BP OIL SPILL ON THE DEEPWATER HORIZON OIL RIG PESONS AND ENTITIES THAT MAY HAVE A CLAIM FOR DAMAGES
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1 BP OIL SPILL ON THE DEEPWATER HORIZON OIL RIG PESONS AND ENTITIES THAT MAY HAVE A CLAIM FOR DAMAGES 1. Fishermen, oyster harvesters, shrimpers, or businesses involved in the processing and packaging for the fishing industry; 2. Owners, crew members or employees of charter and private boats, condominiums, restaurants, marinas and docks; 3. Persons in the tourism industry; 4. Owners of private property, including landlords; and 5. Local city, county, parrish, or other political subdivisions. DEFENDANTS BP, PLC, and BP America, Inc. Transocean Halliburton Energy Services Cameron International Corporation Leased the drilling platform from Transocean. Leased the drilling platform to BP. Involved in cementing/securing the well and cap. Supplied the oil rigs failed blow out prevention equipment. CLAIMS-OVERVIEW Under the Oil Pollution Act of 1990 (OPA) (33 U.S.C.A ), state and the federal governments can get full recovery for their cleanup costs. 1
2 Individuals can bring claims for damages under Oil Pollution Act of 1990 (OPA). However the courts have held the clear text of 2713 creates a mandatory condition precedent barring all OPA claims unless and until a claimant has presented her claims in compliance with 2713(a) and either: (1) all responsible parties deny all liability; or (2) the claim is not settled by payment within 90 days after (A) the claim was presented, or (B) advertising was begun under section 2714(b) of the Act, whichever is later. Boca Ciega Hotel, Inc. v. Bouchard Transportation Company, Inc., 51 F.3d 235, 240 (11 th Cir. 1995). Private claims and any other government claims are capped by OPA and by Louisiana state law at $75 million 1 but if there's gross negligence or federal safety law violations damages are not limited. Whether OPA preempts or repeals punitive damages is in dispute. There may be a cause of action for simple negligence under general maritime law. Lawsuits can be brought under state law, and Alabama, Florida, Mississippi and Texas either have no damages cap in their oil spill statutes or allow state law claims that are not subject to damages caps. These states also allow punitive damages. 1 A U.S. Senate panel on Wednesday, June 30, 2010, voted to remove the cap on damage claims that BP and other companies would have to pay for disasters like the Gulf of Mexico oil spill. The Senate Environment and Public Works Committee approved the measure by a voice vote. The current limit on claims for damage that goes beyond the costs of cleanup is $75 million. That is widely regarded on Capitol Hill as too low. The U.S. House Transportation and Infrastructure Committee will on Thursday take up a related measure to remove the liability cap for offshore operations. It isn't clear when the bills will come up for a vote in the full Senate or the U.S. House of Representatives, or be combined into a single package and sent to U.S. President Barack Obama to sign into law. 2
3 The great unknown is the Oil Spill Liability Trust Fund (OSLTF), which has "essentially no track record." Claimants will have to present claims to BP first and if they don't get full payment, then turn to the OSLTF, whose maximum payout for the BP Gulf oil spill is $1 billion. Claims are processed in the order received and paid out in the order approved. You may choose to seek compensation directly from BP and you are required to if you are proceeding under OPA. BP has 90 days to respond to your claim. If BP fails to process your claim within 90 days or BP denies your claim or you are unsatisfied by BP s financial offer, you have a right to seek payment from the Oil Spill Liability Trust Fund 2. Congress created the trust fund after the Exxon Valdez spill to cover removal costs or damages when responsible parties are unknown or refuse to pay. Claims must be submitted to the Coast Guard s National Pollution Funds Center (NPFC) ( You have three years from the incident to file a claim with the Oil Spill Liability Trust Fund. If you accept money from the trust fund, you cannot later file a lawsuit against any party to recover costs or damages which were the subject of the compensated claim. If payment is received from another source, you must reimburse the fund. Accepting payment from BP before the full extent of your damage is known may prevent the filing of a lawsuit seeking compensation in the future. 2 THE OIL SPILL LIABILITY TRUST FUND The Oil Pollution Act o f 1990 (OPA90) created the Oil Spill Liability Trust Fund (Fund). Under OPA90, a party responsible for an unlawful discharge of oil is liable for the removal costs and damages of the oil spill. Removal costs include all costs of removing and cleaning up oil from water and shorelines. Damages include injury to property, economic losses resulting from destruction of property, loss of subsistence use of natural resources, and loss of profits or earning capacity. The Fund may be used to pay for removal costs and damages resulting from an oil spill. The Fund is financed primarily through taxation. Currently, the financing rate is 8 cents per barrel for crude oil and petroleum products. The total amount that may be paid out of the Fund for one oil spill incident is $1 billion. The Fund is administered by the U.S. Coast Guard s National Pollution Funds Center (NPFC). 3
