Cleanup aid from overseas comes with a price tag
By MATTHEW LEE and EILEEN SULLIVAN (AP) – 7 hours ago
WASHINGTON — At least 22 nations — including Britain, where BP is based — have offered oil-collecting skimmers, boom, technical experts and more to help the U.S. cope with its worst-ever environmental disaster. But their generosity comes with a price tag.
The State Department confirmed that nearly every offer of equipment or expertise from a foreign government since the April 20 oil rig explosion would require the U.S. to reimburse that country.
The offers reveal a hard truth about the United States' international friendships: With the U.S. widely regarded as the world's wealthiest nation, there is a double standard regarding foreign aid after a crisis, especially with offers from relatively poor countries.
U.S. disaster aid is almost always free of charge; other nations expect the U.S. to pay for help.
"These offers are not typically offers of aid," said Lt. Erik Halvorson, a Coast Guard spokesman. "Normally, they are offers to sell resources to BP or the U.S. government."
Only Mexico, with wide swaths of poverty among its population, offered the U.S. anything for free. It said it would give the U.S. government some containment boom. BP separately purchased 13,780 feet of boom and two skimmers from Mexico in early May, according to the State Department.
"We're not disappointed," State Department spokesman Mark Toner said Friday. "We're quite pleased with the international offers of assistance. What we're concerned with right now is getting these types of assistance as they become available, as they are useful to our cleanup operations, getting them into action so they can clean up the Gulf."
The offers include:
_Britain, America's closest ally and headquarters to London-based BP, said it would sell chemical dispersants and containment boom for use cleaning up the spill. London's mayor, Boris Johnson, has previously complained about what he called "buck-passing and name-calling" in the U.S. against BP.
_Russia, which received $70.5 million in U.S. aid last year and $78 million in 2008, said it could send boom, oil containers and ships if the U.S. paid for them.
_China offered containment boom for a price. When a major earthquake struck in northwest China in April, the U.S. quickly gave $100,000 for relief supplies, and after another major earthquake in southwestern China in 2008, the U.S. donated $500,000 through the U.S. embassy in Beijing to the Red Cross to buy and deliver emergency supplies there. Congressional researchers estimate the U.S. spends roughly $30 million on foreign aid to China each year, including educational exchanges and health programs.
_Israel, which receives roughly $3 billion in U.S. military aid and other assistance, also said it would send containment boom, if the U.S. paid for it.
_France offered to send chemical dispersants and equipment to clean oil off birds but only for a price.
_Kenya, which received more than $24 million in U.S. aid last year and $11 million in 2008 for humanitarian aid, offered to send fire boom but only if the Obama administration paid.
_Vietnam offered a ship with oil-collecting sweep arms if the U.S. paid for it. The U.S. spent $102 million in all types of aid to Vietnam in 2008. When Typhoon Ketsana hit that country last fall, affecting 3 million people, the U.S. spent $100,000 on relief operations.
_Romania made a "general offer of support" but asked the U.S. government for payment. After heavy rains sent in July 2008 sent four major rivers over their banks and killed five people, the U.S. gave $50,000 for emergency supplies.
_Croatia offered to send technical experts and plans, for a price. The U.S. gave Croatia $50,000 to buy local firefighting equipment in 2007 when more than 800 wildfires broke out during an unusually hot and dry summer.
List of international oil spill aid offers:
http://www.state.gov/documents/organization/143488.pdf
Friday, June 18, 2010
BP is not alone in Gulf exposure
BP is not alone in Gulf exposure
By Roger Parloff, senior editorJune 11, 2010: 12:10 PM ET
FORTUNE -- Last week I wrote a short legal primer aimed at answering some key questions surrounding the legal landscape of the BP Gulf Coast oil spill. At the same time, I invited readers to send me their questions, so I could take a stab at those, too. Here goes.
In general, my own questions focused on BP (BP)'s civil liability under the Oil Pollution Act of 1990 (OPA), and whether the company would really be subject to OPA's $75 million limitation on liability. (Basically, my answer was no.) Readers had a few follow-up questions about those topics, but also inquired about two other matters: how else can BP be punished and how imperiled are their own investments in peripheral players in the catastrophe -- especially Transocean (RIG), Halliburton (HAL, Fortune 500), Cameron International (CAM, Fortune 500), and Anadarko Petroleum (APC, Fortune 500).
Finally, several readers, apparently of an entrepreneurial bent, wanted to know exactly who owns the spilled oil. Specifically, they wondered, could they skim some off the surface and resell it to refiners themselves?
When BP says it will pay for all costs of cleaning up the oil spill, does that mean it is committing to restoring the Gulf to its previous state?
No. "Clean-up" means removal of the oil, according to Vincent Foley, a partner at the law firm of Holland & Knight, who specializes in maritime law and has testified before Congress about Deepwater Horizon oil spill liability issues. To the extent that natural resources are damaged over the long-term -- diminished fish stocks, for instance -- states can sue to recover damages for those under OPA, but that's not considered "clean-up" costs, which is what BP is voluntarily taking on.
You said in your primer that BP is "100% responsible" for clean-up costs. But what about other investors in the well, like Anadarko?
As the federally-licensed operator of the oil well, BP has been designated as the "responsible party" under OPA, meaning that it is 100% responsible for the clean-up costs in the first instance. It can, however, go after other parties for contribution, including investors in the well.
Though BP operated the well, it owned only a 65% interest in it. Anadarko Petroleum Company owned 25% and Mitsui Oil Exploration owned 10%. (According to the Wall Street Journal, Mitsui Oil Exploration, in turn, was 70% owned by trading company Mitsui & Co.; 20% by the Japanese Ministry of Economy, Trade and Industry; and 10% by assorted Japanese investors.)
