Going beyond a mere formal milestone, BP has formally “chosen to waive” the legal limit on its liability under the Oil Pollution Act (OPA) – the 1990 law that amended the Clean Water Act to essentially create the framework for major oil spill response. OPA exploded onto the national stage shortly after the BP spill when it seemed to limit certain liabilities to $75 million, barely a drop in the bucket when considering actual damages incurred.
BP has, since the early days of the spill, said it would waive those liability limits, but as with so many issues relating to this spill, there was never any documentation provided on the matter. And, as we’re likely to see on other issues, the lack of documentation became a bit of a problem for the court. The United States District Court, Eastern District of Louisiana, during a status conference on Oct. 15, asked for clarification on the issue.
In response, BP is filing its waiver. And there are at least five important positions taken by BP, in addition to simply waiving the $75 million cap:
- The company says it has already spent well more than the $75 million cap – which is clearly true. But that position also implies that the company considers its payment applied to that cap, even though those payments may not have been accounted for or distributed as anticipated by the OPA.
- BP included its favorite “wiggle word” in its response, with its lawyers asserting that: “… BP already has paid claims many times over the OPA limit and will live up to its public commitment to pay all legitimate claims made in connection with the Deepwater Horizon incident and the resulting oil spill.” This is important, because for the first time BP is making a statement to the court that “legitimate” is a key term.
- The company – to nobody’s surprise – stresses that it’s not admitting any wrongdoing, especially taking aim at the term “gross negligence” that would greatly increase both fines and liability. The company’s lawyers: “… however, by making this statement, BP and its affiliates are not admitting anything about their conduct and, indeed, specifically deny that they have engaged in any gross negligence in connection with the Deepwater Horizon incident and the resulting oil spill.”
- BP “urges” other responsible parties to step up and make similar waivers, which in most cases they are unlikely to do. You could see rig-owner Transocean doing something similar, but not any of the smaller companies that still cling to the hope that they will escape being named a “responsible party.”
- BP asserts the option of seeking reimbursement from other companies for money it pays out, stating that: “Even if other Responsible Parties refuse to make such a commitment, it will not affect BP’s pledge to step forward in the first instance to pay all legitimate claims in an efficient and fair manner. BP reserves the right to seek reimbursement or contribution from other Responsible Parties and third parties for claims, costs, expenses, and liabilities arising out of the Deepwater Horizon incident and the resulting oil spill.”
In some ways, BP’s four-page statement puts into writing some of the assumptions we’ve had about the company’s strategy going forward: Drag others into the fray, seem to make a firm commitment while including wiggle room, and remembering that one of the biggest issues of its corporate life is “gross negligence.” No real surprises, but it’s interesting to read between the lines in what amounts to a second chapter in the BP defense manual, the first, of course, being that bogus “internal investigation” that essentially blamed its workers for the disaster.
© Smith Stag, LLC 2010 – All Rights Reserved