AAJ News Brief for June 17, 2010

BP execs meet with Obama, agree to $20B escrow fund.

Media coverage of top BP officials' meeting with President Obama, which included the lead stories on all three network newscasts, credited the President with compelling the company to agree to a $20 billion escrow fund for victims of the Gulf oil spill. The AP (6/17, Loven) reports, "The unending oil spill saga had yielded almost no good news before this. Creation of the fund...is the first big success Obama has been able to give to Gulf residents and the nation in the eight weeks since the explosion."

The CBS Evening News (6/16, lead story, 3:50, Couric) reported, "He said he was trying to find out whose behind to kick for that oil spill in the Gulf of Mexico," and on Wednesday, the President "started at the top, calling BP's senior executives on the White House carpet. By the time their face-to-face meeting was over, BP had agreed to put $20 billion into a fund to pay victims of the spill."

ABC World News (6/16, lead story, 3:10, Sawyer) reported, "We all imagined what it was like in the room today when for four hours, top officials of BP negotiated with the White House. The result? BP agreed to set up a $20 billion fund." ABC (Tapper) added, "Sometimes for meetings such as these, guests are allowed to come in through the side door discretely, but the White House did not afford such a courtesy to BP executives. Some even called it a perp walk. In what resembled a call to the principal's office, BP's top executives were summoned to the White House."

NBC Nightly News (6/16, lead story, 3:30, Holt) reported, "The Chairman of British Petroleum was called to the carpet today by...Obama, who promptly handed him the bill for the Gulf oil disaster." NBC (Guthrie) added, "The Chairman of BP opened this meeting by apologizing. He then had a private meeting in the Oval Office with the President, but there was no private meeting for the BP CEO Tony Hayward, the man the President has suggested he would have fired."

The New York Times (6/17, Calmes, Cooper) reports that "bowing to pressure from the Obama administration," BP "also said it would suspend paying dividends to its shareholders for the rest of the year and would compensate oil field workers for lost wages."

Politico (6/17, Lee, Thrush, Marr) reports that "Carol Browner, Obama's energy adviser, suggested the White House had no legal authority to force BP to pay lost wages. 'There's a very significant legal question about their liability,' Browner told reporters."

The Washington Post (6/17, A1, Wilson, Achenbach) notes that "speaking to reporters in the State Dining Room of the White House...Obama called the agreement 'a good start' that will reassure 'the people and small businesses I was talking to in the Gulf that BP will meet its responsibilities.'" The Post adds that "Attorney General Eric H. Holder Jr. also participated in much of the session, a sign of the potential criminal liability the oil company may face."

Feinberg named to administrate BP fund. The New York Times (6/17, Stolberg) reports, "Kenneth R. Feinberg bristled when reporters dubbed him the compensation czar for his Treasury Department job monitoring executive pay at companies that received government bailouts. The term, he lamented to ABC News last year, 'makes it sound like I'm going to issue some imperial decree.'" Yesterday, he was named by the President "Obama as the independent administrator of a $20 billion fund set up by BP to compensate victims of the oil spill in the Gulf of Mexico." While he "may not have the powers of a king...he does seem to specialize in Solomon-like decisions."

Separate $100M fund negotiated before Obama joined meeting. McClatchy (6/17, Thomma, Talev) reports, "The announcements followed an extraordinary meeting that took on the air of a summit, with lawyers for both sides negotiating in advance before Obama and his top advisers sat down across a long table from BP executives in the White House Roosevelt Room." Adds McClatchy, "One such scripted moment worked out beforehand: that Obama would ask for, and get, a pledge from BP to set aside $100 million in a separate fund to compensate oil rig workers left jobless by Obama's moratorium on some oil drilling in the Gulf, pending new safety reviews."

Noting the separate fund, the New York Times (6/17, Calmes, Cooper) reports that the "company initially resisted compensating those workers because the moratorium was not its decision."

