ADR and the BP Gulf Claims Facility

Using ADR to Compensate Victims of Environmental Catastrophes

In my Environmental Dispute Resolution course, I devote one class to a discussion of the claims facilities used in the 9/11 terrorist attacks and the BP Gulf Coast oil spill disaster.  The facilities attempted to handle the inevitable claims arising from these traumatic events in an organized way that allowed expeditious handling of the claims outside of litigation.  Both adopted a form of arbitration.  

If well designed, these facilities could also enhance procedural justice for claimants --  voice, careful consideration of the facts by the neutral, impartiality by the neutral, and respectful and dignified treatment of claimants.

Updating the Story

An article in The New York Times today updates the status of the Gulf Coast claims facility.    

The Times describes the spill this way:

The oil rig fire and the nearly unstoppable fountain of oil that followed at the Macondo Prospect on April 20, 2010, was the largest marine oil spill in the nation’s history. The oil poured into the gulf for 87 days, fouling an estimated 68,000 square miles of waters and almost 500 miles of coastline from Louisiana to Florida.

The spill released approximately 210 million gallons of oil.

BP, its reputation damaged and facing administrative penalties, criminal prosecution, and vast class action lawsuits, agreed to create a process designed to handle the civil claims for damages. With time, the agreement governing the Gulf Coast claims facility morphed into a 1,000-page document entitled the 2179 Economic and Property Damage Class Action Settlement Agreement.  

BP's Buyer's Remorse

Increasingly, BP has had buyer's remorse as the tab for the civil liability associated with the spill has grown from a predicted payout of  $7 billion to an estimated pay-out of $ 19.5 billion.  The Times explains:

A central element of the agreement . . . would prove to be a time bomb. Instead of having claims calculators contend with different kinds of arguable evidence to prove that damage was linked to the spill, the negotiators came up with a formula that relied solely on financial data for proof of harm. If a business was in a certain region and could prove that its income dropped and rose again in a specific pattern during 2010, that would be enough to establish a claim.

This liberal test has brought a "frenzy" of claims.  

BP has unsuccessfully challenged in federal court the administrator's interpretation of the agreement.  Its lawyers also sought greater oversight of possible fraud in the claims handling process.  The supervising judge called in Freeh Group, a firm headed by Louis J. Freeh, the former F.B.I. director, to investigate. Freeh issued a 98-page report finding some problems, but not a vast system of corruption.  More recently, BP began appealing one in five claims awards under the appeals provisions of the settlement agreement.

ADR Expert Expresses Dismay

Kenneth Feinberg, who spoke to our students last year, served as the administrator of the 9/11 Victims Compensation Fund and as the first administrator of the Gulf Coast claims facility. 

The Times quotes him expressing "dismay" that the problems associated with the Gulf Coast claims facility “too easily lead[] to the conclusion that an alternative resolution doesn’t work, and in an oil spill you’re better off with an Exxon-Valdez, decades-of-litigation approach. That’s a real public policy missed opportunity.”

Exxon Valdez Spill

Feinberg references the March 24, 1989 accident in which the Exxon Valdez ran aground, tore its hull, and spilled 11 million gallons of oil into the Alaska's Prince William Sound. Until the BP spill, the Exxon Valdez accident was seen as the biggest environmental disaster in U.S. history. 

In 1989, only a few law schools were beginning teach ADR principles, skills, and values, most notably the University of Missouri Law School under the leadership of Len Riskin.  

Accordingly, the court adopted the best known approach to mass torts. It approved a class consisting of 32,000 fishermen, Alaska natives, landowners, and others whose livelihoods were gravely affected by the disaster. Lawyers for this class have explained the history of the litigation:

• A class action jury trial was held in federal court in 1994. The jury returned an award of $5 billion in punitive damages. 

• In 2001, the Ninth Circuit Court of Appeals ruled that the original $5 billion punitive damages verdict was excessive. 

• In 2002, U.S. District Court Judge H. Russell Holland reinstated the award at $4 billion. Judge Holland stated that, “Exxon officials knew that carrying huge volumes of crude oil through Prince William Sound was a dangerous business, yet they knowingly permitted a relapsed alcoholic to direct the operation of the Exxon Valdez through Prince William Sound.” 

• In 2003, the Ninth Circuit again directed Judge Holland to reconsider the punitive damages award under United States Supreme Court punitive damages guidelines. 

• In January 2004, Judge Holland issued his order finding that Supreme Court authority did not change the Court’s earlier analysis. 

• In December 2006, the Ninth Circuit Court of Appeals issued its ruling, setting the punitive damages award at $2.5 billion. 

• Subsequently, [in 2008,] the U.S. Supreme Court further reduced the punitive damages award to $507.5 million, an amount equal to the compensatory damages. With interest, the total award to the plaintiff class was $1.515 billion.

In short, class action claimants waited over 20 years to reach this litigated resolution.  One environmental organization called it a "historic legal battle." 

Most of my students would have been toddlers when the accident happened. 

So, back to my first paragraph.  These claims facilities must be well-designed.  The Gulf Coast claims facility will offer new lessons for future designers about when this alternative approach makes sense.

