designated the incident a
“Spill of National Significance, ” created a National Incident Command (NIC),
and named Admiral Thad Allen as National Incident Commander. 32 On June 1,
2010, a third Incident Command Post was opened at Mobile, Alabama. 33
The media ‟s confusion over who was in charge seems largely generated by
the fact that BP remained involved throughout the response efforts and shared
offices with the Incident Command Posts. Nevertheless, government employees
insist that the Coast Guard was actually in charge at all times. 34 Within the
Unified Command Structure, “BP had decision makers in multiple locations, ”
and Coast Guard members and BP employees worked side by side. 35 BP
controlled access to the wellhead, operated the remotely operated vehicles
(ROVs) required for deepwater operations, and controlled the movement of
vessels in the area above the wellhead. 36 BP also took the lead in containment
24. 33 U.S.C. § 1321(d)(2); 40 C.F.R. pt. 300, subpt. D (2010).
25. 40 C.F.R. § 300. 120.
26. Id. § 300.300(b).
27. Id. § 300.300(d).
28. Id. § 300.305(b).
29. Id. § 300.305(d).
30. NAT‟L COMM ‟N, supra note 20, at 4.
31. Id. (Initially assigned personnel were subsequently changed. ).
32. Id. at 4 -5.
33. Id. at 4.
34. Id. at 8.
35. NAT‟L COMM ‟N, supra note 20, at 12.
36. Id. 62 ENERGY LAW JOURNAL [Vol. 32:57
efforts, including unsuc cessful attempts to activate the blowout preventer using
ROVs, failed efforts to stop the leak using a cofferdam, “top hat ” and “junk
shot, ” and the finally successful containment dome emplaced on July 15, 2010. 37
Because the Coast Guard ‟s clean -up expert ise is limited to water surface
impacts, the Coast Guard relied on BP and experts recruited from other
companies. 38 When early containment efforts proved unsuccessful, Deputy
Secretary of the Interior David Hayes, Energy Secretary Steven Chu, and
scientist s from the National Laboratories and Geological Survey became
involved. 39 Throughout, the Coast Guard asserts it maintained control through
its On -Scene Coordinator and National Incident Commander. 40 BP remained
onsite at the Macondo well, and under Coast Guard supervision and direction,
capped the well on July 15, 2010, and completed on September 19, 2010,
cementing of the bottom of the Macondo well using a relief well. 41 BP ‟s
exercise of responsibility, under Coast Guard supervision, for the efforts to br ing
the blowout under control is entirely consistent with OPA 90 ‟s response and
containment apparatus.
B. Why Was the Government Slow to Respond?
OPA 90 was intended to create a comprehensive oil spill response and
containment network that would quickly a nd effectively respond to any type of
oil spill. 42 The Macondo blowout was the first major incident of national
significance to test this network since OPA 90 ‟s enactment, and the media
complained that the government was slow to respond.
Media complaints t hat the government was slow to respond appear to be
overstated. “Though some of the command structure was put in place very
quickly, in other respects the mobilization of resources to combat the spill
seemed to lag. ”43 The On -Scene Coordinator responded i mmediately. Coast
Guard vessels were on scene on the day of the blowout to respond to the
explosion and fire, and on the next day, April 21, 2010, the federal On -Scene
Coordinator was designated and a Regional Response Team activated. 44 While it
took ten days to elevate the spill to “national significance, ” by mid -May “the
Coast Guard was fighting a war against the oil. They built out the organizational
structure for the response, and they moved resources into the area from all over
the country. ”45 In comm enting on the task of rescuing injured birds, Audub on
Magazine, an institution not reticent in finding fault with the government,
indicated that the Coast Guard was quick to respond, competent, and dedicated. 46
37. Id. at 13.
38. Id. at 14 -15.
39. Id.
40. Id. at 13.
41. David A. Fahrenthold & Steven Mufson, After Months of Trying, BP’s Macondo Oil Well Finally
Dead , WASH . POST , Sep t. 18, 2010 , available at http://bp.concerts.com/gom/johnwright092110.htm.
42. S. REP. NO. 101 -94, at 3, 10 (1989).
43. NAT‟L COMM ‟N, supra note 20, at 5.
44. Hearings, supra note 17, at 1.
45. NAT‟L COMM ‟N, supra note 20, at 6.
46. Ted Williams, Black Bayou , AUDUBON MAG., Sept./O ct. 2010, at 62. 2011] BP OIL SPILL 63
An explanation for the lag in mobilizing a na tional effort lies in the gross
understating of the magnitude of the spill in its very earliest stages. BP reported
initially that the spill was a mere 1,000 barrels per day, then increased that
estimate to 5,000 barrels per day. 47 Experts with Columbia ‟s Lamont -Doherty
Earth Observatory reported that as early as May they were able, using reliable
techniques, to estimate from video of the blowout a flow rate of 40,000 to 60,000
barrels per day, ten times greater than what BP was stating. 48 This was the rat e
ultimately determined by the official federal estimate. 49 BP ‟s low ball initial
estimates undoubtedly delayed the Coast Guard ‟s elevating the spill to “national
significance ” and organizing the massive response required for such a large
spill. 50
C. Why Di d It Take So Long to Stop the Spill?
The reason it took so long to stop the spill is that there was no capability in
place to do so, despite the existence of contingency plans for that very purpose.
The NCP requires that each offshore drilling facility have in place, prior to
drilling, a facility -specific oil spill response plan. 51 That plan is supposed to be
the principal tool for containing any spill. BP ‟s response plan was wholly
inadequate.
The NCP regulations adopted to implement OPA 90 require that:
[A]n offshore facility . . . that, because of its location, could reasonably expect to cause substantial harm to the environment by discharging into or on the navigable
waters, adjoining shorel ines, or exclusive economic zone must prepare and submit a plan for responding, to the maximum extent practicable, to a worst case discharge, and to a substantial threat of such a discharge, of oil or a hazardous substance. 52
The NCP regulation cross refe rences a Department of the Interior (DOI)
regulation, which sets forth detailed requirements for facility specific response
plans for offshore oil rigs. 53 DOI ‟s regulations in turn require that if you operate
an oil rig seaward of the coastline, you must f ile with the Mineral Management
Service (MMS) 54 for approval a spill response plan, and “[y]our spill -response
plan must demonstrate that you can respond quickly and effectively whenever oil
is discharged from your facility. ”55 The general requirements for the response
plan are:
(a) The response plan must provide for response to an oil spill from the facility.
You must immediately carry out the provisions of the plan whenever there is a release of oil from the facility. You must also carry out the training, equipment
47. Lea Winerman, Report: Government Understimated, Underreported Oil Spill Size , PBS. ORG
NEWSHOUR , Oct. 6, 2010, available at http://www.pbs.org/newshour/rundown/2010/10/report -federal - government -underestimated -underreported -oil-spill -size.html.
48. Michael B. Shavelson, Oil + Water , COLUMBIA MAG., 2010, at 29, available at
http://magazine.columbia.edu/features/fall -2010/oil -water.
49. See Borenstein, supra note 6; Achenbach, supra note 6.
50. NAT‟L COMM ‟N, supra note 20, at 6 -7, 10.
51. 33 U.S.C. § 1321(j)(5) (2006).
52. 40 C.F.R. § 300.211 (2010).
53. Id. § 300.211(b) .
54. MMS has since been reorganized, with most of its functions assumed by the Bureau of Ocean Energy Management, Regulation and Enforcement.
