Gulf Spill:

Former NOAA general counsel Campbell discusses monetary damages, policy changes

As the former general counsel of the National Oceanic and Atmospheric Administration, Tom Campbell led the federal assessment of the damages caused by the Exxon Valdez oil spill. During today's OnPoint, Campbell, currently a partner at Pillsbury Winthrop Shaw Pittman, compares the scope of that incident to the recent BP oil spill in the Gulf of Mexico. He explains how disaster response has developed since Exxon Valdez and also discusses the potential litigation that may arise as a result of the Gulf spill.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Tom Campbell, former general counsel at the National Oceanic and Atmospheric Administration and currently a partner at the law firm Pillsbury. Tom, it's great to have you here.

Tom Campbell: It's a pleasure to be here, Monica.

Monica Trauzzi: Tom, you were general counsel at NOAA during the Exxon Valdez spill and you led the federal assessment of the damage caused by the accident. Many parallels are being drawn between that spill and the BP spill in the Gulf that happened in late April. In your view, how do the two incidents compare?

Tom Campbell: Well, I think they compare predominantly because of the size of the spill, the number of gallons of oil that have been spilled or are likely to be spilled in the BP case and the amount that was spilled at the Exxon Valdez. In addition, the geographic area is similar. It's going to cover a lot of terrain before this is all done. And, then finally, the size and scope of the government response, both on a state and a federal level, is comparable to what occurred on the Exxon Valdez, but it's almost as instructive looking at the differences as it is to look at the similarities.

Monica Trauzzi: And some of those differences are?

Tom Campbell: Well, in the Exxon case we were not able to get dispersants out into the environment and so the key, when you're dealing with an oil spill, is keeping the oil off of the shore. The greatest injury occurs to the public and to the environment when oil hits the shoreline. It gets into the wetlands, gets onto the beaches, that's where the damage occurs. With the use of dispersants not as much of the oil is hitting the shoreline. In addition to that, they've been using controlled burns and those controlled burns actually limit the amount that make it to the shoreline as well.

Monica Trauzzi: After the Valdez spill the Pollution Act of 1990 was passed and this would essentially limit BP's monetary damages to $75 million for losses to private parties, to many that seems like a very low number, a very low figure. So, how will that law play into the fallout and litigation that we see coming after the spill?

Tom Campbell: Well, I think that that law is going to be critical. It is the rulebook that we established after the Exxon Valdez for how we were going to conduct further spills. One of the key aspects of that is that there is a $1.7 billion fund that was created and that comes as a result of tax on every barrel of oil that is brought into the United States. That tax then, essentially, is on the oil companies and it was intended as a reservoir to draw from in the case of an event like this. The 75 million was intended to be a cap on the liability of an individual company, but that one billion was per event. I'm a little concerned, I'm more concerned with the size of the cap on the per event issue than I am with the 75 million on the part of BP.

Monica Trauzzi: But there's been some talk in Congress about raising that $75 million cap.

Tom Campbell: There has been and I think it's unfortunate because what we need in the marketplace, what we've learned is we need a certain amount of certainty and we set what the rules were back in 1990 and changing the rules after an event would have a real chilling effect on future oil and gas exploration in the Gulf. And one thing we can't afford to do in this response is to cripple our nation's ocean industries and I include in that category both fishermen and ports and harbors as well as the offshore exploration industry as well.

Monica Trauzzi: What kinds of corporate policies and procedures do companies like BP have in place in order to minimize their liability in situations like this?

Tom Campbell: Well, BP has significant safety constraints they put on the oil and gas exploration exercises that they engage in. The government comes in and inspects the operations. Right now, though Monica, I think that what BP is in is in a response mode. They're throwing every resource that they have into trying to keep the oil off of the shoreline. It's really interesting to watch that other oil companies are coming to their aid, Exxon in particular, to try to do that as well, because what we're seeing here is not so much a failure on the part of BP, but an industry failure. For 20 years I have been told and I've told others that an event like this simply could not occur and now that it has occurred I think we need to step back and reevaluate what's going on. Obviously, the cap on our liability fund is not large enough and what we need to do to be sure we don't cripple our fishermen and our ports and harbors is we need to increase the size of that fund, which would mean increasing the tax on the oil that comes into the United States.

Monica Trauzzi: And why did you believe that an event like this couldn't happen? Did you think that enough measures were in place to stop it?

Tom Campbell: There were safety measures that were put in place. There were measures that were referred to as failsafe measures. There were redundant failsafe measures that were put into place and in this instance each and every one of those failsafe measures failed.

Monica Trauzzi: Let's talk about the government for a minute. How will the government agencies begin crafting their claims against BP? What can we expect from the federal government over the next few months?

Tom Campbell: Well, that's another interesting distinction between when I was at NOAA dealing with the Exxon Valdez and the current government situation under the Oil Pollution Act. I had to go to Exxon and ask them to provide us with the money to be able to provide the funding for damage assessment, so I had to go to the responsible party and rely on them to give me the money to study the damages that had been created. That was fixed under the Oil Pollution Act. The government agencies now can go directly to the Coast Guard fund and can draw the money out of that fund in order to be able to conduct their assessment. In addition to that, you've already had the attorney generals of the states of Louisiana, Mississippi, Alabama, and Florida who have sent a letter to the responsible parties and have requested their participation and their funding for state assessments as well. So, you're going to end up with the potential of competing assessments on the state side, as well as the federal side. In addition to that, you're going to have BP out conducting its own assessment in order to make sure that the agency assessments are honest.

Monica Trauzzi: And what kind of issues might arise as a result of all of these competing assessments?

Tom Campbell: Well, during the Exxon Valdez we actually went out and would send a boat out to do a study and then Exxon, because they didn't know what we were doing, would shadow our boat. They would look and try to figure out what studies we were doing and they would conduct their own studies. They would send boats out; our people would see it and we actually ended up in an assessment war. I'm hoping that in this situation cooler heads will be able to prevail, there will be some good coordination that will be done and that science will take place. One of the great possibilities here is there's enormous amounts of restoration work that can be done along the coastlines of Louisiana, Alabama, Mississippi, and Florida. We have wetlands that have been under siege for a number of years. We're not getting the same kind of building affect out of the Mississippi River that we used to get and our wetlands are eroding. This is an opportunity to address some of those problems with money that will come either from BP directly or out of the fund and there are great opportunities for doing really wonderful things that would mitigate the impact of these spills.

Monica Trauzzi: What do you think the overall impact will be on energy and environment policy?

Tom Campbell: I worry. I worry greatly because if we change the rules, there is currently a Senate bill in place that will raise, after the fact, the cap from the 75 million to a $10 billion cap. If that's the case, then we won't be able to get insurance on our exploration and production. The small to midsize company will not be able to do exploration and production. We will have departed from the spirit and the letter of the Oil Pollution Act if we do this. The Oil Pollution Act set a cap and then it collected money from industry in order to be able to fund the worst case. Now, what we've discovered is we have underfunded the worst case, so we need to raise the total amount that's available within the fund, but I think of would be a bad mistake to raise the cap on liability after the fact because every future producer of oil is going to have to consider the fact that the rules of the game could be changed for them after the fact as well.

Monica Trauzzi: OK, we'll end it there. Thank you for coming on the show.

Tom Campbell: Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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