Anadarko's SEC filings suggest that it anticipates being on the hook for one-quarter of the damages unless certain indemnification provisions kick in, though it did not specify the terms of those indemnifications. Anadarko's insurance for its interest in the well comes to only $177.5 million, less deductibles of about $15 million, according to its filings, so it had better hope those indemnification provisions do apply.
According to one lawyer I spoke with, a standard joint operating agreement in this industry would usually provide that a passive investor like Anadarko would be on the hook for its pro rata share of liability unless the operator, BP in this instance, acted in "gross negligence."
Anadarko's spokesman declined to comment on whether this was, indeed, Anadarko's situation. "Our priority right now is to continue offering help to the Unified Command and at the same time be mindful of the interests of our stakeholders," he said.
If I were a betting man, I'd guess that Anadarko has an enormous incentive to prove gross negligence on BP's part.
Mitsui Oil Exploration's spokesman was as laconic as Anadarko's: "MOECO is unable, at this time, to determine the cause of the incident, and the impact, if any, that the incident will have on MOECO's future operating results, financial positions, or cash flows." He declined further comment, citing the pending U.S. government investigation.
A BP spokesperson said she did not know what BP's indemnification agreements were with Anadarko or Mitsui, and that BP's legal team was "so focused on other things" that I should call back "in a couple weeks when things have quieted down a bit."
What about contractors, like Halliburton, Cameron International, and Transocean?
Both Halliburton, which did cement work on the well, and Transocean, the Swiss owner of the rig, have claimed in SEC filings or in congressional testimony that they have broad indemnification agreements with BP that will leave BP holding the bag for virtually all the spill costs -- assuming, of course, that BP stays solvent. In its SEC filings, for instance, Transocean says that that BP has assumed "full responsibility for any loss, expense, claim, fine, penalty or liability for pollution or contamination, including control and removal thereof, arising out of or connected with operations under the contract" and that BP has agreed to "indemnify us and bear the cost of bringing the well under control in the event of a blowout or other loss of control."
(Halliburton and Transocean will certainly bear exposure to the personal injury suits being filed on behalf of the 11 dead and at least 17 injured workers, although, according to the congressional testimony of a top Halliburton lawyer, there are reciprocal indemnification agreements in place whereby a Halliburton will indemnify BP for suits brought by BP workers, while BP indemnifies Halliburton for suits brought by its employees. The lawyer, senior vice president and deputy counsel James W. Ferguson, testified that such agreements were standard practice in the industry.)
Notwithstanding Transocean's assertions, BP's lawyers evidently have some theory under which they think they can invalidate the oil-spill indemnification agreements Transocean thinks it's protected by. BP has already sent a demand letter to Transocean's excess insurers, seeking to tap the $750 million in insurance obligations they owe to Transocean. That letter prompted those insurers, led by certain underwriters at Lloyd's of London, to sue BP in Houston in May for a judicial declaration that they owe BP nothing. (Transocean and its insurers both acknowledge responsibility for any oil leaks coming from Transocean's rig, which floated on or above the water, but not for any leaks from the well itself, a mile below the surface. So far, virtually the entire spill is assumed to come from the latter.)
As previously noted, BP's spokesperson said she could not address my questions about BP's indemnification arrangements.
The general counsel of Cameron International, which made the blow out preventer (BOP) on the well -- one of the crucial safeguard devices designed to avert disasters like this one -- told a congressional committee last month that it was "far too early to draw factual conclusions about how the incident occurred" and, therefore, it was also "impossible for anyone to make liability determinations at this point." Cameron's SEC filings say that it has $500 million of insurance available.
Isn't BP exposed to some sort of per-barrel fine?
Yes. Though my primer dealt mainly with the Oil Pollution Act of 1990 (OPA), BP is also subject to substantial penalties under the Clean Water Act (also known as the Federal Water Pollution Control Act). Specifically, it can be hit with either $37,500 per-day or $1,100 per-barrel civil penalty for oil spills, even without a showing of wrongdoing on its part. Consulting the PBS News Hour Oil Leak Widget, readers can see that by even the most conservative estimates, BP's per-barrel exposure is already around $1 billion. (Remember that there are 42 gallons in a barrel.) If BP is shown to have been guilty of "gross negligence" or "willful misconduct," those penalties can be trebled. Turning to "experts' worst case" scenarios for the size of the oil spill, and assuming gross negligence, one can at least theoretically jack those penalties up to devastating levels.
These penalties would ordinarily be sought by the Environment and Natural Resources Division of the U.S. Department of Justice, and any money collected would go into the Oil Spill Liability Trust Fund, described in the primer.
One lawyer points out to me that BP would probably much rather pay cleanup costs and civil damages than Justice Department penalties, since the latter are not tax deductible. The prospect of imposing these gives the government enormous bargaining leverage over BP, even before one begins talking about the potential criminal sanctions BP could face. U.S. Attorney General Eric Holder has, of course, said that he is looking into the possibility of criminal violations of at least four environmental laws.
Worse yet for BP, it's a recidivist offender. BP units were on probation for two prior environmental crimes when the Deepwater Horizon exploded on April 20. In October 2007, two BP units simultaneously agreed to plead guilty to environmental crimes relating to two different incidents. (One was a felony violation of the Clean Air Act that helped cause an explosion at its Texas City refinery in March 2005, killing 15 and injuring more than 170. BP was fined $50 million and ordered to institute safeguards that cost it about another $265 million. The other was a misdemeanor violation of the Clean Water Act stemming from two oil pipeline leaks in 2006, which drenched stretches of Alaskan tundra with 200,000 gallons of crude oil. BP was fined $20 million for that one.)
Who owns the spilled oil? If I skim some off the surface, can I resell it to a refiner?
Though neither of two experts to whom I posed these questions was immediately confident of the answer to the first one, they both thought the answer to the second question was no.
"It's not finders keepers," says Foley, of Holland & Knight. Both he and Chris Kende, an insurance specialist at Cozen O'Connor, thought the oil belonged to either the federal government, from whom BP licensed the right to drill, or to BP.