55. 30 C.F.R. § 254.1(a) . 64 ENERGY LAW JOURNAL [Vol. 32:57
testing, and periodic drills described in the plan, and these measures must be
sufficient to ensure the safety of the facility and to mitigate or prevent a discharge or a substantial threat of a discharge ;
(b) The plan must be consistent with th e National Contingency Plan and the appropriate Area Contingency Plan(s) ;
(c) Nothing in this part relieves you from taking all appropriate actions necessary to immediately abate the source of a spill and remove any spills of oil. 56
The DOI regulations add ress equipment, maintenance of equipment,
personnel, training of personnel, and periodic exercises to test the personnel and
equipment. 57 The rig operator must identify the worst case spill, the natural and
environmental resources threatened by a worst cas e spill, and detailed steps to
contain a worst case spill. For example, the response plan must include:
A description of the response equipment that you will use to contain and recover the discharge to the maximum extent practicable. This description mu st include the
types, location(s) and owner, quantity, and capabilities of the equipment. You also must include the effective daily recovery capacities, where applicable. You must calculate the effective daily recovery capacities using the methods describe d in §
254.44. For operations at a drilling or production facility, your scenario must show how you will cope with the initial spill volume upon arrival at the scene and then support operations for a blowout lasting 30 days. 58
The response plan is required to be tested periodically with drills and
exercises, and is required to be formally reviewed and updated every two years. 59
Much was made in Congressional hearings of the fact that the Gulf of
Mexico deepwater contingency plans of all of the major oil com panies were
boilerplate copied from plans designed for use in the Arctic, including references
to walruses as potentially affected species. 60 However, that was not the only
problem with the plans. 61 While BP was required to identify a worst case spill
from each specific rig and list the equipment and personnel that would be
employed to contain such a spill, the response plan does not do that. Its focus is
regional, and it is not specific for any particular rig or type of incident. BP ‟s
response plan claim s that BP had the ability to respond to a blowout of 250,000
barrels per day, more than four times the reported maximum discharge from the
56. Id. § 254.5 . If a rig operator has submitted a plan and is awaiting approval, he may operate the rig in advance of approval but only if he certifies in writing that he has:
[T]he capability to respond, to the maximum extent practicable, to a worst case discharge or a substantial threat of such a discharge. The certification must show that [he has] ensured by contract,
or other means approved by the Regional Supervisor, the availability of private personnel and equipment necessary to respond to the discharge. Verification from the organization(s) providing the personnel and equipment must accompany the certification.
Id. § 254.2(b) .
57. Id. § 254.4 .
58. Id. § 254.26(d)(1) .
59. Id. §§ 254.30, 254.42 .
60. Drilling Down on America’s Energy , Hearings Before the Subcomm. on Energy and Env’t, H .
Comm. on Energy and Commerce , 111th Cong. 11 -12 (June 15, 2010) (statement of Rep . Henry Waxman , Chairman, H. Comm. on Energy and Commerce ), available at
http://democrats.energycommerce.house.gov/documents/2010061 5/Waxman.Statement.ee.06.15.2010.pdf.
61. BP‟s Response Plan, approved in 2000, is posted on the Department of Interior‟s website . See BP
Gulf of Mexico Regional Oil Spill Response Plan (Dec. 1, 20 00), http://www.boemre.gov/DeepwaterHorizon/BP_Regional_OSRP_Redactedv2.pdf [hereinafter BP Plan ]. 2011] BP OIL SPILL 65
Macondo blowout. 62 Yet nowhere does the plan specifically describe how it
would handle such a spill. The plan refers generally to equipment available to
BP, 63 and appends a list of equipment located in the region, but does not describe
how specific equipment would be employed to meet a worst case spill from the
Deepwater Horizon. BP ‟s response plan claims to have contra cts with Marine
Spill Response Corporation and National Response Corporation (NRC) for spill
response equipment, and that contractors would organize spill removal, 64 but
details on specific types of spills are lacking. The plan states:
NRC has oil spill r esponse equipment located throughout the Gulf Coast area.
Much of the equipment is in road -ready condition and available to be transported on short notice to the nearest predetermined staging areas(s). The “road -ready
condition ” ensures the shortest possib le response times for transporting equipment to the staging areas. Major equipment locations for NRC can be found in Figure 14 - 1.65
While listed equipment includes skimmers, remotely operated submersibles
of the type used to eventually cap the blowout are not mentioned. In responding
to the Macondo blowout, it quickly became apparent that BP was not prepared to
contain such a large blowout in deep water. The equipment and personnel
required for containment had to be assembled after the fact, and were draw n
from locations spread around the world. 66
BP ‟s board chairman was questioned by the Presidential Commission about the
inadequacy of its contingency plan. The following exchange was reported by
Associated Press:
Graham []: “Why was there a gap between what BP said it would do and what it
could actually deliver in a spill? ” Suttles: “It‟s hard for me to go back in time and understand what people were
thinking at the time. ” He said no one anticipated a well that would flow for weeks on end at “significan t rates. ” Now, however, the company has systems that have been developed since the April 20 blowout that could be applied to other deep -
water wells. Graham: “Do you think that now your company can live up to the permit representations that it made as to i ts ability to respond? ”
Suttles: “I think what ‟s been clear is that we have demonstrated that we can contain uncontrolled flow in this particular well . . . . What we need to do is see about how
62. Drilling Down on America’s Energy, Hearings Before the Subcomm. on Energy and Env’t, H .
Comm. on Energy and Commerce , 111th Co ng. 12 -13 (June 15, 2010) (statement of Rep . Henry Waxman , Chairman, H. Comm. on Energy and Commerce ).
63. BP Plan , supra note 6 1, § 4 , at 3.
64. Id. § 14, at 1.
65. Id.
66. The conclusion of the Presidential Commission on containment is as follows:
The containment story thus contains two parallel threads. First, on April 20, the oil and gas industry
was unprepared to respond to a deepwater blowout, and the federal government was similarly unprepared to provide meaningful supervision. Second, in a compres sed timeframe, BP was able to
design, build, and use new containment technologies, while the federal government was able to develop effective oversight capacity. Those impressive efforts, however, were made necessary by the failure to anticipate a subsea b lowout in the first place.
NAT‟L COMM ‟N ON THE BP DEEPWATER HORIZON OIL SPILL & OFFSHORE DRILLING , Stopping The Spill: The Five -Month Effort To Kill The Macondo Well 1 (Staff Working Paper No. 6, Nov. 22, 2010), available at
http://www.oilspillcommission.g ov/sites/default/files/documents/Updated%20Containment%20Working%20P aper.pdf. 66 ENERGY LAW JOURNAL [Vol. 32:57
adaptable is that current capability to all the situations a cross the Gulf of
Mexico. ”67
The primary problem with BP ‟s contingency plan was that it did not
address what specific technology would be needed or available to respond to a
deepwater blowout. Instead, it repeatedly emphasized that such a spill was
unlikel y, and that if it were to occur, environmental damage would be minimal
because the well was forty -eight miles from shore. 68 If the Macondo blowout
revealed a weakness in the comprehensive response and containment system
created by OPA 90, it was the weakn ess of not properly implementing the NCP
contingency planning elements at the lowest levels, not weakness in the
regulatory structure itself. BP ‟s response plan was simply inadequate. The
regulations required that BP be prepared to contain a worst case s pill, but BP
failed to meet the requirements of the regulations. BP CEO Tony Hayward
admitted that BP “did not have the tools you would want in your tool -kit ” and “it
was entirely fair criticism to say BP dropped the ball when it came to planning
for a ma jor oil leak. ”69 This has a familiar ring, as it was the same complaint
voiced after the Exxon Valdez spill and one of the principal deficiencies that
OPA 90 was designed to correct. 70
The Presidential Commission investigating the BP spill concluded that
mistakes by three major companies were responsible for the blowout, and the
contingency plans of all the major oil companies were inadequate.