So far, the federal courts have backed the process and shown overall confidence in the current administrator, Patrick Juneau.   

May 9, 2014 Update: More on BP's challenges of certain claims here. 

#polarvortex, Climate Change, and My Course on Environmental Dispute Resolution

Understanding and Solving Complex Environmental Issues

This Cold Morning

Schools and offices closed as the temperatures dipped to lows not seen in decades. Experts explained what was happening here and here.  A deep dip in the jet stream allowed the frigid cold and winds of the North Pole to descend far south.  

This morning, my little micro-climate in the central Appalachian Mountains registered a temperature of nearly six degrees below zero.  My home town of St. Louis, inundated with a large snow fall and even colder temperatures, is reportedly "closed" today.  The entire city.

As I write this post, I am bundled in a fleece robe, long underwear, yoga pants, a hat, and my pink, fluffy, finger-less gloves.  I've got a lap blanket wrapped around my legs and mid-section, but I'm about to crawl inside my down sleeping bag so I can continue to work at the computer comfortably.

Boo Boo, my littlest dog, is wearing two layers of dog clothes and has curled up on what I call his "heating station," a heating pad set on "4."  I've wrapped him in a lap quilt to finish the heat treatment.   

Climate Change: The Deniers and the Believers

In a New Year's tweet, Donald Trump used the bitter winter weather to argue that global warming is "bullshit."   On Facebook, a friend posted this response:  "Just because you can stick your head in your fridge's freezer does not mean the house is not on fire!"  

And so, that is how so many conversations about our big problems go.  Funny, but they do not help us move forward in any meaningful way.

What might?  How about building more capacity for group facilitation, consensus building, and cooperative behavior?


Environmental Dispute Resolution Course at the Appalachian School of Law

Last year, my Dean, Lucy McGough, invited me to teach a course on Environmental Dispute Resolution. Yes, I said!  Please!  

Less than 20 of the 200 ABA-approved law schools in the U.S. offer this type of course. I am proud to say Appalachian School of Law is one of them.  

But, what a sad statement that statistic offers about the kinds of skills we are teaching the next generation of civic and legal leaders graduating from our nation's law schools. These graduates face complex problems that repeatedly teach us that "we are all connected."   Yet, they have a modest tool box of tools, unless they attend a school like ours.

Here's how I describe the course to students:

This course explores the characteristics of environmental disputes, how they arise, and how we choose to resolve them.  We will examine a range of consensual and non-consensual processes (litigation, arbitration, multi-party negotiation, mediation, negotiated rule-making, consensus-building, collaborative governance, and group facilitation) and evaluate the consequences of process selection.  We will explore and examine the advantages and disadvantages of different process choices in environmental disputes.

The course gives me a place to teach these various processes and their corresponding techniques, skills, values, and ethics.  I also use it to teach distributive bargaining skills when parties have a fixed pie they must divide.  More often than not parties think they have a fixed pie when, instead, they have many opportunities to expand the pie before they begin dividing it.

I rely on four original simulations to teach the course:

• Icky Stuff (about a dangerous by-product of a manufacturing process);
• To Hell with Your Angels' Share (about widespread property damage resulting from a fungus that grows in the presence of ethanol fumes arising from aging whiskey);
• Proposal to Reintroduce Red Wolves into the Central Appalachian Mountains of Southwestern Virginia (as the name suggests); and,
• The East River Wind  Farm Project (about the attempt of Dominion Power to locate a wind farm on a ridge of the Appalachian Mountains located about an hour from the law school).  

Students are assigned roles that include government officials or regulators, local businessmen, industrial representatives, farmers, landowners, environmentalists, eco-terrorists, hunters, local politicians, and labor.  Each representative has confidential facts he or she can share strategically as the negotiation evolves.

Last year, my trained mediators got an opportunity to serve as the group facilitators. They were surprised at the additional skills the task required and pleased at the chance to experience the complexity and promise of these types of processes.

At the end of the course, students will know:

• The relevance and prevalence of consensual processes (multi-party negotiation, mediation, negotiated rule-making, consensus-building, collaborative governance, and group facilitation) in solving environmental problem;
• The role of environmental litigation and adjudication to enforce standards, interpret laws, and to attribute liability;
• How to effectively prepare for and participate in an environmental problem-solving process;
• What consequences process selection has on the outcomes that are possible;
• How environmental conflicts differ from other conflicts and how they can be managed effectively;
• The central elements of effective advocacy and the different ways organizations manifest them;
• The purpose and effective elements of public comments to administrative agencies;
•  Judicial review of administrative decisions;
• The role of arbitrators and administrative law judges in administrative decision-making;
• Basic theory and practice of administrative adjudication;
• Basic theory and practice of administrative rule-making;
• Basic legal processes; how a case proceeds through the courts; and,
• The basic structure of government, and the federal/state separation.

I must have done something right last year, even if I barely stayed one step ahead of the course calendar. This year, I understand the course has a wait list.  I know it will be a lot more fun for me, and based on the lessons I learned last year, it should be a better course for students.  