4 Joining a class-action lawsuit against BP may prevent the plaintiff from receiving short-term compensation from BP. BP is unlikely to consider a claim if the person or entity is a party in litigation against them and the Oil Spill Liability Trust Fund will not consider a claim that is the subject of a pending lawsuit. There is a $1-billion cap on expenditures from the Oil Spill Liability Trust Fund per incident and claims are processed in the order they are received. BEFORE MAKING A CLAIM TO THE OIL SPILL LIABILITY TRUST FUND Before any claims may be presented to the Fund, you must first present your claim to the responsible party (BP). If BP denies the claim, or does not settle the claim within 90 days, you may either file a lawsuit against BP or file a claim with the Oil Spill Liability Trust Fund. If you file both a lawsuit against BP and a claim with the Fund, the claim will not be approved while the lawsuit is pending. Damages related to the Deepwater Horizon event can be submitted to BP by phone ( ) or online at If BP s payment of a claim is for less than the full amount of your damages, you may be able to recover the remaining damages in the future. This will depend on the terms of any release signed with the BP. CLAIMS TIMELINE UNDER THE FUND To qualify for compensation under the Oil Spill Liability Trust Fund, you must make your claim within certain time limitations. Claims for clean-up costs must be brought within 6 years from the date of completion of all removal actions. Claims for damages must be brought within 3 years after the date on which the injury and its connection with the oil spill was reasonably discoverable. LOAN PROGRAMS The OPA90 requires that the President establish a loan program under the Fund to provide interim assistance to fishermen and aquaculture producers 4
5 affected by an oil spill while their claims are pending. To be eligible for a loan, fishermen and aquaculture producers must have incurred damages, made a claim to the RP or the Fund that is pending, and have not received a payment from the RP for interim or short-term damages for a claim to the RP that is pending. CONTENT OF CLAIMS TO THE OIL SPILL LIABILITY TRUST FUND You are responsible for providing all evidence, information, and documentation deemed necessary to support your claim. General requirements include the following: The claim must be in writing and for a specified dollar amount for uncompensated damages or removal costs. If, at any time during the pendency of your claim against the Fund, you receive any compensation for the claimed amounts, you must immediately amend the claim. You must specify all of your known removal costs or damages arising out of the oil spill. You must provide information concerning any insurance which may cover the removal costs and damages for which compensation is claimed. You must include an accounting, including the source and value, of all other compensation received, applied for, or potentially available as a consequence of the incident out of which the claim arises, including, but not limited to, monetary payments, goods or services, or other benefits. REIMBURSEMENT OF REMOVAL COSTS To make a claim for removal costs, you must show that: 1. The actions taken were necessary to prevent, minimize, or mitigate the effects of the oil spill; 2. The removal costs were incurred as a result of those actions; and 5
6 3. The actions taken were determined by the Federal On-Scene Coordinator (FOSC) to be consistent with the National Contingency Plan or were directed by the FOSC. DAMAGES TO PROPERTY & ECONOMIC LOSSES FROM DESTRUCTION OF PROPERTY To make a claim for damages to property or for economic losses resulting from destruction of property, you must prove: 1. Ownership or leasehold interest in the property; 2. That the property was injured or destroyed; 3. The cost of repair or replacement; and 4. The value of the property both before and after the injury occurred. A claim for economic loss resulting from destruction of property also requires: Proof that the property was not available for use, and if it had been, the value of that use; Whether substitute property was available and, if used, the costs of using substitute property; And That the economic loss claimed was incurred as the result of the injury to or destruction of the property. LOST PROFITS OR IMPAIRED EARNING CAPACITY To make a claim for lost profits or impaired earning capacity resulting from property damage or natural resource damage, you must show: Your actual loss or impairment, without regard to the ownership or management of the property or natural resources; That the property or natural resources have been injured, destroyed, or lost; 6