A reader who wants to claim ownership of oil he collects would probably have to claim that BP "abandoned" it, Kende said, "which, I think, would be hard to prove." Alternatively, he continued, the reader could use "some kind of novel salvage theory, like the old Spanish galleon cases." In maritime law, he explains, if you salvage an old sunken vessel or its cargo, you can stake a claim in it. But to do that here, he says, "you would have to 'sue' the oil you recovered to assert a lien for the salvage." More important, he says, "salvage only applies to maritime property like vessels or cargo on board vessels," and this oil never reached a vessel and was, thus, never cargo.
By Roger Parloff, senior editorJune 11, 2010: 12:10 PM ET
FORTUNE -- Last week I wrote a short legal primer aimed at answering some key questions surrounding the legal landscape of the BP Gulf Coast oil spill. At the same time, I invited readers to send me their questions, so I could take a stab at those, too. Here goes.
In general, my own questions focused on BP (BP)'s civil liability under the Oil Pollution Act of 1990 (OPA), and whether the company would really be subject to OPA's $75 million limitation on liability. (Basically, my answer was no.) Readers had a few follow-up questions about those topics, but also inquired about two other matters: how else can BP be punished and how imperiled are their own investments in peripheral players in the catastrophe -- especially Transocean (RIG), Halliburton (HAL, Fortune 500), Cameron International (CAM, Fortune 500), and Anadarko Petroleum (APC, Fortune 500).
Finally, several readers, apparently of an entrepreneurial bent, wanted to know exactly who owns the spilled oil. Specifically, they wondered, could they skim some off the surface and resell it to refiners themselves?
When BP says it will pay for all costs of cleaning up the oil spill, does that mean it is committing to restoring the Gulf to its previous state?
No. "Clean-up" means removal of the oil, according to Vincent Foley, a partner at the law firm of Holland & Knight, who specializes in maritime law and has testified before Congress about Deepwater Horizon oil spill liability issues. To the extent that natural resources are damaged over the long-term -- diminished fish stocks, for instance -- states can sue to recover damages for those under OPA, but that's not considered "clean-up" costs, which is what BP is voluntarily taking on.
You said in your primer that BP is "100% responsible" for clean-up costs. But what about other investors in the well, like Anadarko?
As the federally-licensed operator of the oil well, BP has been designated as the "responsible party" under OPA, meaning that it is 100% responsible for the clean-up costs in the first instance. It can, however, go after other parties for contribution, including investors in the well.
Though BP operated the well, it owned only a 65% interest in it. Anadarko Petroleum Company owned 25% and Mitsui Oil Exploration owned 10%. (According to the Wall Street Journal, Mitsui Oil Exploration, in turn, was 70% owned by trading company Mitsui & Co.; 20% by the Japanese Ministry of Economy, Trade and Industry; and 10% by assorted Japanese investors.)
Anadarko's SEC filings suggest that it anticipates being on the hook for one-quarter of the damages unless certain indemnification provisions kick in, though it did not specify the terms of those indemnifications. Anadarko's insurance for its interest in the well comes to only $177.5 million, less deductibles of about $15 million, according to its filings, so it had better hope those indemnification provisions do apply.
According to one lawyer I spoke with, a standard joint operating agreement in this industry would usually provide that a passive investor like Anadarko would be on the hook for its pro rata share of liability unless the operator, BP in this instance, acted in "gross negligence."
Anadarko's spokesman declined to comment on whether this was, indeed, Anadarko's situation. "Our priority right now is to continue offering help to the Unified Command and at the same time be mindful of the interests of our stakeholders," he said.
If I were a betting man, I'd guess that Anadarko has an enormous incentive to prove gross negligence on BP's part.
Mitsui Oil Exploration's spokesman was as laconic as Anadarko's: "MOECO is unable, at this time, to determine the cause of the incident, and the impact, if any, that the incident will have on MOECO's future operating results, financial positions, or cash flows." He declined further comment, citing the pending U.S. government investigation.
A BP spokesperson said she did not know what BP's indemnification agreements were with Anadarko or Mitsui, and that BP's legal team was "so focused on other things" that I should call back "in a couple weeks when things have quieted down a bit."
What about contractors, like Halliburton, Cameron International, and Transocean?
Both Halliburton, which did cement work on the well, and Transocean, the Swiss owner of the rig, have claimed in SEC filings or in congressional testimony that they have broad indemnification agreements with BP that will leave BP holding the bag for virtually all the spill costs -- assuming, of course, that BP stays solvent. In its SEC filings, for instance, Transocean says that that BP has assumed "full responsibility for any loss, expense, claim, fine, penalty or liability for pollution or contamination, including control and removal thereof, arising out of or connected with operations under the contract" and that BP has agreed to "indemnify us and bear the cost of bringing the well under control in the event of a blowout or other loss of control."
(Halliburton and Transocean will certainly bear exposure to the personal injury suits being filed on behalf of the 11 dead and at least 17 injured workers, although, according to the congressional testimony of a top Halliburton lawyer, there are reciprocal indemnification agreements in place whereby a Halliburton will indemnify BP for suits brought by BP workers, while BP indemnifies Halliburton for suits brought by its employees. The lawyer, senior vice president and deputy counsel James W. Ferguson, testified that such agreements were standard practice in the industry.)
Notwithstanding Transocean's assertions, BP's lawyers evidently have some theory under which they think they can invalidate the oil-spill indemnification agreements Transocean thinks it's protected by. BP has already sent a demand letter to Transocean's excess insurers, seeking to tap the $750 million in insurance obligations they owe to Transocean. That letter prompted those insurers, led by certain underwriters at Lloyd's of London, to sue BP in Houston in May for a judicial declaration that they owe BP nothing. (Transocean and its insurers both acknowledge responsibility for any oil leaks coming from Transocean's rig, which floated on or above the water, but not for any leaks from the well itself, a mile below the surface. So far, virtually the entire spill is assumed to come from the latter.)
