World and Nation

The oil spill: tackling questions of liability, cleanup, & consequences

On the evening of April 20, the oil rig Deepwater Horizon exploded about 50 miles off the Louisiana coast in the Gulf of Mexico, killing 11 workers and injuring 17. Two days later it sank in 5,000 feet of water.

Crude oil soon began streaming out of a broken pipe attached to a well a mile below sea level. Within days much of the nation was transfixed by a frantic effort by BP and the federal government to plug the leaks and contain a massive spill threatening the gulf coastline and the ocean itself.

As the crisis has unfolded, confusion has soared about the oil spill’s gravity, the potential effects on coastal residents, the risks to wildlife and who will foot the costs of the cleanup.

Following is an oil spill primer:

Q: Who owned the oil rig?

A: The 9-year-old rig was owned by Transocean, a giant Swiss offshore drilling contractor. It had been leased to BP for roughly $500,000 a day.

Q: Who is legally responsible for the spill?

A: BP and Transocean have been named by the Coast Guard as “responsible parties,” which means they must cover all cleanup costs, including those incurred by the Coast Guard and other government employees.

They will also have to compensate people and businesses for things like property damage, lost business revenue and harm to ecosystems. BP’s liability bill is capped at $75 million and Transocean’s probably at $65 million, but those caps could be lifted if the companies were found to have acted with gross negligence or to have broken rules that led to the spills.

Or the government could rule that the spill involves more than one incident, which would mean higher caps. And three senators have introduced legislation to raise the $75 million cap to $10 billion.

Cameron, the company that manufactured a “blowout preventer” that failed to function after the explosion, and Halliburton, which performed drilling services like cementing, could in turn face claims from BP or Transocean.

Third parties like fishermen could sue the responsible parties or companies like Cameron and Halliburton. The companies’ insurers face claims too.

Q: How much will the cleanup cost?

A: It depends on how much hits shore. Exxon spent $3.4 billion in cleanup costs, fines and compensatory payments for the 1989 Valdez spill in Alaska. When the Cosco Busan hit ta bridge near San Francisco in 2007 and spilled 50,000 gallons of fuel, the cleanup cost $70 million.