Ripple Effects

The Deepwater Horizon oil spill may not produce the environmental apocalypse in the Gulf of Mexico that many initially feared. Nevertheless, those millions of gallons of crude still did plenty of damage, not only to the ecosystem but also to coastal economies.

There is no question that those responsible for the disaster — primarily BP — must compensate those who suffered its effects. So far, BP says it has paid $303 million in claims to more than 40,000 businesses and individuals affected by the oil spill.

The question, though, is what constitutes a victim. As can be expected, whenever there's a pool of money to be distributed, a lot of outstretched hands appear.

Where do you draw the line on who deserves recompense?

The process already is becoming a game of six degrees of separation.

There are of course the easy, obvious cases, such as people whose property was directly damaged by "petroleum products" and fishermen who could not earn a living because areas of the Gulf were closed to fishing. Then there are tourist-related businesses that saw marked declines in sales over previous years because vacationers avoided what they feared would be oil-stained beaches.

Last week, BP gave a $7 million grant to seven coastal counties in Northwest Florida, including Bay County, to help them promote late-summer tourism. Escambia and Santa Rosa counties were given some extra funds because they sustained the most impact from the spill and received the worst press from the national media. That makes sense.

However, each step back from a tangible harm invites questions of just how many links the responsibility chain holds.

For instance, in late July Gov. Charlie Crist signed an executive order authorizing property appraisers in 26 counties to give property owners an updated assessment on their homes and businesses if they believe they have lost value because of the spill. Property owners could use the document to file a claim for damages against BP, although they wouldn't necessarily have their tax bills lowered.

Seeing as how Florida's real estate market has been in free-fall for several years, how exactly would appraisers determine how much of a drop in value is attributable to the oil spill and how much to the economy? Again, a beachfront property with tar balls or mousse on it is directly affected.

But how far inland can you claim that oil impacted values when there is no physical damage? That creates a process that is far too subjective.

Meanwhile, last week the St. Joe Co. — the Panhandle's largest private landowner — filed suit against Halliburton Co. over its role in the rig explosion that led to the oil spill, holding it responsible for decline in value of St. Joe properties (the company's stock has lost 23 percent since the April 20 disaster). The cause of the blowout, however, has not yet officially been determined.

For many Panhandle observers, seeing St. Joe go after Halliburton must be like watching "Alien vs. Predator" — which corporate monster do you root for? And expect sequels: St. Joe says it plans to sue other companies associated with Deepwater Horizon as well (that's BP with the little laser sighting on its back).

Who deserves to be made whole? A coastal restaurant can point to a reduced number of meals served since the oil spill began and file a seemingly legitimate claim with BP for revenues lost. But what of its suppliers? Does the company in Ohio that sees reduced sales of napkins to Gulf Coast eateries have a valid claim? And what of its economic partners who suffer when the napkin supplier purchases less?

Think that's hyperbole? According to the Obama administration's claims czar, Kenneth Feinberg, claims have been submitted from 48 states.

As with any downturn in a market economy, its ripples radiate far and wide. The Oil Pollution Act of 1990, passed after the Exxon Valdez disaster in Alaska, allows for indirect economic damages. But the dark crude of the Gulf spill has created a vast gray area. Feinberg recently testified to Congress that figuring indirect damages will be his toughest task.

Where he draws that line will itself create ripple effects, setting a standard for future disaster claims.

REPRINTED FROM THE PANAMA CITY NEWS HERALD.

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