As the Gulf oil spill enters its 44th day, BP officials are now fearing that it may be impossible to stop the flow of oil until relief wells are completed in August. The company is now hoping to stem the flow by using underwater robots that will attempt to cut the leaking riser pipe and install a custom fitted cap that will allow them to siphon the gushing oil the surface. It is a risky procedure that, if unsuccessful, could actually cause the flow of oil to increase, but it seems that this may be the only option left.
Meanwhile, the Obama administration has begun civil and criminal investigations into the circumstances surrounding the spill, intending to prosecute any responsible parties to the “fullest extent of the law.”
One person briefed on the inquiry said it was in an early stage and that no subpoenas had been issued yet to BP, the owner of the well. It was unclear whether any had gone to Transocean, which leased the Deepwater Horizon, the nine-year-old drilling rig that exploded and sank in April, to BP; Cameron, the company that manufactured a “blowout preventer” that failed to function after the explosion; or Halliburton, which performed drilling services like cementing.
Administration officials said they were reviewing violations of the Clean Water Act, which carries criminal and civil penalties and fines; the Oil Pollution Act of 1990, which can be used to hold parties responsible for cleanup costs; the Migratory Bird Treaty Act and the Endangered Species Act, which provide penalties for injury and death of wildlife.
In addition to its inability to stop the oil from gushing into the the Gulf, some of BP’s comments have not helped it to garner public sympathy. When reports recently surfaced that cleanup workers were experiencing nosebleeds, headaches, nausea, vomiting and shortness of breath – symptoms that are evidently similar to exposure to the chemical dispersant that BP is using – BP CEO Tony Hayward dismissed the illness as food poisoning. Food poisoning experts have disagreed with Hayward’s assessment and have pointed to a lack of proper safety equipment.
“These do not sound like the symptoms my clients typically suffer, ” said nationally-known food safety attorney Bill Marler. “It’s not that I wouldn’t mind suing BP.”
Of greater concern perhaps is the long-term environmental and economic impact this disaster will have. Although the outcome is still unknown, it is almost certain to be devastating. For businesses in the Gulf area it will be important to understand their insurance coverage . To that end, be sure to check out Anderson Kill & Olick’s latest online Fine Print column in Risk Management magazine. Originally the subject of an AKO Policyholder Alert, the article discusses the policies that could be in play for your company.
The massive losses are covered by a variety of insurance policies already purchased by those being harmed. First party property and business interruption (BI) insurance certainly will provide coverage for certain losses. Liability insurance, both general liability and pollution liability policies, will provide defense and indemnity for lawsuits. Directors and officers insurance also will provide coverage for derivative lawsuits against directors and officers.
Be sure to check it out and stay tuned to the Risk Management Monitor for more updates.
Some might say this was a breakdown of risk management, but I wonder. Did the C-level cut corners? Did those in charge on site ignore signs? Was risk management given the authority and freedom to develop the appropriate disaster recovery response levels?
It would be unfair, in my opinion, to blame risk management entirely. Risk management should be part-and-parcel of ALL business operations and should be practiced at every single position in a company.