As previously noted, BP's spokesperson said she could not address my questions about BP's indemnification arrangements.
The general counsel of Cameron International, which made the blow out preventer (BOP) on the well -- one of the crucial safeguard devices designed to avert disasters like this one -- told a congressional committee last month that it was "far too early to draw factual conclusions about how the incident occurred" and, therefore, it was also "impossible for anyone to make liability determinations at this point." Cameron's SEC filings say that it has $500 million of insurance available.
Isn't BP exposed to some sort of per-barrel fine?
Yes. Though my primer dealt mainly with the Oil Pollution Act of 1990 (OPA), BP is also subject to substantial penalties under the Clean Water Act (also known as the Federal Water Pollution Control Act). Specifically, it can be hit with either $37,500 per-day or $1,100 per-barrel civil penalty for oil spills, even without a showing of wrongdoing on its part. Consulting the PBS News Hour Oil Leak Widget, readers can see that by even the most conservative estimates, BP's per-barrel exposure is already around $1 billion. (Remember that there are 42 gallons in a barrel.) If BP is shown to have been guilty of "gross negligence" or "willful misconduct," those penalties can be trebled. Turning to "experts' worst case" scenarios for the size of the oil spill, and assuming gross negligence, one can at least theoretically jack those penalties up to devastating levels.
These penalties would ordinarily be sought by the Environment and Natural Resources Division of the U.S. Department of Justice, and any money collected would go into the Oil Spill Liability Trust Fund, described in the primer.
One lawyer points out to me that BP would probably much rather pay cleanup costs and civil damages than Justice Department penalties, since the latter are not tax deductible. The prospect of imposing these gives the government enormous bargaining leverage over BP, even before one begins talking about the potential criminal sanctions BP could face. U.S. Attorney General Eric Holder has, of course, said that he is looking into the possibility of criminal violations of at least four environmental laws.
Worse yet for BP, it's a recidivist offender. BP units were on probation for two prior environmental crimes when the Deepwater Horizon exploded on April 20. In October 2007, two BP units simultaneously agreed to plead guilty to environmental crimes relating to two different incidents. (One was a felony violation of the Clean Air Act that helped cause an explosion at its Texas City refinery in March 2005, killing 15 and injuring more than 170. BP was fined $50 million and ordered to institute safeguards that cost it about another $265 million. The other was a misdemeanor violation of the Clean Water Act stemming from two oil pipeline leaks in 2006, which drenched stretches of Alaskan tundra with 200,000 gallons of crude oil. BP was fined $20 million for that one.)
Who owns the spilled oil? If I skim some off the surface, can I resell it to a refiner?
Though neither of two experts to whom I posed these questions was immediately confident of the answer to the first one, they both thought the answer to the second question was no.
"It's not finders keepers," says Foley, of Holland & Knight. Both he and Chris Kende, an insurance specialist at Cozen O'Connor, thought the oil belonged to either the federal government, from whom BP licensed the right to drill, or to BP.
A reader who wants to claim ownership of oil he collects would probably have to claim that BP "abandoned" it, Kende said, "which, I think, would be hard to prove." Alternatively, he continued, the reader could use "some kind of novel salvage theory, like the old Spanish galleon cases." In maritime law, he explains, if you salvage an old sunken vessel or its cargo, you can stake a claim in it. But to do that here, he says, "you would have to 'sue' the oil you recovered to assert a lien for the salvage." More important, he says, "salvage only applies to maritime property like vessels or cargo on board vessels," and this oil never reached a vessel and was, thus, never cargo.
Looking for Liability in BP’s Gulf Oil Spill
LEGAL
Looking for Liability in BP’s Gulf Oil Spill
June 7, 2010, 9:30 AM
Peter J. Henning follows issues involving securities law and white-collar crime for DealBook’s White Collar Watch.
Attorney General Eric H. Holder Jr. made a commitment during a visit to the Gulf Coast last week that the Justice Department would be looking at both civil and criminal charges to ensure accountability for anyone responsible for the oil spill at BP’s oil rig. In his statement, the attorney general said that “if we find evidence of illegal behavior, we will be forceful in our response.”
The likelihood of civil enforcement proceedings for violations of various environmental laws is almost guaranteed for BP and Transocean, the operator and owner, respectively, of the Deepwater Horizon rig that exploded back in April. Halliburton was working as a contractor for Transocean in cementing the well, so it also may be named.
Mr. Holder’s emphasis on using criminal provisions makes it clear that the companies, and perhaps even some individuals at them, will be the targets for prosecution. Here is a preliminary assessment of the various types of litigation the environmental disaster is likely to spawn.
Criminal Prosecution
Criminal charges are probable under the environmental laws that govern discharging pollutants in navigable waterways and that cause harm to migratory birds. My colleague, Prof. Noah Hall, an expert in environmental law, summarized on the Great Lakes Law blog some potential criminal environmental charges and penalties that may result:
Government attorneys have many laws to use in this case, and would likely pursue violations for discharge of pollution under the Clean Water Act. Criminal charges could be brought under the Refuse Act and the Migratory Bird Treaty Act, both of which use strict liability, so the government would not need to show that BP intended to violate the law or was even negligent in its operation and response. Fines are the most likely outcome — Exxon was nailed for $150 million after the 1989 Valdez spill in Alaska, although the court forgave $125 million of the fine in recognition of Exxon’s cooperation in cleaning up the spill and paying certain private claims. The money would likely go to some combination of special funds, the federal government, and state governments.
Strict liability provisions like those included in the Refuse Act and Migratory Bird Treaty Act mean that BP and Transocean would be liable for any violation, regardless of whether it occurred accidentally or as a result of intentional misconduct. For a Clean Water Act violation, 33 U.S.C. § 1319(c)(1), the government would only have to show negligence, which is a fairly low threshold for criminal liability.