Final bill for BP unknown. NBC Nightly News (6/16, story 3, 1:55, Faber) said, "as long as that oil continues to come out of the Gulf of Mexico, we simply have no certainty what the ultimate bill is going to be for BP or for that matter for all the companies that do business in that area." Under the headline "BP's Shareholders Take It On The Chin," the New York Times (6/17, Hauser) asks, "Just how big is this oil spill, really? For BP shareholders, about $88 billion big -- and growing. That is roughly how much money investors have lost on paper as the oil giant's share price has plunged." And "BP is so big, and its stock is so widely held, that its troubles are being felt throughout the investment world." The Financial Times (6/17, Crooks) reports that it may take BP a long time to reach a deal limiting its liability.

Criminal charges could dramatically increase costs for BP. The New York Times (6/17, Schwartz) reports that as BP "watches its bill rise quickly for the oil spill, including $20 billion it is setting aside for claims, it could find the tally growing much faster in coming months if the United States Department of Justice files criminal charges against the company." Under the "latest estimates, for example, the daily civil fine for the escaping oil alone could be $280 million," but "criminal penalties, if imposed, could cause the costs to balloon still further, said David M. Uhlmann, a law professor at the University of Michigan, who headed the environmental crimes section of the Justice Department from 2000 to 2007."

Administration's right to determine BP's liability questioned. The Christian Science Monitor (6/16, Cook) reported on its website that during "a Monitor-sponsored lunch" yesterday, ex-House Majority Leader Dick Armey "sharply criticized President Obama's approach to dealing with the massive oil spill in the Gulf." Armey said, "The Constitution does not envision the president of the United States saying that 'I will decide what compensations, what redress will be elicited from a British-owned company.' There are courts for this purpose. My own view is that the Constitution is far ahead of the game compared to where this president is with his current fulminations about what he will decide about whose butt to kick."

In a blog at The Atlantic (6/16), Chris Good wrote, "There is a case to be made...for why BP shouldn't be made to pay." It is "simply this: laws should generally be followed, or at least treated seriously by the bodies that make them, otherwise laws in general are meaningless, as is the process by which they are made." If "Congress retroactively eliminates the liability cap for BP--in preemption of the escrow fund not being enough, or (perhaps more likely) as a PR stunt by congressional Democrats wishing to appear proactive and heavy handed--Congress will have, in no uncertain terms, changed the rules."

Blogger concerned over potential fraud linked to fund. In the "On the Docket" blog at Forbes (6/16), Daniel Fisher wrote that the fund's creation "shoves the ever-spreading Gulf spill firmly out of what we know about traditional tort law and into the strange world of mass torts like asbestos, fen-phen and Vioxx." Any fund "that big...raises the specter of the massive fraud, fake claims, bloated legal bills and insider dealing that have marked other tort settlements. Vanderbilt Law School's Richard Nagareda thinks and writes a lot about these issues and he's concerned that the BP escrow account could go the way of asbestos bankruptcy trusts, with the same lawyers who are pressing claims controlling the processing of same."

NYTimes urges Obama not to trust BP. The New York Times (6/17) editorializes that "there are a lot of reasons, of course, not to trust BP," and "the White House will need to keep pressing BP hard. ... We would like to think the battle is over. It is not. Claims in the 1989 Exxon Valdez case were not finally adjudicated until two years ago, and there is still oil on the rocks of Prince William Sound."

Attorney whose son died on oil rig pushes for reform of DOHSA. In an op-ed in CNN (6/16), attorney Keith Jones, whose son Gordon died on the Deepwater Horizon, wrote, "Gordon's older brother Chris and I are directing all our energies to try to make right an outdated law that would deprive my daughter-in-law, Michelle, and her two boys, my grandsons, of 'more nearly fair compensation' for the loss of their husband and father." In "a system that is imperfect, the Death on the High Seas Act stands alone in the draconian way it limits the recovery of damages for wrongful deaths on the high seas." Senate Bill 3463, "introduced by Sen. Patrick Leahy; and House Resolution 5503, by chairman of the Judiciary Committee and Rep. John Conyers, seek to address the inequities of DOHSA" by allowing the recovery of "non-pecuniary damages." In addition, "Sen. Sheldon Whitehouse has introduced Senate Bill 3345, which simply provides that in computing punitive damages in maritime cases, the amount of compensatory damages is not to be considered."

