U.S. Could Be Liable For BP Oil Spill Damages Under FTCA

June 21, 2010 - PRLog -- With so much interest focused on the liability of BP to pay for various different types of harm resulting from its oil spill, little attention has been focused on the potential monetary liability of the federal government under the Federal Torts Claims Act [FTCA] for many of those same damages, and the potential legal problems which this could cause, suggests law professor John Banzhaf, who has been called the "Dean of Public Interest Lawyers" for his novel and often successful public interest legal theories, and who also teaches the FTCA at George Washington University law school.

Under the FTCA, the federal government is liable for the negligent acts of its employees if their negligence is at least one of the (possibly several) proximate causes of an injury of virtually any kind.  Most observers seem to agree that the U.S. Minerals Management Service [MMS] was at least negligent -- if not grossly negligent -- in improperly issuing permits which permitted and led directly to the BP spill; a contention supported by evidence of MMS employees accepting gifts from the oil industry, coming to work high and/or watching pornography in their offices, of suddenly resigning or being fired or subject to criminal probes, etc.

The only major defense the government would have to such a tort negligent action -- which could be brought by individuals, companies, or even state or local governments -- would be to argue that it is shielded by the "discretionary function exception" under which there is no tort liability if the negligent employee was performing a discretionary function.  But the U.S. Supreme Court held that this key exception did not apply in a case with remarkably similar facts, says Banzhaf, talking about the case of Berkovitz v. United States.

In Berkovitz, a government agency issued a license permitting the use of a drug, and that use resulted in paralysis to a young child.  Because the license was issued in violation of provisions of both statutory law and agency regulations, the Court held that the discretionary function exception to liability did not apply because federal officials have no discretion to violate a statute or an existing regulation.  As the Court put it, "the discretionary function exception will not apply when a federal statute, regulation, or policy specifically prescribes a course of action for an employee to follow."

In the BP oil spill situation, it appears that the MMS, in similarly issuing licenses, likewise violated several federal regulations requiring, among other things, necessary permits from the National Oceanic and Atmospheric Administration [NOAA], environmental impact studies, etc.  Indeed, a report from the department's acting inspector general found that the Louisiana office violated several federal regulations, as well as agency ethics policies and rules.

The federal government's potential liability for spill damages could raise interesting legal issues and problems, suggests Banzhaf.

* Although no claimant can recover for the same damages twice -- once from BP, and again from the federal government -- claimants who may be shut out of the BP claims process for procedural or technical reasons could litigate against the U.S., as could those who believed that the award might be higher.

*  Indeed, notes Banzhaf, since claimants may also choose to sue BP rather than simply settling for whatever they obtain from the escrow fund, it's possible for exactly the same claim to be litigated against both BP and the federal government, either in different court proceedings, or in one judicial proceeding where the U.S. stands shoulder to shoulder with BP as two separate defendants.

* The government may be potentially liability for any damages which BP cannot or will not pay.  This arguably prevents it from being a completely disinterested "honest broker" in seeking to persuade BP to "voluntarily" pay off certain claimants, through an escrow fund arrangement or otherwise.

* Indeed, says Banzhaf, pressuring BP to agree beforehand to absorb many billions of dollars worth of claims the federal government might otherwise have to bear, especially when the government can threaten to bring criminal charges against high ranking corporate officers if they fail to agree, could raise arguments of unfairness and even duress, thereby providing a possible legal basis upon which for BP to attack -- and possibly even seek to vacate -- the agreement subsequently.

* Suing the federal government and collecting a large judgment might also have a very significant symbolic significance by reminding federal workers and others that the bureaucracy has a duty to supervise its workers to be sure that they follow the law.  In other words, some one injured directly or even indirectly by the spill, and with a grudge against the federal government, could bring a lawsuit against it just to make a point.

PROFESSOR JOHN F. BANZHAF III
Professor of Public Interest Law
George Washington University Law School
FAMRI Dr. William Cahan Distinguished Professor,
FELLOW, World Technology Network
2013 H Street, NW
Washington, DC 20006, USA
(202) 659-4310 // (703) 527-8418

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John F. Banzhaf III is a professor of law at George Washington University Law School where he is known for a wide variety of public interest legal actions.