Our investigative team concluded that three major companies were fully implicated in the catastrophe and our staf f further reported that other companies had no
effective containment preparations and laughable response plans that promised to look out for any polar bears or walruses that happened on to the scene. The poor state of containment and response plans and cap ability in the Gulf of Mexico is
indisputable evidence of a widespread lack of serious preparation, of planning, of management. 71
67. Joel Achenbach, Oil Spill Commission Questions BP’s Response Plan , WASH . POST , Sept. 27, 2010, available at http://www.washingtonpost.com/wp -
dyn/content/article/2010/09/27/AR 2010092703107.html?sid=ST2010100603343.
68. BP Didn’t Plan for Major Oil Spill , ASSOCIATED PRESS , Apr. 30, 2010, available at
http://www.cbsnews.com/stories/2010/04/30/national/main6449241.shtml. The Presidential Committee concluded that provisions in OPA 90 for research into containment and response technology had been grossly underfunded, and private industry did very little research in this area. NAT‟L COMM ‟N ON THE BP DEEPWATER
HORIZON OIL SPILL AND OFFSHORE DRILLING , Response/Clean -Up Tech. Research & Dev. & The BP Deepwater Horizon Oil Spill (Staff Working Paper No. 7, Nov. 22, 2010), available at http://www.oilspillcommission.gov/sites/default/files/documents/Updated%20Response%20RD%20Working%
20Paper.pdf.
69. Hearings , supra note 17, at 5.
70. Randl e, supra note 9, at 12. Congressman Chafee, a sponsor of the OPA 90 bill, asserted that contingency plans for Exxon Valdez “were not worth the paper they were written on.” 136 CONG . REC.
S11537 (Aug. 2, 1990). To address this problem provisions were inc luded in OPA 90 to require periodic review and updating of response plans and periodic inspection and testing of equipment and personnel. H.R. Rep. No. 101 -241, at 30, 42 (1989).
71. Press Release, Nat’l Comm’n on the BP Deepwater Horizon Oil Spill and O ffshore Drilling , Opening Remarks by Co -Chairmen William K. Reilly and Senator Bob Graham from Dec. 2 Deliberative
Meeting (Dec. 2, 2010), available at http://www.oilspillcommission.gov/page/opening -remarks -co-chairmen - william -k-reilly -and -senator -bob -grah am-dec -2-deliberative -meeting. The Commission on January 6, 2011, issued its key findings in advance of its final report, due January 11, 2011, which reiterate that “the Macondo
blowout was the product of several individual missteps and oversights by BP, Halliburton, and Transocean, which government regulators lacked the authority, the necessary resources, and the technical expertise to 2011] BP OIL SPILL 67
Nine “overarching ” management decision failures by BP, Halliburton, and
Transocean are identified as causing the blowout, wit h BP responsible for seven
and implicated in two. 72 Lax federal oversight by the Minerals Management
Service at the time the plans were filed was also a major factor. 73 The report
states that:
[E]fforts to expand regulatory oversight, tighten safety requir ements, and provide
funding to equip regulators with the resources, personnel, and training needed to be effective were either overtly resisted or not supported by industry, members of
Congress, and several administrations. As a result, neither the regulat ions nor the regulators were asking the tough questions or requiring the demonstration of preparedness that could have avoided the Macondo disaster. 74
The MMS for years preceding the blowout had been in bed with the
industry it was supposed to regulate, and failed to insure that response plans met
the requirements of its regulations. 75
Problems with the Regional and Area Plans also surfaced during the efforts
to contain the spill. While state participation is integrated into the NCP planning
and command structure through these plans, in reality the state and local
governments in some respects either refused to acknowledge the NCP plans or
chose instead to seek federal relief outside the NCP structure. Governors of the
Gulf States requested and received d eclarations of emergency disasters under the
Stafford Act administered by the Federal Emergency Management Agency
(FEMA). 76 The FEMA authority provides money to state agencies, which then
are responsible for disbursement. This produced state and local act ions that
sometimes operated at cross purposes with the NCP -authorized activities and
created further confusion concerning the adequacy of response efforts.
D. Is There a Cap on BP ’s Liability?
The media widely publicized OPA 90 ‟s $75 million cap on li ability for
offshore spills and aired promises of politicians to amend the law to remove the
cap. However, the media never closely examined how OPA 90 ‟s liability cap
applied in this situation. In fact, under the facts of this case, there is no cap on
BP ‟s liability.
While section 1004(d) of OPA 90 contains a limit on liability of $75 million
for spills from offshore facilities, the cap applies on its face only to damages and
prevent.” Press Release, Nat’l Comm’n on the BP Deepwater Horizon Oil Spill and Offshore Drilling, Comm ’n Releases Chapte r on BP Well Blowout Investigation in Advance of Full Rep . (Jan. 6, 2011), available at
http://www.oilspillcommission.gov/sites/default/files/documents/Advance%20Chapter%20on%20BP%20Well%20Blowout%20Investigation%20Released.pdf.
72. NAT‟L COMM ‟N ON THE BP DEEPWATER HORIZON OIL SPILL AND OFFSHORE DRILLING , REPORT TO
THE PRESIDENT , DEEP WATER : THE GULF OIL DISASTER AND THE FUTURE OF OFFSHORE DRILLING 122 -126 (Jan. 11, 2011).
73. Id. at 126 -127. See also Ian Urbina, Inspector General’s Inquiry Faults Regulators , N.Y. TIMES , May 24, 2010, available at http://www.nytimes.com/2010/05/25/us/25mms.html.
74. NAT‟L COMM ‟N ON THE BP DEEPWATER HORIZON OIL SPILL AND OFFSHORE DRILLING , supra note 72, at 126.
75. See Urbina, supra note 7 3.
76. 42 U.S.C. §§ 5121 -5206 (2006); 44 C.F.R. §§ 206.1 -206.440 (2010); NAT‟L COMM ‟N, supra note
20, at 18 -20. 68 ENERGY LAW JOURNAL [Vol. 32:57
not to removal costs. 77 Hence, all of the costs incurred by the federal
govern ment and by state and local governments to remove and clean up the oil
are not subject to the cap. 78 BP is strictly liable for these removal costs. 79 In
addition, OPA 90 does not preempt state law, so that private damage claims
arising under state law are not subject to the $75 million cap. Finally, OPA 90 ‟s
cap on damages does not apply if there was gross negligence, willful
misconduct, or a violation of a federal safety regulation pertaining to the
construction or operation of the facility by the respons ible party. 80 Press reports
and evidence heard at congressional hearings have detailed a number of
regulatory violations by BP management. 81 These are highlighted in the Report
of the Presidential Commission, as noted above. BP ‟s drilling partner,
Anadark o, has called BP ‟s management reckless and grossly negligent, and other
major oil companies have distanced themselves from BP. 82 Given these facts, it
is perhaps not surprising that BP informed the court in the consolidated district
court proceedings that it was voluntarily waiving the $75 million cap. 83
77. 33 U.S.C. § 2704(a)(3) (2006).