BP engages second oil containment system. The New York Times (6/17, Robbins, Gillis) reports BP "on Wednesday began collecting crude oil from a second containment system that the company hopes will help stem the thousands of barrels escaping from their damaged well in the Gulf of Mexico, an amount that scientists said could be as high as 60,000 barrels a day." The company is "siphoning the oil through a series of pipes and hoses to a ship, the Q4000, which will then clean and burn the oil and gas mixture in a processing device called an EverGreen burner." The method BP "has been using since June 3 - a containment cap - has been able to collect about 15,000 barrels of crude oil a day. But based on new estimates of the flow rate released on Tuesday, that may be only about one quarter of the amount leaking daily."

Sludge disposal another challenge for BP. USA Today (6/17, Levin) reports BP is "facing a huge new challenge in disposing of the millions of gallons of potentially toxic oil sludge its crews are collecting from the Gulf of Mexico, according to industry experts and veterans of past spills." Crews "so far have skimmed and sucked up 21.1 million gallons of oil mixed with water," and "because the out-of-control well may continue spewing for months, that total almost certainly will surge." BP's "plan for handling the gooey mess, written in conjunction with the Coast Guard, the Environmental Protection Agency and Louisiana officials, calls for reclaiming or recycling as much as possible." But some experts said while "that approach is the best option for the environment...it has not worked in previous spills."

CDC says BP is failing to provide list of cleanup workers. CQ HealthBeat (6/17, Norman) reports, "One of the main elements of the response" to the Gulf Coast oil spill by the CDC "is to develop a roster of workers involved in cleaning up the spill caused by the explosion of BP's Deepwater Horizon rig April 20." With this, the government "would be able to track workers' health and any symptoms or illnesses for years to come, and try to determine if those health problems are related to the spill." Yet, "John Howard, director of the National Institute for Occupational Safety and Health at CDC, told" the House Health Subcommittee of the Energy and Commerce panel "that the agency several times has requested from BP a complete list of workers, without result. He said he doesn't know why BP has not responded."

Experts say spill is taking psychological toll on people in the region. The New York Times (6/17, A19, Navarro) reports, "Beyond the environmental and economic damage, the toll of the mammoth spill in the Gulf of Mexico is being measured in hopelessness, anxiety, stress, anger, depression, and even suicidal thoughts among those most affected, social workers say." In fact, "Catholic Charities reported this week that of the 9,800 people the counselors had approached since May 1 in Orleans, St. Bernard and Plaquemines Parishes, 1,593 were referred for counseling because of signs of depression." Meanwhile, "officials with the Louisiana Department of Health and Hospitals said staff members had counseled 749 people in the last week of May and the first week of June to 'mitigate' symptoms that could lead to destructive behavior."

AFP (6/17, Montet) notes, "State health authorities 'are anticipating that the longer-term stressors and economic consequences of this disaster could lead to an increase in depression, substance use and abuse, family violence, high risk behavior, suicide,' Department of Health and Human Services deputy assistant secretary Lisa Kaplowitz told lawmakers." Dr. Aubrey Keith Miller, senior medical adviser to the NIH, "told the committee the oil nearest the source of the spill 'can cause acute toxicity as well as longer-term health effects such as cancer, birth defects and neurological effects.'"

Interior Department Inspector General criticizes MMS probe of spill. The Washington Post (6/17, Eilperin) reports Interior Department's acting inspector general Mary L. Kendall is expected to tell the House Natural Resources Committee that "elected officials should consider imposing ethics rules on oil and gas companies that do business with the federal government." Kendall will "also tell the panel that the Minerals Management Agency, which oversees offshore oil drilling, is probing the BP oil spill in a 'completely backwards' way and needs to have its culture revamped."

AAJ News Brief for June 17, 2010

Leading the News

BP execs meet with Obama, agree to $20B escrow fund.

AAJ in the News

Tarricone: BP, not taxpayers, should compensate victims for oil spill claims.

Civil Justice System

Feinberg urges 9/11 workers to accept settlement.

Drug Safety

Missouri receives $11M from AstraZeneca, Novartis under settlement.

Medical Errors/Healthcare

New York project seeks to cut malpractice costs, compensate victims more quickly.

Product Safety

Testimony ends in Chinese drywall trial in Florida.

James City County, VA, slashes assessments on Chinese Drywall homes.

Securities

Nebraska investors sue LPL Financial over annuity sales.

Also in the News

Two New Jersey lawyers disbarred.

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