Crisis in the Gulf of Mexico: is new federal legislation the answer and if so, to what question?

• Author: Gershonowitz, Aaron

The Deepwater Horizon well blowout was a disaster on many levels. The release of millions of gallons of petroleum into the Gulf of Mexico will have an impact on ecosystems in the Gulf for years to come. The release has also had a major impact on the economy of the states that border the Gulf, and on the business interests of the citizens of those states. Several pieces of federal legislation have been proposed with the intent to create a "fair and efficient" compensation system for those who have been injured by this event. (1) The assumption underlying these proposals is that the existing compensation systems, particularly the common law tort system, are either not "fair and efficient," or if they are generally "fair and efficient" they would not be a "fair and efficient" means to compensate those injured by the Deepwater Horizon well blowout. This paper will examine that assumption and attempt to provide some guidance regarding where the legal system should draw the line between common law compensation and compensation by federal legislation.

Our legal system has long had the means to deal with cases in which one party causes injury to another. All first-year law students study torts and understand it to be the common law means to determine whether an injured party is entitled to compensation, and if so, what compensation. (2) The law of negligence, a major branch of the law of torts, would examine whether the party alleged to have caused the injury owed a duty to the injured party, whether he or she had breached that duty, and whether that breach of duty was the proximate cause of the injury. (3) A court would examine the extent to which the harm was reasonably foreseeable to determine whether there was a duty owed, and engage in a balancing of the risks and benefits to determine whether there was a breach. (4)

The Deepwater Horizon well blowout could fit easily into this system. The risk of a spill or release of significant quantities of petroleum was reasonably foreseeable, and many of the specific types of damage allegedly caused by the spill or release were similarly foreseeable. Thus, there is little doubt that in an action for negligence, a court could find that BP had a duty to prevent or to take reasonable steps to prevent the spill or release, and that the failure to take those steps was the proximate cause of the harm. If so, why is there so much discussion of the need for better laws and regulations to provide a remedy for injured parties?

1. WHY IS MOST ENVIRONMENTAL LAW BASED ON STATUTES AND REGULATIONS?

   The first step in exploring the need for a statutory or regulatory response is a short discussion of why our legal system addresses environmental legal issues through statutes and regulations much more than through the common law. Prevention of harm is among the primary goals of negligence law. (5) Negligence law tends to deter risky behavior because it assumes that rational decision makers will take precautions to avoid liability when the cost or burden of the precautions is less than the probable liability. (6) Regulation is aimed at preventing harm more directly, by prohibiting people from, or creating disincentives to, creating or taking certain risks. (7) Regulation to prevent harm is necessary, however, only when the common law system is not preventing the harm at issue. (8) Thus, to understand the need for environmental regulation, we need to examine why the negligence system was not deterring the activities that created environmental harm.

   There are at least four factors that make environmental harm different from the types of harm generally dealt with by the common law tort system. First, environmental harms tend to be long-term and indirect, making them less foreseeable. Second, environmental harm tends to affect many people at the same time, creating problems with regard to who may bring suit, and even when suit can be brought. This wide distribution of harm often creates difficulties of proof. Third, environmental harm can be the result of complex processes difficult for the average person to understand, which makes it difficult to determine what the duty is and when sufficient precautions have been taken (i.e., expertise is often needed to determine whether there has been a breach). Fourth, environmental law sometimes recognizes interests that may not have been known or appreciated at common law.

   The National Environmental Policy Act ("NEPA"), (9) the first major federal environmental program, (10) illustrates the foreseeability issue. It requires federal agencies to examine environmental impacts when making decisions regarding major federal actions. (11) The legislative history specified a lack of information regarding the possible consequences as a reason for the law, stating: "we do not know the consequences of our actions until it is too late." (12) The legislative history also attributed the failure to identify the consequences of actions to lack of expertise. (13) Thus, where the reasonable person might not have foreseen the environmental consequences (and the common law might not impose a duty), the statute requires a specific examination of environmental consequences, which often requires the use of experts. (14)

   The second problem can be illustrated by the Second Circuit's decision in In re "Agent Orange" Product Liability Litigation. (15) Agent Orange was a defoliant used during the Vietnam War by the military to remove jungle vegetation which was thought to provide cover to enemy troops. (16) Hundreds of thousands of veterans claimed to be injured by exposure to this substance. (17) A class action settlement was reached with the manufacturers, and claims of those who opted out of the class were dismissed on summary judgment. (18) One of the grounds for summary judgment was that "no opt-out plaintiff could prove that a particular ailment was caused by Agent Orange." (19) One of the problems with proving causation was the lack of epidemiological studies, which no single plaintiff could afford to fund, and which could take years to perform. (20) Such problems of proof could cause manufacturers to undervalue the risk, and thus fail to prevent harm.

   Even in cases in which federal statutes define a duty to protect the environment, the widespread nature of the effects often...