78. 33 U.S.C. § 2702(a). Removal costs include all costs incurred in response to a spill, including:
[C]ontainment and removal of oi l or a hazardous substance from water and shorelines or the taking of other actions as may be necessary to minimize or mitigate damage to the public health or welfare,
including, but not limited to, fish, shellfish, wildlife, and public and private propert y, shorelines, and beaches.
Id. §§ 2701(30), (31).
79. Id. § 2702(a).
80. Id. § 2704(c).
81. See, e.g. , Hearings , supra note 17; Jad Mouawad, BP Has a History of Blasts and Oil Spills , N.Y.
TIMES , May 8, 2010, available at http://www.nytimes.com/2010/05/09/business/09bp.html?pagewanted=all; David Hammer & Dan Shea, Safety Fluid Was Removed Before Oil Rig Exploded , TIMES -PICAYUNE , May 6,
2010, available at http://www.nola.com/news/gulf -oil- spill/index.ssf/2010/05/safety_flui d_was_removed_befor.html . “On the morning of April 20, the crew from Transocean (the owner of the rig), over the strong objections of their own drilling superintendent, was ordered
by BP to take the heavy drilling mud out of the drill pipe and replace it with seawater. That was the triggering event . . . .” Michael B. Shavelson, Oil + Water , COLUMBIA MAG., Fall 2010, at 27. In testimony before the joint Coast Guard/Bureau of Ocean Management investigatory panel, Haliburton engineer Jesse Gagliano
stated that he had “recommended that BP use 21 centralizers to keep the casing properly positioned. But even though an additional 15 centralizers were flown to the rig, BP chose not to use them. The cementing job proceeded with six.” And, “Transocean subsea supe rintendent William Stringfellow Jr., when asked about
federal regulation governing [blowout preventer] maintenance, testified, „I would say that it‟s probably out of compliance with the regulation.‟ ” Juliet Eilperin & Mary Pat Flaherty, Top Obama Adviser ’s Input on Drilling Plan Limited , WASH . POST , Aug. 26, 2010, available at http://www.washingtonpost.com/wp -
dyn/content/article/2010/08/25/AR2010082507021.html. A defective blowout preventer manufactured by Cameron International, and faulty well cementing performed by Halliburton Energy Services were other culprits identified as being responsible for the spill. Matthew Mosk, BP Oil Spill: As Companies Point Fingers
at Each Other, New Concerns About Blowout Preventer , ABCN EWS .COM , May 12, 2010, http://abcnews.go.com/Blotter/bp -oil-spill -companies -point -fingers -concerns -blowout/story?id=10627599.
82. Joel Achenbach & David Hilzenrath, From Series of Missteps to Calamity in the Gulf; Investigators
Believe that BP Cut Corners , WASH . POST , July 25, 2010, available at http://www.washingtonpost.com/wp - dyn/content/article/2010/07/24/AR2010072402594.html; John M. Broeder & Jad Mouawad, Oil Exec s. Break
Ranks in Testimony , N.Y. TIMES , June 16, 2010, at A20; Christopher Swann, Anadarko Hopes Blame Is Pinned on BP , N.Y. TIMES , June 22, 2010, available at http://www.nytimes.com/2010/06/22/business/22views.html.
83. BP Waiving $75 Million Cap for Some Oil Spill Claims , WASH . POST , Oct. 18, 2010, available at
http://blog.al.com/wire/2010/10/bp_w aiving_75_million_cap_for.html. 2011] BP OIL SPILL 69
E. Why Was BP ’s Permission Required for Private Clean -Up Efforts?
Media coverage expressed frustration with the need of private parties to
obtain approval from BP or the Coast Guard to participate in clean -up efforts,
and for the slow pace of approval. The private parties seeking to help were often
local watermen whose livelihoods were at stake, and who had the knowledge and
resources to help. The reason for BP approval, or Coast Guard sanction, of
privat e clean -up efforts is that OPA 90 makes BP liable for all oil removal costs
incurred by governmental entities, but not necessarily those of private entities.
Private entities can be recruited and employed as part of the responsible party ‟s
contingency pla n, and in that respect BP would not only pay for their costs, but
would control what they do. To be part of the BP contingency response plan
they would have to be approved in advance by BP, or recruited after the fact to
participate in the plan by BP. Al ternatively, private efforts can be incorporated
into a federal, state, or local government clean up and removal effort, allowing
the government to pay the private parties and thereafter be reimbursed by BP,
but again the efforts would have to be under the control of a governmental entity,
part of its official clean up response, and consistent with the NCP. 84 Absent
sanction by a governmental entity or by BP, a private party assisting the clean up
might seek to recover its costs from BP as damages, but the claim would have to
be filed after the costs were incurred, and would be subject to challenge by BP. 85
Furthermore, many of the voluntary efforts could not be effectively utilized.
For example, the U.S. Fish and Wildlife Service, working with its Louisiana
counterpart and Audubon naturalists, had sufficient personnel to perform the
demanding job of rescuing, cleaning, and releasing oiled birds, but could not use
hundreds of untrained volunteers seeking to assist. 86 Local officials, unfamiliar
with the Area C ommittees and Unified Command structure, demanded action not
contemplated by the NCP response plan and complained when their demands
were not met. 87 This ultimately led to efforts that were funded through FEMA
grants outside the NCP structure that were cou nterproductive to the NCP -
sanctioned activities, including the deployment of booms in inappropriate areas
and the construction of berms. 88
F. To What Penalties Is BP Subject?
OPA 90 provides an array of civil and criminal penalties to which a
responsible party is potentially subject. Administrative penalties that can be
assessed by the Coast Guard include Class I civil penalties of $10,000 per
violation, and Class II civil penalties of $25,000 per day up to a maximum of
$125,000. 89 Civil penalties that can be assessed by court action on a strict
liability basis 90 include $25,000 per day of violation, or $1,000 per barrel of oil
84. Parties seeking reimbursement for removal expenses from the Oil Spill Liability Trust Fund must
meet narrowly interpreted regulations showing that their efforts are consistent with the NCP. Gatlin Oil Co. v. United States, 169 F.3d 207, 210 -11 (4th Cir. 1999).
85. Id.
86. Williams, supra note 46, at 63.
87. NAT‟L COMM ‟N, supra note 20, at 19 -20.
88. Id. at 20 -22.
89. 33 U.S.C. § 1321(b)(6) (2006).
90. City of Phila . v. Stepan Chemical Co., 544 F. Supp. 1135 (E.D. Pa. 1982). 70 ENERGY LAW JOURNAL [Vol. 32:57
discharged, or on proof of gross negligence or willful misconduct, not less than
$100,000 and not more than $3,000 per barrel of oil discharged. 91 Criminal
penalties can also be assessed against responsible organizations and individuals,
including a fine of $25,000 plus one year in prison for negligence, and a $50,000
fine and up to three years in prison for a knowing violation. For a violation that
amounts to knowing endangerment, a fine of up to $250,000 for an individual
and $1,000,000 for an organization, and a prison term of not more than fifteen
years are authorized. 92 Each day of violation is considered a separate offense.