7 That your income was reduced because of that injury and the amount of that reduction in income; The amount of profits or earnings in comparable periods and during the period when the claimed loss or impairment was suffered, established by tax returns, financial statements, and similar documents, including comparative figures for profits or earnings for the same or similar activities outside of the area affected by the incident; Whether alternative employment or business was available and undertaken, and if so, the amount of income received; and All income that you received as a result of the incident must be clearly indicated and any saved overhead and other normal expenses not incurred as a result of the incident must be established. If you are also making a claim for property damage and/or economic losses resulting from that damage, you must file the two claims together, with the loss of profits claim a subpart of the damage and/or economic loss claim. DAMAGES FOR LOSS OF SUBSISTENCE USE OF NATURAL RESOURCES To make a claim for the loss of subsistence use of natural resources, you must provide: Proof of your actual use, for subsistence, of the natural resources which have been injured, destroyed, or lost, without regard to the ownership or management of those resources; The identification of each specific natural resource for which compensation for loss of subsistence use is claimed; A description of the actual subsistence use made of each specific natural resource; A description of how and to what extent your subsistence use was affected by the injury to or loss of each specific natural resource; 7
8 A description of each effort made by you to mitigate your loss of subsistence use; and A description of each alternative source or means of subsistence available to you during the period of time for which loss of subsistence is claimed, and any compensation available to you for loss of subsistence. Subsistence is defined as: means of subsisting the minimum (as of food and shelter necessary to support life a source or means of obtaining the necessities of life. Webster s Dictionary. Subsistence use refers to using natural resources to obtain minimum necessities of life and not simply business activities. If you are making a claim for loss of subsistence use of natural resources and also for the loss of profits or impairment of earning capacity due to that loss, you must file the two claims together, with the loss of profits claim a subpart of the loss of subsistence use claim. SIMPLE NEGLIGENCE UNDER GENERAL MARITIME LAW- STATUTE OF LIMITATIONS Any claims that are brought under state law are subject the statutes of limitations in each state. The chart below sets forth the time periods in Alabama, Florida, Louisiana and Mississippi. Alabama-Ala. Code , Alabama Water Pollution Control Act You have two years to file a lawsuit based on negligence in Alabama. Florida- You have four years to file a lawsuit based on negligence in Florida. Fla. Stat et seq. Pollutant Discharge Prevention and Control Act Liabilities and defenses of 8
9 responsible parties; liabilities of third parties; financial security requirements for vessels; liability of cargo owners; notification requirements (5) Liability for property damages.--each responsible party is liable to any affected person for all damages as defined in s , excluding natural resource damages, suffered by that person as a result of the discharge. Louisiana- You have one year to file a lawsuit based on negligence in Louisiana. Mississippi- You have three years to file a lawsuit based on negligence in Mississippi. BRINGING A CLAIM PRIOR TO FILLING SUIT In the case of Boca Ciega Hotel, Inc., vs. Bouchard Transportation Company, Inc., 51 F3rd 235 (11th Cir. 1995), the court stated that the claims procedure set forth in the Oil Protection Act of 1990 (U.S.C.A ) "constitute a mandatory condition precedent to the filing of private lawsuits under the Act." Section 2713 of the Oil Protection Act of 1990 states that "except as provided in subsection (b) of this section, all claims for removal costs or damages shall be presented first to the responsible party or guarantor of the source designated under section 2714(a) of this title." Section 2701(32)(c) of the Oil Protection Act of 1990, defines "responsible party." And in this case that is BP and or the other defendants (BP, PLC, BP America, Inc., Transocean, Halliburton Energy Services and Cameron International Corporation). 9
