President Obama says that BP
Mac Greer: Is there a general standard for determining who has a claim? If I'm trying to understand what differentiates a legitimate claim from someone who is not going to get anywhere, what are some things I should be thinking about?
Noah Hall: Well, that's a great question. Some courts use actual physical impact as a requirement to getting economic losses. So if you own a hotel and your business is down 30%, they are going to want to see that the oil spill somehow caused a physical impact either on your property, at least immediate or adjacent to your property. Other courts, though, don't have those kinds of restrictions, and the law is really kind of unclear in this area.
The reason I think that's going to play out pretty significantly: We're already hearing about the tourism industry taking a huge hit in parts of Florida, where there is no oil whatsoever. Everything from Fort Meyers down to the Keys and even the Atlantic side of Florida, they're saying tourism is down, but there is no oil there. So BP is going to say, "We're sorry that the tourism industry in Florida isn't what it used to be, but our oil doesn't have anything to do with it."
If anything, they'll say, "Blame the media; they're the ones who scared everybody away from going down to Florida, but there's no actual harm, there's no injury, there's no physical damage." And that's going to be where I think we'll see a lot of legal battles over liability in this case played out. BP is going to essentially want the courts to hold plaintiffs to some standard of causation that's stricter than just "there was an oil spill in the late spring/summer of 2010, and in 2015 our tourism revenues are still down." To me, that's probably the biggest legal uncertainty that can alter how much BP is ultimately liable for … and BP is the ideal deep-pocket defendant for plaintiffs to be targeting.
And I think we're only seeing just the first hint of this, because right now BP is very much concerned about their image and public relations, and BP doesn't want to be seen as the [company] that's nulling people's claims right now. But five years from now, six years from now, BP's shareholders are not going to be sitting back and letting the company pay out claims for economic damages that are fairly tangential or cannot be proved in court. So I think you're going to see this issue build over time. When the current controversy dies down, down the road you're going to see BP fighting much more vigorously to defend itself against these economic-loss claims.
Greer: I want to talk about the government-imposed moratorium on deepwater drilling. Drilling companies Transocean
Hall: Yes, actually. I actually looked at that case. It's a very tough one. Claims against the government are far easier things to advocate for politically than to win legally.
Hornbeck doesn't actually have a property right that has been taken away by the government. It's not like you own a piece of property and the government comes and takes it away or even prevents you from developing it because there's some endangered species on there. The government before was allowing deepwater offshore drilling; now they're not. That's a change in policy. Generally speaking, you don't get compensation for a change in policy.
I don't know if they would get monetary damages, but they may have a valid claim that the Obama administration did not follow the proper administrative procedures to change government policies. If the government wants to create new regulations or change their regulations, there's usually a pretty extensive process you go through. You notice the new rule. You put it out for public comment. You can't just say, "Whoa, we changed our mind, and before we allowed something, and now we're not going to allow something."
So I think as an administrative claim in terms of process followed and procedure followed, they might have a pretty decent suit. In terms of collecting monetary damages, not so much.