The Justice Department has initiated an investigation to determine whether
to bring criminal charges in connection with the BP spill. 93 The criminal
investigation is focusing on BP, Transocean, and Halliburton, 94 but the
Department has not officially announced who it intends to charge or what
criminal penalties it will seek. The report of the Deepwater Horizon Joint
Investigation, which should detail what civil fines will be assessed against BP
and others, was not available at the time this article was written. On December
16, 2010, the Justice Department filed a civil complaint against BP and eight
other companies in the United States District Court in New Orleans, where it
will undoubtedly be included among the consolidated cases pending before
Judge Barbier. 95 In this action, the United States seeks to assess civil penalties
and to recover damages under the Clean Water Act and OPA 90 for costs of the
clean up and damages to natural resources. The complaint demands that civil
penalties be assessed in an amoun t “of up to $1,100 per barrel of oil that has
been discharged or up to $4,300 per barrel of oil that has been discharged, to the
extent that the discharge of oil was the result of gross negligence or willful
misconduct .”96 Without stating an explicit amount of damages, the complaint
asserts that damages exceed $75 million, and that BP has waived the $75 million
liability cap under OPA 90. 97
Considering that oil was spewing into the Gulf at a rate of some 60,000
barrels pe r day from April 20 until July 15, 2010, the per barrel civil penalties
and per day criminal violations amount to a huge liability. At 4.4 million
barrels, which is the current estimate of the total size of the spill, the civil
penalty of $3,000 per barre l could exceed $13.2 billion if a gross negligence
standard is used. Furthermore, a corporation convicted of a criminal penalty
could lose its right to bid on any contracts with the U.S. government, 98 and the
Secretary of the Interior has authority under th e Outer Continental Shelf Lands
91. 33 U.S.C. § 1321(b)(7) .
92. 33 U.S.C. § 1319(c) .
93. Jerry Markon, „ BP Squad’ Assembles to Probe Oil Spill; Criminal Inquiry to Focus on Three Firms
and Their Ties to Regulators , WASH . POST , July 28, 2010, at A1.
94. Jerry Markon, BP, 8 Oth er Companies Sued by Justice Dep artment over Gulf Oil Spill , WASH . POST ,
Dec. 16, 2010, at A6.
95. Id.
96. United States v. BP Am. Exploration & Prod. Inc., No. 2:10 -cv-04536 -CJB -SS ¶ 75 (E.D. La. filed Dec. 15, 2010).
97. Id. ¶ 90.
98. 31 U.S.C. § 6101.1 1(a) (2006); see also Exec. Order No. 12,549, 30 Fed. Reg. 6370 (1986) ; Exec.
Order No. 12,689, 54 Fed. Reg. 34131 (1989); 48 C.F.R. § 9.404 (2010). 2011] BP OIL SPILL 71
Act to cancel BP ‟s lease if he finds that BP has violated Outer Continental Shelf
(OCS) regulations or the terms of its lease. 99
G. What Damages Will BP Have to Pay?
Damages that BP will have to pay, in addition to the prev iously mentioned
civil and criminal penalties, include removal costs incurred by federal, state , and
local governments, personal injury and property damage claims now pending in
the consolidated law suits, and resource damage claims that will be assessed b y
federal and state governments as trustees for the damaged natural resources. The
total cost to BP in penalties and damage claims will be very large. An article
published in the New York Times estimated that total costs to BP, including civil
and crimin al penalties, could exceed $60 billion. 100
Removal costs, 101 while capped under the Clean Water Act at
$50,000,000, 102 are not capped under OPA 90, which states:
Notwithstanding the limitations established under subsection (a) of this section and the defenses of section 2703 of this title, all removal costs incurred by the United
States Government or any State or local official or agency in connection with a discharge or substantial threat of a discharge of oil from any Outer Continental Shelf facility or a ve ssel carrying oil as cargo from such a facility shall be borne by
the owner or operator of such facility or vessel. 103
BP will accordingly be responsible for all costs incurred to remove oil from
the water and shorelines of the Gulf States.
Personal injury and economic damage claims are not preempted by OPA
90. 104 Such claims are proceeding under state and federal law in the
consolidated federal court actions in New Orleans. 105 They include eleven
99. 43 U.S.C. §§ 1334(a)(2), (c) & (d) (2006) provide authority to cancel leases, subject in certain cases
to the lessee‟s right to receive compensation for the value of the canceled lease. The Secretary‟s authority to suspend leases in order to protect natural resources was recognized in the aftermath of the Santa Barbara blowout, Gulf Oil Corp. v. Morton , 493 F.2d 141 (9th Cir. 1973), but the courts also held that if the suspension
effectively canceled the lease, then compensation for a taking would be owed. Sun Oil Co. v . United State s, 572 F.2d 786 (1978).
100 . John Schwartz, With Criminal Charges, Costs to BP Could Soar , N.Y. TIMES , June 16, 2010,
available at http://www.nytimes.com/2010/06/17/us/17liability.html.
101 . OPA 90 broadly defines removal costs. Section 1001 states:
(30) „r emove‟ or „removal‟ means containment and removal of oil or a hazardous substance from
water and shore -lines or the taking of other actions as may be necessary to minimize or mitigate damage to the public health or welfare, including, but not limited to, f ish, shellfish, wildlife, and public and private property, shorelines, and beaches; (31) „removal costs‟ means the costs of
removal that are incurred after a discharge of oil has occurred or, in any case in which there is a substantial threat of a dischar ge of oil, the costs to prevent, minimize, or mitigate oil pollution from such an incident.
33 U.S.C. §§ 2701(30), (31) .
102 . Id. § 1321(f)(3) .
103 . Id. § 2704(c)(3) .
104 . Askew v. Am. Waterways Operators, Inc., 411 U.S. 325 (1973).
105 . For the OCS, 42 U.S. C. § 1333 adopts the law of the adjacent state, including tort law, as surrogate
federal law for area covered by Outer Continental Shelf Lands Act (43 U.S.C. §§ 1331 -1356(a)) to the extent that the state law is not inconsistent with other federal laws. Of fshore Logistics v. Tallentire, 477 U.S. 207
(1986). Courts have held that, under 43 U.S.C. § 1333(a)(2)(A), state law is applicable to fill gaps in federal law, and thus, where Longshoremen‟s and Harbor Workers‟ Compensation Act provides a comprehensive 72 ENERGY LAW JOURNAL [Vol. 32:57
wrongful death claims, numerous claims for personal injury suf fered by rig
workers and by persons engaged in clean -up efforts, and claims for damages to
business interests, including claims by fishermen, persons engaged in tourist
related businesses, and other businesses adversely impacted by the spill. 106 BP ‟s
liab ility in these actions will undoubtedly be substantial. In the Exxon Valdez
spill, damage claims arising under state law constituted by far the largest liability
faced by Exxon. 107
Resource damages are yet another area where BP face s substantial,
unknown li ability. Section 1006 of OPA 90 makes BP liable to the federal
government, state governments, and Indian tribes for damage to natural
resources “belonging to, managed by, controlled by, or appertaining to ” such
entities, which are specifically designated as trustees of such natural resources. 108
In addition, the measure of damages to natural resources is spelled out in the
Act. Rather than leaving it up to a court to assign an economic or commodity
value for each destroyed resource, OPA 90 requires that th e measure of damages
be based on: “(A) the cost of restoring, rehabilitating, replacing, or acquiring the
equivalent of, the damaged natural resources; (B) the diminution in value of
those natural resources pending restoration; plus (C) the reasonable cost of
assessing those damages. ”109 The trustees are tasked with assessing natural
resource damage, and developing plans for rehabilitation and restoration. 110
OPA 90 also authorizes disbursements from the Oil Spill Liability Trust
Fund, established under the Cl ean Water Act, 111 to pay up to $1 billion for
removal costs incurred in response to an oil spill. 112 The purpose of the Fund is
to pay for NCP -authorized activities and removal costs so that there is no delay
in undertaking essential actions to prevent, mitig ate, or clean up oil spills.