Whether prosecutors pursue a case against a company in this situation would usually depend on how cooperative it was in clean-up efforts and complying with requests for information because there are no real defenses to charges under these provisions. Given the pressure on the Obama administration over its response to the oil spill, however, criminal charges are much more likely than in other cases.
Criminal penalties for environmental violations are not as severe as for other white-collar crimes. For a Clean Water Act violation, the maximum fine is $25,000 a day and up to one year in prison for a conviction based on negligence, and $50,000 a day and up to three years in prison for a conviction based on conduct shown to be done “knowingly.”
A greater danger for both the companies and any individual employees would be if false statements were made to the government in obtaining any permits or approvals for operating the rig or in compliance reports about applicable environmental and safety regulations. The broad federal false statement statute, 18 U.S.C. § 1001, makes it a crime to make any “materially false, fictitious, or fraudulent statement or representation” in connection with “any matter within the jurisdiction of the” federal government.
Unlike the environmental statutes, a violation of this provision is subject to a five-year prison term for each violation. More important, under the federal sentencing guidelines, the recommended sentence can be based on the amount of the loss caused to victims of the crime, and this could include the environmental damage caused by the oil spilling up on the beaches of the Gulf Coast. That loss calculation could lead to a lengthy prison term if an individual were found to have made multiple false statements, while the potential fine for a company could be multiplied significantly.
No individuals have been identified as targets of the criminal investigation, which is still in its earliest stages, and it remains to be seen whether anyone will be accused of wrongdoing. At this point, it does not appear any senior executives at BP, Transocean, or Halliburton would be the focus of a criminal case. Although the oil spill is a significant event, the Deepwater Horizon rig was only a small part of their global operations, so it is unlikely senior executives had much if any awareness of its operations before the disaster.
Civil Liability
The direct costs to BP from the oil spill have escalated significantly since April. In its earlier disclosures to shareholders right after the rig accident, the company estimated that the costs would be approximately $6 million a day. BP stated Friday that it had spent more than $1 billion in response and clean-up costs, and that those are only increasing as the oil slick reaches further along the Gulf Coast.
BP and Transocean will be liable for all the environmental clean-up costs, under both the Clean Water Act and the Comprehensive Environmental Response Compensation and Liability Act. Halliburton’s work as a contractor on the well may also make it liable for the costs.
How much each company ultimately has to pay remains to be seen. Transocean disclosed that it has an agreement under which BP would “assume full responsibility for and defend, release and indemnify us from any loss, expense, claim, fine, penalty or liability for pollution or contamination, including control and removal thereof, arising out of or connected with operations under the contract.” This provision will doubtless be the subject of litigation once the government figures out what is owed for the oil spill.
Thousands of lawsuits have already been filed against the companies by those harmed by the oil spill, but there is an interesting limit on the amount of economic damages they may be liable to pay. Under the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez oil spill, an “offshore facility” is liable for “the total of all removal costs plus $75,000,000.”
There is a bill in Congress called the Big Oil Bailout Prevention Liability Act of 2010, introduced in early May, to raise the cap on economic damages to $10 billion. But as Professor Hall points out, “the $75 million cap does not apply to claims in state court or under maritime law, and as we saw from the Exxon case, that’s where most victims and potential plaintiffs will turn to pursue large claims against BP and other parties.” In addition, the cap is not available if there was a violation of federal safety regulations at the facility, a real possibility given what happened on the Deepwater Horizon.
One area in which the Exxon Valdez spill may actually help BP and Transocean is the limit the Supreme Court imposed on punitive damages in its 2008 decision in Exxon Shipping Co. v. Baker, which only allows such damages up to the amount of compensatory damages awarded. Juries in the Gulf Coast region will remember this spill long after its effects are mitigated, but the limit on punitive damages may keep down the costs of the disaster somewhat.
Finally, and perhaps inevitably, a securities class action complaint was filed against BP on May 21 alleging that the company misled investors about the risks from deep water drilling. We are unlikely to see claims against the directors of the companies for breach of a fiduciary duty because BP is a British corporation and Transocean is a Swiss company, and neither country’s laws are as accommodating of shareholder suits as the law in the United States. So at least that’s one less case their lawyers will have to deal with.
– Peter J. Henning
Looking for Liability in BP’s Gulf Oil Spill
June 7, 2010, 9:30 AM
Peter J. Henning follows issues involving securities law and white-collar crime for DealBook’s White Collar Watch.
Attorney General Eric H. Holder Jr. made a commitment during a visit to the Gulf Coast last week that the Justice Department would be looking at both civil and criminal charges to ensure accountability for anyone responsible for the oil spill at BP’s oil rig. In his statement, the attorney general said that “if we find evidence of illegal behavior, we will be forceful in our response.”
The likelihood of civil enforcement proceedings for violations of various environmental laws is almost guaranteed for BP and Transocean, the operator and owner, respectively, of the Deepwater Horizon rig that exploded back in April. Halliburton was working as a contractor for Transocean in cementing the well, so it also may be named.
Mr. Holder’s emphasis on using criminal provisions makes it clear that the companies, and perhaps even some individuals at them, will be the targets for prosecution. Here is a preliminary assessment of the various types of litigation the environmental disaster is likely to spawn.
Criminal Prosecution
Criminal charges are probable under the environmental laws that govern discharging pollutants in navigable waterways and that cause harm to migratory birds. My colleague, Prof. Noah Hall, an expert in environmental law, summarized on the Great Lakes Law blog some potential criminal environmental charges and penalties that may result:
Government attorneys have many laws to use in this case, and would likely pursue violations for discharge of pollution under the Clean Water Act. Criminal charges could be brought under the Refuse Act and the Migratory Bird Treaty Act, both of which use strict liability, so the government would not need to show that BP intended to violate the law or was even negligent in its operation and response. Fines are the most likely outcome — Exxon was nailed for $150 million after the 1989 Valdez spill in Alaska, although the court forgave $125 million of the fine in recognition of Exxon’s cooperation in cleaning up the spill and paying certain private claims. The money would likely go to some combination of special funds, the federal government, and state governments.
