Who Will Pay For Oil Spill Cleanup?
The New York Times suggests that untangling liability will be necessary. In this case, BP, Transocean and Deepwater Horizon all have insurance protecting them against an accidental release of this nature.
Yesterday, NPR posted an article suggesting Haliburtan may be responsible because they had cemented the well within 24 hours of the blow out, intimating that the cement had not sealed the well properly allowing hydrocarbons or liquids into the well upsetting hydrostatic balances.
The litigation amongst potentially responsible parties and their insurers will ensue with the objective of covering as much of the clean up costs as possible through insurance. After all of that is resolved and the responsible parties have cleaned up the gulf as much as possible, Natural Resource Damage Assessment (NRDA) will come into play.
An NRDA determines the financial payout to NOAA and the FWS, the Trustees responsible for the public’s natural resources, sea turtles, birds the fishery and wetlands, etc. The economic damages are calculated to determine how much money it will cost to restore the affected area to pre-spill conditions, the difference being restoration verses clean-up.
However, there is generally litigation associated with an NRDA to determine an equitable damage figure. The baseline condition of the resources is a major consideration in NRDA cases.
For the recent Gulf spill, responsible parties may claim the fishery was already significantly damaged by Hurricane Katrina and wetland areas have been damaged by previous oil spills and had not recovered when this spill occurred.
A more accurate statement by the Obama administration would be that many companies will be involved in paying for the cleanup and that BP will be responsible for paying for restoration.
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