Through subrogation, the Fund is authorized to recover from responsible parties
the amounts it pays out. 113 The Fund is an essential response resource,
particularly when the responsible party has not been determined, or when th e
responsible party does not cooperate. In this case, however, BP has
acknowledged its status as a responsible party, has agreed to fund a $20 billion
claims fund, and has stated it is willing to pay reasonable and appropriate
damage claims. 114 Under these circumstances, the Oil Spill Liability Trust Fund
may have a less critical role to play, but it still has a role. BP was billed some
$69 million on June 3, 2010, to reimburse the Fund for removal costs incurred as
scheme of rights and remedies, federal not state law applies. Perron v. Bell Maintenance & Fabricators , 970 F.2d 1409 (5th Cir. 1992), cert. denied 507 U.S. 913 (1993).
106 . In Re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on Apr il 20, 2010, No.
2:10 -MDL -02179 -CJB -SS, 2010 WL 3269206 (E.D. La. Aug. 10, 2010).
107 . In re: Exxon Valdez, 472 F.3d 600 , 619 -20 (9th Cir. 2006).
108 . 33 U.S.C. §§ 2706(a) -(b).
109 . Id. § 2706(d)(1).
110 . Id. § 2706(c).
111 . 26 U.S.C. § 9509.
112 . 33 U.S.C. § 2712.
113 . Id. § 2715.
114 . Claims – Gulf of Mexico , BP,
http://www.bp.com/sectiongenericarticle.do?categoryId=9034722&contentId=7064398 (last visited Jan. 28, 201 0). 2011] BP OIL SPILL 73
of that point in time. 115 By November 12, 2010, removal costs totaled $581
million, of which BP had repaid to the Fund $518 million. 116 In a report dated
November 12, 2010, the Government Accountability Office (GAO) indicated
that required payments from the Fund could exceed $1 billion for the Mac ondo
blowout, and recommended that Congress amend OPA 90 to allow
disbursements from the Fund to exceed the $1 billion limitation per incident,
provided that recovery of disbursed monies from responsible parties can be
assured. 117
Resource damages, while sub stantial, will be less than the apocalyptic
predictions made in the early days of the blowout. “Due to the nature of the oil
and the monumental cleanup effort, visible damage was not as bad as the public
imagines or the media have depicted. ”118 Of the 4.4 million barrels discharged,
the government estimated that BP had removed a quarter (either by recovering or
burning the oil), another quarter had evaporated, and a third quarter had been
dispersed in the water column. The last quarter remaine d as slicks on the surface
or had washed up on shore. 119 Of long -term concern to scientists is the oil
dispersed in the water column, the result of BP ‟s widespread use of chemical
dispersants. The deep waters of the Gulf show oxygen depleted zones and a
sig nificant reduction in plankton and copepods which scientists attribute to the
spill. 120 By December 31, 2010, most beaches has been cleared of oil, but on
shorelines in Louisiana oil residue and tar balls remained buried beneath sand
and oyster shells. 121
Th e National Oceanic and Atmospheric Administration (NOAA), which
was delegated the federal government ‟s trusteeship duties under section 1006 of
OPA 90, must perform the natural resource damage assessment. Once this has
been completed, NOAA must develop a plan to restore or replace the damaged
resources. BP will be expected to pay the costs of the environmental assessment
and implementing the restoration plan.
Relatively early in the saga, President Obama persuaded BP to
“voluntarily ” establish an indep endent $20 billion fund to pay damage claims to
persons financially injured by the spill. 122 The fund is being administered by
Kenneth Feinberg, and persons whose claims are denied have a right of appeal to
a three -person panel. 123 The President made clear th at the $20 billion is not a
115 . Hearings, supra note 17, at 5.
116 . U.S. GOV‟T ACCOUNTABILITY OFFICE , GAO -11-90R, DEEPWATER HORIZON OIL SPILL : PRELIMINARY ASSESSMENT OF FEDERAL FINANCIAL RISKS AND COST REIMBURSEMENT AND NOTIFICATION
POLICIES AND PROCEDURES (2010).
117 . Id.
118 . Wil liams, supra note 46, at 63.
119 . Joel K. Bourne, Jr., The Deep Dilemma , NAT‟L GEOGRAPHIC , Oct . 2010, at 52.
120 . Id. at 50 -53.
121 . Cain Burdeau, Coasts Almost Cleared of Oil , ASSOCIATED PRESS , Dec. 31, 2010, available at http://www.theeagle.com/business/Coasts -almost -cleared -of-oil.
122 . Jackie Calmes & Helene Cooper, BP to Set Aside $20 Billion to Help Victims , N.Y. TIMES , June 17, 2010, available at
http://query.nytimes.com/gst/fullpage.html?res=9503E5DE143FF934A25755C0A 9669D8B63&sec=&spon=& pagewanted=2.
123 . As of February 12, 2011, Mr. Feinberg had paid 168,634 claims totaling $3.4 billion. Steven
Mufson, BP Fund to Settle More than 2,000 Claims of Damage from Gulf Oil Spill , WASH . POST , Feb. 12, 74 ENERGY LAW JOURNAL [Vol. 32:57
cap on liability. 124 BP also agreed to fund a separate $100 million pool for oil
industry workers laid off during the President ‟s suspension of offshore drilling
activities. 125
H. How Will the Macondo Blowout Affect Deepwater Oil Pr oduction?
In addition to protecting the environment, environmental laws serve a
secondary purpose of reassuring the public that needed industrial activities can
proceed in a safe and environmentally responsible manner. But if,
notwithstanding the existe nce of the national comprehensive oil spill
containment and response system erected by OPA 90, major spills can still occur
and persist for several months before being brought under control, then one may
question whether OPA 90 is adequate. Alternatively, as some environmentalists
argue, one might conclude that deepwater oil production is simply too
challenging to be allowed to continue because the Macondo blowout ran
unabated for three months even with the national comprehensive oil spill
containment and response system erected by OPA 90.
In reaction to the blowout, the President immediately ordered the Secretary
of the Interior to report within thirty days regarding what measures under the
Outer Continental Shelf Lands Act were required to protect public health and
safety. The Secretary in a series of actions issued through the Bureau of Ocean
Energy Management, Regulation, and Enforcement (BOEMRE), suspended
deepwater drilling in the Gulf of Mexico, first on May 28, 2010, then again on
July 12, 2010. 126 During the suspension, the BOEMRE Director held a series of
public meetings, gathered information from written submissions and from
congressional hearings, and on October 1, 2010, he issued his Decision
Memorandum for the Secretary, in which he recommended an early lifting of the
suspension, subject to the adoption of new safety rules and containment
strategies. 127 Accordingly, the Secretary lifted the moratorium on October 12,
2010, as the new and more stringent regulations were put in place. 128
2011 , at A13, http:// www.washingtonpost.com/wp - dyn/content/article/2011/02/11/AR2011021106414.html?nav=emailpage.
124 . Id.
125 . Id.