Strict liability provisions like those included in the Refuse Act and Migratory Bird Treaty Act mean that BP and Transocean would be liable for any violation, regardless of whether it occurred accidentally or as a result of intentional misconduct. For a Clean Water Act violation, 33 U.S.C. § 1319(c)(1), the government would only have to show negligence, which is a fairly low threshold for criminal liability.
Whether prosecutors pursue a case against a company in this situation would usually depend on how cooperative it was in clean-up efforts and complying with requests for information because there are no real defenses to charges under these provisions. Given the pressure on the Obama administration over its response to the oil spill, however, criminal charges are much more likely than in other cases.
Criminal penalties for environmental violations are not as severe as for other white-collar crimes. For a Clean Water Act violation, the maximum fine is $25,000 a day and up to one year in prison for a conviction based on negligence, and $50,000 a day and up to three years in prison for a conviction based on conduct shown to be done “knowingly.”
A greater danger for both the companies and any individual employees would be if false statements were made to the government in obtaining any permits or approvals for operating the rig or in compliance reports about applicable environmental and safety regulations. The broad federal false statement statute, 18 U.S.C. § 1001, makes it a crime to make any “materially false, fictitious, or fraudulent statement or representation” in connection with “any matter within the jurisdiction of the” federal government.
Unlike the environmental statutes, a violation of this provision is subject to a five-year prison term for each violation. More important, under the federal sentencing guidelines, the recommended sentence can be based on the amount of the loss caused to victims of the crime, and this could include the environmental damage caused by the oil spilling up on the beaches of the Gulf Coast. That loss calculation could lead to a lengthy prison term if an individual were found to have made multiple false statements, while the potential fine for a company could be multiplied significantly.
No individuals have been identified as targets of the criminal investigation, which is still in its earliest stages, and it remains to be seen whether anyone will be accused of wrongdoing. At this point, it does not appear any senior executives at BP, Transocean, or Halliburton would be the focus of a criminal case. Although the oil spill is a significant event, the Deepwater Horizon rig was only a small part of their global operations, so it is unlikely senior executives had much if any awareness of its operations before the disaster.
Civil Liability
The direct costs to BP from the oil spill have escalated significantly since April. In its earlier disclosures to shareholders right after the rig accident, the company estimated that the costs would be approximately $6 million a day. BP stated Friday that it had spent more than $1 billion in response and clean-up costs, and that those are only increasing as the oil slick reaches further along the Gulf Coast.
BP and Transocean will be liable for all the environmental clean-up costs, under both the Clean Water Act and the Comprehensive Environmental Response Compensation and Liability Act. Halliburton’s work as a contractor on the well may also make it liable for the costs.
How much each company ultimately has to pay remains to be seen. Transocean disclosed that it has an agreement under which BP would “assume full responsibility for and defend, release and indemnify us from any loss, expense, claim, fine, penalty or liability for pollution or contamination, including control and removal thereof, arising out of or connected with operations under the contract.” This provision will doubtless be the subject of litigation once the government figures out what is owed for the oil spill.
Thousands of lawsuits have already been filed against the companies by those harmed by the oil spill, but there is an interesting limit on the amount of economic damages they may be liable to pay. Under the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez oil spill, an “offshore facility” is liable for “the total of all removal costs plus $75,000,000.”
There is a bill in Congress called the Big Oil Bailout Prevention Liability Act of 2010, introduced in early May, to raise the cap on economic damages to $10 billion. But as Professor Hall points out, “the $75 million cap does not apply to claims in state court or under maritime law, and as we saw from the Exxon case, that’s where most victims and potential plaintiffs will turn to pursue large claims against BP and other parties.” In addition, the cap is not available if there was a violation of federal safety regulations at the facility, a real possibility given what happened on the Deepwater Horizon.
One area in which the Exxon Valdez spill may actually help BP and Transocean is the limit the Supreme Court imposed on punitive damages in its 2008 decision in Exxon Shipping Co. v. Baker, which only allows such damages up to the amount of compensatory damages awarded. Juries in the Gulf Coast region will remember this spill long after its effects are mitigated, but the limit on punitive damages may keep down the costs of the disaster somewhat.
Finally, and perhaps inevitably, a securities class action complaint was filed against BP on May 21 alleging that the company misled investors about the risks from deep water drilling. We are unlikely to see claims against the directors of the companies for breach of a fiduciary duty because BP is a British corporation and Transocean is a Swiss company, and neither country’s laws are as accommodating of shareholder suits as the law in the United States. So at least that’s one less case their lawyers will have to deal with.
– Peter J. Henning
Friday, May 14, 2010
Glenn Beck thinks God is talking through him!
| The Colbert Report | Mon - Thurs 11:30pm / 10:30c | |||
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Friday, May 07, 2010
Monday, April 05, 2010
WikiLeaks VIDEO Exposes 2007 'Collateral Murder' In Iraq
WikiLeaks VIDEO Exposes 2007 'Collateral Murder' In Iraq
First Posted: 04- 5-10 12:54 PM | Updated: 04- 5-10 02:43 PM
Calling it a case of "collateral murder," the WikiLeaks Web site today released harrowing until-now secret video of a U.S. Army Apache helicopter in Baghdad in 2007 repeatedly opening fire on a group of men that included a Reuters photographer and his driver -- and then on a van that stopped to rescue one of the wounded men.
None of the members of the group were taking hostile action, contrary to the Pentagon's initial cover story; they were milling about on a street corner. One man was evidently carrying a gun, though that was and is hardly an uncommon occurrence in Baghdad.
Reporters working for WikiLeaks determined that the driver of the van was a good Samaritan on his way to take his small children to a tutoring session. He was killed and his two children were badly injured.
