Oil spill's economic damage could take years to identify

McClatchy NewspapersJuly 27, 2010 

WASHINGTON — Some of the economic consequences of the Gulf of Mexico oil spill may take years to identify, and BP's compensation fund should be flexible enough to account for long-term losses, a panel of experts from Alaska's Exxon Valdez tanker spill told a Senate committee Tuesday.

Some of those damages are difficult to quantify, said Brian O'Neill, a Minnesota attorney who spent two decades shepherding through the court system the lawsuit fishermen and business owners filed against Exxon after its 1989 oil spill in Prince William Sound.

The collapse of the herring fishery, for example, couldn't be fully anticipated until nearly a decade after 11 million gallons of oil spilled into the sound, he told the Senate Judiciary Committee. And it's difficult, too, to measure the long-term mental health effects of waiting for two decades for the litigation against the oil giant to be resolved, O'Neill said.

Even while BP works to permanently cap its runaway oil well in the Gulf of Mexico, there are many lessons they can learn from the 1989 oil spill in Alaska, said Sen. Amy Klobuchar, D-Minn., who led Tuesday's meeting of the Senate Judiciary Committee. Exxon, she warned, "used every legal trick in the book" to prolong the litigation against the company and postpone paying punitive damages.

"While BP's executives sound outraged and contrite now, who's to say that won't change in two to three years?" Klobuchar said. "In the immediate aftermath of Exxon Valdez, Exxon's top executives were publically repentant. But once they were behind the courtroom doors, they sang a very different tune."

O'Neill told the committee that the compensation structure — such as the fund established by BP last month after negotiations with the White House — needs to address people's immediate needs. However, it also must account for damages that may not be clear right away, such as if a fishery never recovers. It might be optimistic for the administrator of the $20 billion BP compensation fund, Kenneth Feinberg, to expect to have all claims paid in just a few years, O'Neill said.

"The inability to know the impacts of the spill are inherent in oil spills," O'Neill said. "In three or four years, you're still not going to know what the impact of the spill is."

It took 15 years for Cordova to recover economically, noted Joe Banta, a native of the town who now works as a project manager with the Prince William Sound Citizens' Regional Advisory Council, an independent group that is funded by the industry but serves as a watchdog on behalf of oil patch communities.

"Our hearts go out to the folks down there," he said of the Gulf of Mexico. "We can definitely relate to that, unfortunately."

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