126 . The BOEMRE Director issued his “Safety Report” on May 27, 2010, in response to the President‟s directive. Based on this report, the Secretary on May 28 suspended drilling activities in the Gulf of Mexico in
water deeper than 500 feet. Decision Memorandum for the Secretary from the Director of the Bureau of Ocean Energy Management, Regulation, and Enforcement 1 -2 (Oct. 1, 2010), available at http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=64703. The
Secretary‟s action was immediately challenged by companies in the offshore industry, and on June 22, the U.S. District Court for Louisiana enjoined the suspension. Id. The BOEMRE Director continued to study the facts relating to the Macondo blowout and the industry‟s response to it, and on July 12, 2010, the Secretary issued a
new suspension. Id. The new suspension was more precisely drafted, and was limited to drilling operations employing blowout preventers. The purpose of the new suspension was to allow time to put in place new safety measures, to develop improved containment response capability for blowouts, and to allow sufficient
time for the industry to d evote the resources required to contain and clean up the BP spill. Id.
127 . Decision Memorandum for the Secretary from the Director of the Bureau of Ocean Energy
Management, Regulation, and Enforcement 1 -2 (Oct. 1, 2010).
Building upon the Safety Report, BOEMRE has prepared three sets of major safety -related standards:
(I) Notice to Lessees No. 20 I0·05: Increased Safety Measures for Energy Development on the OCS (the Safety NTL) which was issued on June 8, 2010; (2) the S afety Interim Final Rule, which has 2011] BP OIL SPILL 75
The new regu lations tighten standards for well design, blowout preventers,
safety certification, emergency response, and worker training. 129 Those in the
industry claim that the spill is “a game changer, ” and that it has made the
industry far more alert to safety. 130 Stu ng by the revelations regarding their
response plans, Exxon, Shell, ConocoPhillips, and Chevron have pledged to
spend $1 billion on a Gulf of Mexico response force. 131 BOEMRE concluded
that the experience of responding to the Macondo blowout has caused the
industry to develop technologies and capabilities that it previously lacked:
It is clear that, due to the experience of gaining control over the Macondo well and
a new commitment by industry focused on developing new equipment and systems for well contain ment, industry and government are better equipped and prepared
today to contain an oil well blowout in deepwater than they were at the time of the Deepwater Horizon event or the July 12 suspension decision. 132
The Gulf holds some 19% of U.S. proven reserves. 133 Offshore oil leasing
provided $5.9 billion to the U.S. Treasury in 2009, $5.6 billion of which came
from the Gulf of Mexico. 134 Most of the promising prospects in the Gulf lie in
deepwater. National policy reflected in the Outer Continental Shelf Lands Act
encourages the production of oil from the continental shelf, provided it can be
done safely and without unreasonable risk to the environment. Oil exploration
and production will undoubtedly continue in the deepwater of the Gulf of
Mexico, but it will proceed more carefully and deliberately.
At the same time, the Macondo blowout dramatically changed the political
landscape for offshore leasing. In March, shortly before the Macondo blowout,
the President had announced that his Administration was opening new areas off
the U.S. coast for expanded oil and gas leasing, part of a political overture to
obtain backing for comprehensive climate legislation. On December 2, 2010, the
Administration canceled that initiative, marking “a sharp political shift . . . in the
wake of the massive BP oil spill and the collapse of comprehensive climate
been completed and will be published in the next several days; and (3) the Workplace Safety Rule, which requires operators to develop SEMS programs, which has been completed and will be published in the next several days , with additional enhancements to be added in a supplemental
rulemaking. With certain exceptions discussed below, these measures implement the enhanced safety standards recommended by the Safety Report. These new safety standards also address the central safety concerns raised by the Deepwater Horizon event.
Id. at 9.
128 . Peter Baker, White House Is Lifting Ban on Deepwater Drilling , N.Y. TIMES , Oct. 12, 2010,
available at http://thecaucus.blogs.nytimes.com/2010/10/12/white -house -to-lift-ban -on-deep -water -drilling/. See also Press Release, Dep‟t of the Interior, Salazar: Deepwater Drilling May Resume for Operators Who
Clear Higher Bar for Safety, Environmental Protection (Oct. 12, 2010), available at http://www.doi.gov/news/pressreleases/Salazar -Deepwater -Drilling -May -Resume -for-Operators -Who -Clear - Higher -Bar -for-Safety -Environmental -Protection.cfm.
129 . Decision Memorandum for the Secretary from the Director of the Bureau of Ocean Energy Management, Regulation, and Enforcement 1 -2 (Oct. 1, 2010).
130 . Steven Mufson, Concerns About the Big Spill Might Already Be Drying Up , WASH . POST , Sep t. 30, 2010, at AA9.
131 . Id.
132 . Id. at 14.
133 . Id.
134 . Bourne, supra note 11 9, at 44. 76 ENERGY LAW JOURNAL [Vol. 32:57
legislation. ”135 While the Administration pledged to continue leasing in the deep
water of the Gulf of Mexico, areas off the Mid -Atlantic coast were removed
from the next five -year leasing plan, and areas in the western Gulf of Mexico
and off the western coast of Alaska were subjected to a moratorium on
drilling. 136
Thus, it would appear that the regulatory apparatus created by OPA 90 was
insufficient to contain a major blowout caused by deepwater drilling operations.
That this was the fault of a failure to abide by and enforce OPA 90 ‟s regulations
may well be lost on the general public, or deemed to be not important. In any
event, to the extent that comprehensive environmental regulation is intended to
inspire confidence that oil exploration and production can proceed responsibly in
environmentally sensitive areas, OPA 90 has not succeeded.
III. LEGISLATIVE RESPONSE
The House Committee on Energy and Commerce held ten days of he arings
in May, June , and July of 2010, and introduced a bill called the Blowout
Prevention Act of 2010. 137 A companion bill to the House bill was introduced in
the Senate ,138 and the Senate also held hearings. Both bills would repeal the
liability limit for offshore spills, and would have made other changes to OPA 90.
The House bill was referred to committee, and an entirely different bill emerged
and was passed by the House on July 30, 2010. 139 The Senate bill was not
reported out of committee, and the Senat e took no action on its own bill or the
House bill before the conclusion of the 2010 legislative session. 140
H.R. 3534, the Consolidated Land, Energy , and Aquatic Resources
(CLEAR) Act passed by the House, covers an array of energy issues, in addition
to sections that would amend OPA 90. Its OPA 90 changes are not insignificant.
Section 702(a) would eliminate OPA 90 ‟s $75 million cap on liability for spills
from offshore facilities, and would permit the President to increase other liability
caps based on specific findings. The change would be retroactive for “any claim
arising from an event occurring before [the] date of enactment, if the claim is
bro ught within the limitations period applicable to the claim. ”141 Section 704 of
CLEAR would also add human health (including mental health) damages to
OPA ‟s list of recoverable claims, retroactive in the same manner. Similarly, S.
3663 also would remove OPA 90 ‟s liability cap and make other changes in the
spill liability regime.
135 . Juliet Eilperin & Steven Mufson, Admin istration Reverses Offshore Drilling Policy in Eastern Gulf, Atlantic , WASH . POST , Dec. 2, 2010, at 1 , available at http://www.washingtonpost.com/wp -
dyn/content/article/2010/12/01/AR2010120106675.html.
136 . Id. at 16.
137 . H.R. 5626, 111th Cong. (2010).