In the video, which Reuters has been asking to see since 2007, crew members can be heard celebrating their kills.
"Oh yeah, look at those dead bastards," says one crewman after multiple rounds of 30mm cannon fire left nearly a dozen bodies littering the street.
A crewman begs for permission to open fire on the van and its occupants, even though it has done nothing but stop to help the wounded: "Come on, let us shoot!"
Story continues below
Two crewmen share a laugh when a Bradley fighting vehicle runs over one of the corpses.
And after soldiers on the ground find two small children shot and bleeding in the van, one crewman can be heard saying: "Well, it's their fault bringing their kids to a battle."
The helicopter crew, which was patrolling an area that had been the scene of fierce fighting that morning, said they spotted weapons on members of the first group -- although the video shows one gun, at most. The crew also mistook a telephoto lens for a rocket-propelled grenade.
The shooting, which killed Reuters photographer Namir Noor-Eldeen, 22, and driver Saeed Chmagh, 40, took place on July 12, 2007, in a southeastern neighborhood of Baghdad.
The next day, the New York Times reported the military's official cover story:
The American military said in a statement late Thursday that 11 people had been killed: nine insurgents and two civilians. According to the statement, American troops were conducting a raid when they were hit by small-arms fire and rocket-propelled grenades. The American troops called in reinforcements and attack helicopters. In the ensuing fight, the statement said, the two Reuters employees and nine insurgents were killed.
"There is no question that coalition forces were clearly engaged in combat operations against a hostile force," said Lt. Col. Scott Bleichwehl, a spokesman for the multinational forces in Baghdad.
The video shows otherwise.
Washington Post reporter David Finkel described the incident -- and the video -- in great detail in his September 2009 book, "The Good Soldiers". A summary can be found here.
Finkel also described a review session after Lt. Col. Ralph Kauzlarich, commander of the Army's 2nd Battalion, 16th Infantry Regiment and his soldiers returned to base, which "concluded that everyone had acted appropriately." (Kauzlarich was also involved in the Army's Pat Tillman cover-up, and later told ESPN that the reluctance of Tillman's parents to accept the military's story that he was killed by enemy action, rather than friendly fire, was the unfortunate result of their lack of Christian faith.)
WikiLeaks, a small, independent Web site that invites people to post information and documents that powerful interests would prefer to keep secret, says it received the video and supporting documents from military whistleblowers.
Julian Assange, the editor of the site, said the killings either violated the the army's rules of engagement, or those rules of engagement "are very, deeply wrong."
Unveiling the video at the National Press Club on Monday morning, Assange said the helicopter crew approached its job as if it were a video game, not something involving human lives. Their desire was simply to kill," he said. "Their desire was to get high scores on that computer game."
Reuters released this statement from David Schlesinger, editor-in-chief of Reuters news: "The deaths of Namir Noor-Eldeen and Saeed Chmagh three years ago were tragic and emblematic of the extreme dangers that exist in covering war zones. We continue to work for journalist safety and call on all involved parties to recognise the important work that journalists do and the extreme danger that photographers and video journalists face in particular. The video released today via Wikileaks is graphic evidence of the dangers involved in war journalism and the tragedies that can result."
First Posted: 04- 5-10 12:54 PM | Updated: 04- 5-10 02:43 PM
Calling it a case of "collateral murder," the WikiLeaks Web site today released harrowing until-now secret video of a U.S. Army Apache helicopter in Baghdad in 2007 repeatedly opening fire on a group of men that included a Reuters photographer and his driver -- and then on a van that stopped to rescue one of the wounded men.
None of the members of the group were taking hostile action, contrary to the Pentagon's initial cover story; they were milling about on a street corner. One man was evidently carrying a gun, though that was and is hardly an uncommon occurrence in Baghdad.
Reporters working for WikiLeaks determined that the driver of the van was a good Samaritan on his way to take his small children to a tutoring session. He was killed and his two children were badly injured.
In the video, which Reuters has been asking to see since 2007, crew members can be heard celebrating their kills.
"Oh yeah, look at those dead bastards," says one crewman after multiple rounds of 30mm cannon fire left nearly a dozen bodies littering the street.
A crewman begs for permission to open fire on the van and its occupants, even though it has done nothing but stop to help the wounded: "Come on, let us shoot!"
Story continues below
Two crewmen share a laugh when a Bradley fighting vehicle runs over one of the corpses.
And after soldiers on the ground find two small children shot and bleeding in the van, one crewman can be heard saying: "Well, it's their fault bringing their kids to a battle."
The helicopter crew, which was patrolling an area that had been the scene of fierce fighting that morning, said they spotted weapons on members of the first group -- although the video shows one gun, at most. The crew also mistook a telephoto lens for a rocket-propelled grenade.
The shooting, which killed Reuters photographer Namir Noor-Eldeen, 22, and driver Saeed Chmagh, 40, took place on July 12, 2007, in a southeastern neighborhood of Baghdad.
The next day, the New York Times reported the military's official cover story:
The American military said in a statement late Thursday that 11 people had been killed: nine insurgents and two civilians. According to the statement, American troops were conducting a raid when they were hit by small-arms fire and rocket-propelled grenades. The American troops called in reinforcements and attack helicopters. In the ensuing fight, the statement said, the two Reuters employees and nine insurgents were killed.
"There is no question that coalition forces were clearly engaged in combat operations against a hostile force," said Lt. Col. Scott Bleichwehl, a spokesman for the multinational forces in Baghdad.
The video shows otherwise.
Washington Post reporter David Finkel described the incident -- and the video -- in great detail in his September 2009 book, "The Good Soldiers". A summary can be found here.
