Following the Exxon Valdez oil spill in 1989, Congress passed the Oil Pollution Act of 1990 (OPA), which provides for strict liability in oil spills like the Gulf oil spill. While estimates increase daily as to how much oil is leaking and the breadth of damage, OPA limits damages to $75 million, according to Christopher Kende of Cozen O’Connor. Kende, who handles complex multinational litigation in insurance, reinsurance, environmental, admiralty and maritime matters, spoke to HB ahead of presenting at HB’s Oil in the Gulf: Litigation & Insurance Coverage teleconference on May 26 at 2pm (Eastern Time) and seminar June 24-25 in Atlanta.
The ability to recover cleanup costs from a responsible party are not limited under OPA; however, claims for restoration of private property, economic loss and subsistence use fall under the $75 million cap, he said. There is a fund available under OPA providing up to $1 billion for claims relating to oil spills. The intent behind the fund was to discourage litigation, therefore, injured parties could foreclose their entitlement to submit a claim to the fund if they choose to litigate, he told HB. The fund has a right to subrogation and can pursue the responsible party after paying out claims.
There are exceptions to the $75 million cap, for example, if BP or another party being sued was found to have committed gross negligence, he said.
Watch a video of Kende explaining more about these laws and exceptions and potential legislation to raise the damages cap under OPA. Learn if pursuing litigation or alternative dispute resolution is the best option for you or your client under applicable laws. Kende also discusses recent legislative activity that could affect the amount of recoverable damages and what this means for insurers, various factors between the parties related to the Deepwater Horizon oil rig and issues pertaining to their insurance.