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Diving into the Wreck: BP and Kenneth Feinberg’s Gulf Coast Gambit

48 Pages Posted: 27 Feb 2012  

George W. Conk

Fordham Law School

Date Written: February 27, 2012

Abstract

The 1990 Oil Pollution Act mandate - that a party “responsible” for an oil spill establish a “procedure” to pay interim damages - has largely removed the courts from the process of determining scope of liability and turned it over to the private ordering of the claims bureau established by the responsible parties designated by the President under the OPA.

BP put its “procedure” in the hands of a lawyer of solomonic reputation - Kenneth Feinberg. His broad settlement authority was designed to produce both prompt compensation for current losses (without prejudice to future claims) and early settlements of claims for any future losses. Through its Gulf Coast Claims Facility BP - making interim payments - has had a nearly free hand in determining the extent of its liability under the OPA. Though plaintiffs lawyers have moved to “supervise” the process through the MDL, neither a negotiated grid nor any court ruling has defined the scope of liability.

BP’s private claims resolution process is almost entirely unregulated. Only after months of jaw-boning by Gulf Coast Attorneys General and the U.S. Attorney General did BP agree to be audited. No regulations govern responsible parties who establish a “procedure”. The GCCF’s allocations are often impenetrable. BP’s GCCF can be described as the pseudo-fund model for mass tort claims resolution. Though its name suggests an independent fund, the GCCF is in fact merely BP’s statutorily compelled mechanism for satisfying economic loss and clean-up claims. In the absence of either regulatory guidance or court rulings on scope of liability the settlement parameters are indistinct to claimants. Even BP is uneasy because Feinberg’s settlement offers under the OPA go well beyond the narrow parameters of maritime courts which in spill claims have historically denied compensation to all in the supply chain except fishermen and those who suffered property damage.

The executive branch should examine the OPA’s regulatory gap. No regulations govern the manner in which a solvent polluter meets its statutory clean-up and compensation responsibilities. There is no liability guidance, no audit, no reporting, no monitoring of the company’s ability to meet its obligations, no review of its success in meeting its obligations. If the executive branch does not take this up, Congress in its oversight capacity should do so.

Suggested Citation

Conk, George W., Diving into the Wreck: BP and Kenneth Feinberg’s Gulf Coast Gambit (February 27, 2012). Roger Williams University Law Review, Vol. 17, No. 137, 2012; Fordham Law Legal Studies Research Paper No. 2011837. Available at SSRN: https://ssrn.com/abstract=2011837

George W. Conk (Contact Author)

Fordham Law School ( email )

150 West 62nd Street
New York, NY 10023
United States
212-636-7446 (Phone)

HOME PAGE: http://law.fordham.edu

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