A legal memo intended to advise oil spill claims administrator Kenneth Feinberg on who is entitled to compensation suggests that many Florida claims by businesses located in areas the oil never reached may not be eligible for damages under the federal Oil Pollution Act.
The memo (available in full below) states that the law is meant to provide compensation for losses that occurred “because a spill has damaged, destroyed or otherwise rendered physically unavailable to them property or resources that they have a right to put to commercial use.”
That would cover fisherman who was barred from fishing, for example, in addition to those who suffered losses because of fish actually killed by the oil.
“By contrast, operators of beach resorts in areas physically unaffected by the spill, but that nonetheless suffer economic loss because of a general decline of tourism resulting from the spill, are among those who are not entitled to recover under OPA [the Oil Pollution Act],” the memo reads.
The memo, prepared by Harvard University legal scholar John C. P. Goldberg, was released today, along with the protocol for final and interim payments.
It is not intended to set the terms the facility will use to evaluate claims. That’s up to Feinberg, who has said he intends to be “more generous” than the law requires in an effort to keep claimants from going court. Instead, the memo outlines how the courts might view these claims.
The law, Goldberg contends, is not likely to look favorably on the claims of Floridians who suffered losses due to expectations that oil would hit the beaches. It could be even less sympathetic to losses that occurred as a result of “misinformation,” such as that which reached would-be tourists who presumed oil had reached the shores of Jacksonville or Miami.
“Considered without regard to their connection to actual property or resource damage, the economic losses flowing from a major spill could have been expected to generate billions in lost profits for businesses in any state reliant on coastal resources to attract tourism,” not to mention the economic chain reactions that could affect their suppliers and business partners.
What’s more, it’s conceivable that “compensation of the entire universe of provable economic loss claims would come at the expense of victims who have suffered personal injuries and property damage,” an issue at the crux of some recent complaints that claims form the oil-free (but economically and politically powerful) Florida peninsula may be overshadowing those from the panhandle counties that actually had oil in their waters and on their beaches.
Here’s a breakdown of how the memo treats an assortment of hypothetical claims:
- A commercial fisherman barred from fishing in oil-covered waters
- A hotel whose guests use waters or beaches that were covered in oil (but not necessarily located right on an oiled beach)
- An employee of that hotel lost wages because the hotel had fewer guests
- A barge operator on a river that was obstructed by an oil slick and the cleanup crews working to remove it (this case is not quite as clear-cut as the first three, but still likely to be found eligible, according to the memo)
- A real estate agent selling beachfront property in an area affected by the oil
- A furniture store near an oiled beach that suffered lower sales due to a decline in tourist traffic
- A seaside restaurant whose clientele consisted predominantly of commercial fishermen who lost income as a direct result of damaged natural resources
In Goldberg’s words, “it could conceivably be appropriate to interpret OPA generously to permit these claims.”
Clearly not eligible under OPA:
- A beachfront hotel located 100 miles from the nearest oiled beach, but where oil was projected to reach at some point, though this never came to pass
- A tour boat operator located 400 miles from the nearest oiled beach suffered losses due to misinformation about where the oil went
- An inland fireworks stand on the road to a Gulf Coast tourism hub
- An inland tourist destination that suffered losses because many of its visitors are also drawn to Florida’s beaches
- A Nevada hotel that hosts conventions for the gulf seafood industry, which suffered a loss of traffic due to the spill
- A seafood restaurant owner in Arizona whose customers were spooked by reports that gulf seafood could contain oil
- A Connecticut company that sells snorkeling equipment that suffers a decline in sales
- A gas station targeted by a boycott
- A caterer serving an oil company’s corporate headquarters suffers because the company slashes expenses
Again, these points address how Goldberg believes these claims are likely to be viewed in court, not how they will be treated by Feinberg, who has pledged to be “more generous” in his assessments.
Florida Attorney General Bill McCollum has pressed Feinberg to disregard geographic proximity when deciding how to pay claimants. When Feinberg made the announcement that he would not base eligibility on a claimant’s nearness to the spill, he noted that if a large number of Florida businesses ended up in court, the process would have been a failure.
According to The New York Times:
Sandi Copes, the communications director for Florida’s attorney general, Bill McCollum, said Mr. McCollum appreciated Mr. Feinberg’s willingness to consider claims without any limitation on geographic proximity.
The rules also allow people to ask for expenses they paid to estimate their damages — another point requested by Mr. McCollum, Ms. Copes said.