138 . S. 3663, 111th Cong. (2010).
139 . H.R. 3534, 111th Cong. (2010).
140 . Mufson, supra note 1 30, at AA9.
141 . Consolidated Land, Energy and Aquatic Resources Act, H.R. 3534, 111th Cong. § 702(b) (2010)
(CLEAR) . Much of the discussion of CLEAR in this section is based on an article authored by Svend Brand t- Erichsen and Adam Orford. Svend Brandt -Erichsen & Adam Orford, House Enacts Amendments to Oil
Pollution Act, Outer Continental Shelf Lands Act; Measure Awaits Senate Action , MARTEN LAW (Aug. 2, 2010), available at http://www.martenlaw.com/newsletter/201 00802 -house -enacts -amendments. 2011] BP OIL SPILL 77
To enhance spill prevention, CLEAR would require the Department of the
Interior to impose additional safety equipment standards for blowout preventers,
and would require independent t hird -party inspection and certification of
blowout preventers. Section 205(a) would require DOI to set performance
requirements for cementing and would require mandat ory safety and
environmental management systems for operations on the OCS. The bill woul d
also impose safety standards and a buy -American standard for vessels operating
in conjunction with oil exploration and production from the OCS.
Amendments designed to improve future spill response planning and
execution are scattered throughout CLEAR. Of fshore facilities would be
required to develop response plans for worst -case discharges, which would be
subject to governmental review and approval. 142 Methods for responding to
worst -case underwater blowouts would have to be studied and evaluated. 143
Memorand a of Understanding would have to be developed to clarify the
responsibilities of the Environmental Protection Agency, Coast Guard,
Department of the Interior, and other federal agencies in preventing and
responding to spills. Coastal states would be eligi ble for grants to improve spill
response planning. 144 New programs, such as the Offshore Technology Research
and Risk Assessment Program and the National Oil and Gas Health and Safety
Academy, would be developed to focus on prevention and response.
CLEAR al so would create a “Gulf of Mexico Restoration Task Force ” to
include governors of the Gulf Coast States and federal agency heads, tasked with
creating a “comprehensive, multi -jurisdictional plan for long -term restoration of
the Gulf of Mexico, ”145 followed by annual reports to Congress. The National
Oceanic and Atmospheric Administration would be required to establish a
“comprehensive marine environmental monitoring and research program for the
marine and coastal environment of the Gulf of Mexico, ” to last at least ten
years. 146 NOAA would monitor the fate of oil released during the Deepwater
Horizon spill, and of the dispersants applied to break up the oil, as well as
identify environmental impacts.
Section 205(a)(4) of CLEAR would authorize the cancellatio n of leases and
permits if, after a hearing, it is concluded that a spill has occurred and “the threat
of harm or damage will not disappear or decrease to an acceptable extent within
30 days. ”147 In direct response to the Deepwater Horizon accident, the CLE AR
Act would preclude bidding on leases, easements , or rights -of-way by parties
who had failed to meet their “obligations under [OPA] to provide compensation
for covered removal costs and damages; ” or had, in the previous seven years,
committed “willful or repeated ” Occupational Safety and Health Administration
(OSHA) violations five times higher than industry average; had been convicted
of a crime involving death or serious bodily injury; had more than ten fatalities
at its facilities “as a result of viola tions of Federal or State health, safety, or
142 . Consolidated Land, Energy and Aquatic Resources Act, H.R. 3534, 111th Cong. § 714 (2010).
143 . Id. §§ 715, 718.
144 . Id. § 605. The funds would come from the Ocean Resources Conservation and Assistance (ORCA)
Fund, created by the act and funded by OCS revenues.
145 . Id. § 501.
146 . Id. § 502(a).
147 . Id. § 205(a)(4). 78 ENERGY LAW JOURNAL [Vol. 32:57
environmental laws; ” or had been fined more than $10 million under the Clean
Water Act or Clean Air Act. 148 Under these provisions of CLEAR, BP would be
barred from further participation in OCS leasing.
Other p rovisions of CLEAR that affect offshore leasing, but not OPA 90,
include provisions that codify the abolition of the Minerals Management Service
and the placement of its functions in three separate bureaus, 149 amend the leasing
provisions of the Outer Contin ental Shelf Lands Act to require consideration of
other energy producing uses of the OCS, 150 and provide for changes in OCS
royalties and the use of royalties. 151
CLEAR did not pass the Senate in the last session of Congress. Moreover,
the Congressional mid -term elections held in the fall of 2010 awarded control of
the House of Representatives to the Republican Party and changed the political
landscape in Washington, making it highly unlikely that CLEAR will be
resurrected in the 2011 session of Congress.
Not withstanding that CLEAR almost certainly will not be revisited,
Congress would be amiss in allowing the opportunity presented by the Macondo
blowout to go by without taking some form of action. In particular, two critical
provisions should be adopted. Fi rst, the $75 million cap on liability for offshore
spills should be lifted. In fact, while OPA 90 strengthened and clarified
previously existing oil spill response laws in most respects, it weakened prior
law on this particular point. Prior to OPA 90, th ere was no liability limit for
spills or blowouts resulting from oil and gas activities on the Outer Continental
Shelf. The unlimited liability was the legacy of DOI regulation put in place after
the Santa Barbara blowout, and the change in prior law effe cted by OPA 90 was
lamented in the comments of Senator Lieberman and others. 152 A second critical
point is the limit in the Oil Pollution Fund of $1 billion for any single incident, a
limit that, as previously noted, the GAO has warned will likely be exceed ed in
the clean -up of the Macondo blowout. However, other provisions of CLEAR,
such as those intended to remedy shortcomings in the Department of the
Interior ‟s regulatory oversight of offshore drilling, could be deemed unnecessary
in light of the changes adopted by BOEMRE in October 2010. Some of
CLEAR ‟s provisions, such as those designed to punish BP and those requiring
substantial new funding for rebuilding the Gulf states ‟ shorelines, are certain to
find little support in the changed political environ ment.
IV. CONCLUDING OBSERVATIONS
The Macondo blowout tested the mechanisms put in place by OPA 90 to
deal with a major oil spill of national significance. The existing regulatory
structure appears for the most part to have functioned as it was intended, but the
effectiveness of containment efforts was disappointing. A national response to
the spill was organized expeditiously, government control of the response and
clean up was maintained, if not always appreciated by the public, the spill was
148 . Id. § 206(b).
149 . Id. §§ 101 -109.
150 . Id. § 206.
151 . Id. §§ 301 -321.
152 . S. REP. NO. 101 -94, at 26 -27 (1989). 2011] BP OIL SPILL 79
eventually brought under control, and efforts to provid e compensation for
economic loss and environmental damage are underway. But the spill ran out of
control for over three months, and public confidence in the industry and its
regulators was badly shaken.
In terms of containing a major spill, OPA 90 ‟s effectiveness is dependent
on its contingency response plans, which in this case proved woefully
inadequate. This is the legacy of years of lax oversight by the MMS, which the
current Administration has undertaken to correct, and not due to deficiencies i n
the statute. While the BP spill highlighted some weaknesses in OPA 90,
Congress ‟ failure to adopt revisions to the law is not critical. OPA 90 remains a
good and effective law. The failure to implement and enforce fully all of OPA
90 ‟s requirements, n ot deficiencies in the statute, has contributed to the loss of
public confidence in the offshore oil and gas industry caused by the BP spill.