Finkel also described a review session after Lt. Col. Ralph Kauzlarich, commander of the Army's 2nd Battalion, 16th Infantry Regiment and his soldiers returned to base, which "concluded that everyone had acted appropriately." (Kauzlarich was also involved in the Army's Pat Tillman cover-up, and later told ESPN that the reluctance of Tillman's parents to accept the military's story that he was killed by enemy action, rather than friendly fire, was the unfortunate result of their lack of Christian faith.)
WikiLeaks, a small, independent Web site that invites people to post information and documents that powerful interests would prefer to keep secret, says it received the video and supporting documents from military whistleblowers.
Julian Assange, the editor of the site, said the killings either violated the the army's rules of engagement, or those rules of engagement "are very, deeply wrong."
Unveiling the video at the National Press Club on Monday morning, Assange said the helicopter crew approached its job as if it were a video game, not something involving human lives. Their desire was simply to kill," he said. "Their desire was to get high scores on that computer game."
Reuters released this statement from David Schlesinger, editor-in-chief of Reuters news: "The deaths of Namir Noor-Eldeen and Saeed Chmagh three years ago were tragic and emblematic of the extreme dangers that exist in covering war zones. We continue to work for journalist safety and call on all involved parties to recognise the important work that journalists do and the extreme danger that photographers and video journalists face in particular. The video released today via Wikileaks is graphic evidence of the dangers involved in war journalism and the tragedies that can result."
Bush On Jobs: The Worst Track Record On Record
Bush On Jobs: The Worst Track Record On Record
President George W. Bush entered office in 2001 just as a recession was starting, and is preparing to leave in the middle of a long one. That’s almost 22 months of recession during his 96 months in office.
His job-creation record won’t look much better. The Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration and only slightly better than President George H.W. Bush did in his four years in office.
Here’s a look at job creation under each president since the Labor Department started keeping payroll records in 1939. The counts are based on total payrolls between the start of the month the president took office (using the final payroll count for the end of the prior December) and his final December in office.
Because the size of the economy and labor force varies, we also calculate in percentage terms how much the total payroll count expanded under each president. The current President Bush, once taking account how long he’s been in office, shows the worst track record for job creation since the government began keeping records. –Sudeep Reddy
The chart can be sorted by any of the following categories.
President Jobs created Jobs at end of term Jobs at start of term Payroll expansion Jobs created per year in office Population growth Percent change in population
George W. Bush 3.0 million 135.5 million 132.5 million 2.3% 375,000 22.0 million 7.7%
Bill Clinton 23.1 million 132.5 million 109.4 million 21.1% 2,900,000 25.2 million 8.9%
George H.W. Bush 2.5 million 109.4 million 106.9 million 2.3% 625,000 12.5 million 4.8%
Ronald Reagan 16.0 million 106.9 million 90.9 million 17.6% 2,000,000 17.3 million 7%
Jimmy Carter 10.5 million 90.9 million 80.4 million 13.1% 2,600,000 9.8 million 4.3%
Gerald Ford 1.8 million 80.4 million 78.6 million 2.3% 745,000 5.1 million 2.3%
Richard Nixon 9.4 million 78.6 million 69.2 million 13.6% 1,700,000 12.3 million 5.7%
Lyndon Johnson 11.9 million 69.2 million 57.3 million 20.8% 2,300,000 11.3 million 5.6%
John F. Kennedy 3.6 million 57.3 million 53.7 million 6.7% 1,200,000 8.2 million 4.3%
Dwight Eisenhower 3.5 million 53.7 million 50.2 million 7% 438,000 23.3 million 12.8%
Harry Truman 8.4 million 50.2 million 41.8 million 20.1% 1,100,000 N/A N/A
NOTE: Earlier version of this chart had transposed the headings on the Jobs at start of term and Jobs at end of term columns.
President George W. Bush entered office in 2001 just as a recession was starting, and is preparing to leave in the middle of a long one. That’s almost 22 months of recession during his 96 months in office.
His job-creation record won’t look much better. The Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration and only slightly better than President George H.W. Bush did in his four years in office.
Here’s a look at job creation under each president since the Labor Department started keeping payroll records in 1939. The counts are based on total payrolls between the start of the month the president took office (using the final payroll count for the end of the prior December) and his final December in office.
Because the size of the economy and labor force varies, we also calculate in percentage terms how much the total payroll count expanded under each president. The current President Bush, once taking account how long he’s been in office, shows the worst track record for job creation since the government began keeping records. –Sudeep Reddy
The chart can be sorted by any of the following categories.
President Jobs created Jobs at end of term Jobs at start of term Payroll expansion Jobs created per year in office Population growth Percent change in population
George W. Bush 3.0 million 135.5 million 132.5 million 2.3% 375,000 22.0 million 7.7%
Bill Clinton 23.1 million 132.5 million 109.4 million 21.1% 2,900,000 25.2 million 8.9%
George H.W. Bush 2.5 million 109.4 million 106.9 million 2.3% 625,000 12.5 million 4.8%
Ronald Reagan 16.0 million 106.9 million 90.9 million 17.6% 2,000,000 17.3 million 7%
Jimmy Carter 10.5 million 90.9 million 80.4 million 13.1% 2,600,000 9.8 million 4.3%
Gerald Ford 1.8 million 80.4 million 78.6 million 2.3% 745,000 5.1 million 2.3%
Richard Nixon 9.4 million 78.6 million 69.2 million 13.6% 1,700,000 12.3 million 5.7%
Lyndon Johnson 11.9 million 69.2 million 57.3 million 20.8% 2,300,000 11.3 million 5.6%
John F. Kennedy 3.6 million 57.3 million 53.7 million 6.7% 1,200,000 8.2 million 4.3%
Dwight Eisenhower 3.5 million 53.7 million 50.2 million 7% 438,000 23.3 million 12.8%
Harry Truman 8.4 million 50.2 million 41.8 million 20.1% 1,100,000 N/A N/A
NOTE: Earlier version of this chart had transposed the headings on the Jobs at start of term and Jobs at end of term columns.
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