Who will foot the bill for oil spill?
A dead turtle lies in the surf as concern continues that the massive oil spill in the Gulf of Mexico may harm animals in its path in Bay St. Louis, Miss.
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Kai Ryssdal: Here is an impolite, if somewhat necessary question, about the ever-increasing oil spill in the Gulf of Mexico. Just who is going to pay for this whole thing? The clean up and the lost wages and the livelihoods. In a statement today BP said it would pay legitimately and objectively verifiable claims for personal and commercial losses.
A BP spokesman we spoke to wouldn't go much farther than that, so we asked Marketplace's Sarah Gardner to find out what might happen in real life.
SARAH GARDNER: BP has promised to foot the bill for environmental clean-up.
But attorney Tracy Hester at Bracewell & Guiliani says BP has no other choice under U.S. law.
TRACY HESTER: Under the Oil Pollution Act, BP as the lease holder bears responsibility for any response costs to clean up the oil spill.
BP will share that cost with its lease partners, Anadarko Petroleum and Mitsui. But BP points out that other companies are also involved. A company called Transocean owned the rig. Cameron International made a key safety component. And Halliburton cemented the piping to prevent leaks.
Mike Le Vine, attorney with the environmental group Oceana, says BP can tap into a rainy-day fund to help pay for the clean-up. It's funded by an 8 cent tax on every barrel of oil.
MIKE LE VINE: This tax is paid by the oil companies but ultimately every time you buy a gallon of gas, you're contributing to that Oil Spill Liability Trust Fund.
Le Vine says up to a billion dollars of the fund's reserves can help pay for any one particular oil spill. Federal law, though, does cap liability for damages to $75 million. Attorneys we talked to weren't sure if that cap has ever been challenged in court but say it might be in this case. Analysts estimate this spill will end up costing BP billions. And Le Vine says if the Exxon Valdez disaster is any example, it'll be a long haul.
LE VINE: It took 20 years for the fishermen in the communities in Alaska to have their litigation resolved.
The investment bank Oppenheimer and Company today called the spill a major disaster with catastrophic implications for the offshore oil industry and Gulf Coast economies.
I'm Sarah Gardner for Marketplace.