10 BP has set up several different methods of presenting them with your claim. You can do so by phone or online. To make a claim by phone you need to call You will be asked some basic information, such as: your name address location of your loss if known primary contact number social security number date of birth occupation Next, you will be asked about the specific damage you are reporting. If your claim is for property damage, they will need to know about the nature of your property. Damages are recorded as "factors". For example, a person may have one property damage claim, yet, have more than one "factor" ie. a boat owner who claims loss of income and damage to the boat. If your claim is for loss of income, you will be asked about the nature of your income stream. You will be asked to provide historical proof of your income, and proof of the loss caused by the oil spill ie. a boat captain would be required to provide a copy of his fishing license, boat registration, and proof of past income (tax returns). If your claim is for bodily injury, you will be asked about the nature of your injury or illness. Once again, all injuries are recorded as "factors". You may only have one bodily injury claim, but several factors. You will be asked if you have sought out or received any medical treatment for your injuries or illness, and if so, the name of the doctor or facility providing the treatment and their address. You will need to obtain all of your medical records and to sign releases for those medical records. Once all of this information has been collected and entered into the system, you will be provided with a claim number and told a claims adjuster will follow up with you in 3 to 4 days. If you prefer to make your claim on line you can go to one of these web site addresses listed below: 10
11 You will be directed to fill out an on line claims form and will be told that you will receive either an or telephone call with your claim number within 3 to 4 days. Once your claim has been filed and a claim number assigned, your claim will be entered into the data base creating a First Notice of Loss, which is then sent to a Claim Manager, who reviews the claim and assigns the claim to the appropriate State Team. Complex claims are assigned to the Large Loss Unit. An adjuster is then assigned to the claim, and the adjuster then will contact you to discuss your claim, confirm your contact information, and advise you of the documentation you will need to support your claim. You will need to compile documents such as tax returns, charter agreements, purchase orders, any documentation you have which shows your prior income. Your ability to document your claim will determine whether your claim is processed and paid without the necessity of filing suit. The better your documentation, the greater the likelihood that your claim will be paid. BP will deny your claim if you do not have sufficient documentation. Here are a few examples from BP's website Loss of Income Claims "The information requested to support an economic loss claim can include tax records, trip tickets, wage loss statements, deposit slips, boat registration, and a copy of claimant's current fishing license. Commercial economic loss claims may require additional business specific records to support the claim. The information requested to support a loss of rental claim can include prior occupancy rates, cancellations, tax records, and bookkeeping records." 11
12 Property Damage Claims "Minor property damage claims can often be handled over the phone with the subsequent submission of supporting information, e.g., photographs and replacement or cleaning receipts. Larger property damage claims may require on-site inspection by a claims adjuster." Bodily Injury claims "The information requested to support a bodily injury claim can include medical records, medical bills, and pharmacy records." If you have sustained a Large Loss, which is defined as a claim with a large monetary value or a claim which is based on complex economic predictions of loss, you should submit your claim to ESIS Large Loss Team, P.O. Box 17160, Wilmington, DE These claims will be handled by experienced claims adjusters with the assistance of accountants and lawyers. As you might expect, financial documents supporting your claimed loss will be imperative. Finally, there is an opportunity to receive an interim payment from BP. Within 48 hours of receiving your documentation in support of your claim, your claim is supposed to be evaluated and you are supposed to be notified if BP will make an advance payment to you for your claim. BP's website states, "the advance payment will be up to the equivalent of one month lost income, based on the documentation you have provided to support the claim. This advance is not based on actual income and may need to be adjusted for any secondary payment if the advance exceeds actual income." If you are in need of a second payment, BP will make that payment based on your actual loss of income, which, once again, is based on the documents you provide. After having gone through all of these procedures, if BP either fails to make you an offer within 90 days of your presenting your claim, or makes you an offer which you feel is woefully insufficient, after the 90 days have passed, you do have the right to pursue an action in either State Court or Federal Court against BP. 12
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