We won't tackle climate change, although Mediators Without Borders keeps trying. But, we can get a sense of how talk works even with big, polarizing issues, like climate change. 

Student Organizations: The Environmental Law Society

Appalachian School of Law Environmental Law Society

The Appalachian School of Law Environmental Law Society is open to any student enrolled at the school.  Students created it in 2007.  Its Facebook page appears here.

Mission Statement

The ELS:

• Promotes awareness of environmental concerns, issues, and problems within the legal community, the student body, and the local community;
• Bridges the communication and information gaps between the scientific and political/legal communities;
• Enhances the law school experience for students interested in environmental issues confronting southwest Virginia, the United States, and the World; and,
• Serves the community and the school by actively engaging in projects and events to serve this mission. 

Sponsored Activities

As noted in my posting on the Energy and Mineral Law Society, ASL students have planted trees, including blight-resistant American Chestnuts, in honor of Arbor Day in April. ESL co-sponsors this event. In April 2012, they worked on a site located about 23 miles from Grundy near Elkhorn City, Kentucky.

Every October, the ELS hosts the Green Bowl, a touch football competition.  Every March, the ELS also sponsors the Spring Fling, which includes an Ultimate Frisbee competition.

It has co-sponsored educational film viewings, including The Cove, an Academy-Award-winning documentary about the annual dolphin slayings in a Japanese national park.

The group also advises students about events that focus on environmental issues arising in the Appalachian Region, like Appalachia Rising, a protest highlighting the environmental impact of mountain top mining.

ESL also sponsors speaker programs, including a 2011 program by Associate Professor Buzz Belleville on the Appalachian Wind Wars.

Finally, from time-to-time it sponsors river rafting trips.  It also organizes river clean-up events.

Associate Professor Mark Belleville and Associate Professor Derrick Howard serve as its co-faculty advisors.

Back To School: Exciting New Natural Resource and Environmenal Law Program

This month, the Energy and Mineral Law Institute is featuring Appalachian School of Law on its website.  I have reproduced that lengthy discussion below.   Be sure to check out the link for the upcoming symposium.  It will be terrific. Students may get a discount.  

Our Program

Excitement is growing over the official launch of ASL’s Natural Resources Law Program in 2013.  The NRLP is intended to provide a place for rational discussion, intelligent debate and collaboration by engaging both students and the surrounding community in efforts to balance our very real energy needs with stewardship of our land and natural resources.  

A few years back, ASL formulated a plan to create a nationally-recognized natural resources law program.  The goal was to take advantage of ASL’s location in the heart of Appalachia’s coal and gas fields, to attract high quality students with an interest in this area of the law, to provide a resource both to the surrounding community and to the many energy and mineral employers in the region, and to enhance ASL’s academic reputation.  Now, due to the foundation that has been laid by many dedicated stakeholders, faculty members, Board members, students and friends of ASL, the NRLP is ready to launch.

The Governor’s First Biennial Natural Resources and Energy Law Symposium, hosted by ASL

The NRLP will be formally rolled out the ASL-hosted Governor’s First Biennial Natural Resources and Energy Law Symposium on September 23, 2013 in Abingdon, Virginia.  There, respected legal experts will interact with ASL professors in examining topics relevant to practice in natural resources law, particularly as they relate to the Appalachian region.  The 2013 program will focus on “The Future of Energy,” and bring all sides together for rational discussion about how to responsibly address some of the country’s most pressing energy challenges. Representatives from industry, the environmental community, government, and academia will engage in intelligent debate in an atmosphere of civil discourse on a range of important contemporary topics.  Additional information is available at http://www.asl.edu/Admissions/Natural-Resources-and--Energy-Law-Symposium.html. ASL plans to host such a symposium biennially.

Our Curriculum

The core of the NRLP is its curriculum.  Drawing on ASL’s diverse and highly qualified faculty, all with significant relevant practice experience, the school demonstrated its commitment to the NRLP by greatly expanding course offerings in areas related to natural resources.  Current offerings include:

• Natural Resources Law
• Environmental Law
• Sustainable Energy Law
• Coal Law
• Oil & Gas Law
• The Law of Renewables
• Real Estate Transactions
• Environmental Dispute Resolution
• Water Law
• Appellate Advocacy – Natural Resources

Our Certificate Program

The deep curriculum allows the NRLP to offer a specialized Certificate in Natural Resources Law, so students can highlight for prospective employers their commitment and knowledge in this area.  To achieve the certificate, a student must complete at least 15 hours of natural resources related coursework with at least a 3.0 grade point average. 

Our Partners

The formal launch also allows the NRLP to highlight other keystones of the Program that have been put in place over the past several years.  ASL’s ongoing relationship with the Energy and Mineral Law Foundation (EMLF), for example, provides opportunities for scholarship awards, continuing legal education and networking with leading energy and mineral practitioners.  

Further, for the past several years, ASL has partnered with Virginia Tech to offer a Certificate of Graduate Studies in Natural Resources; this program reflects the interdisciplinary approach of the NRLP and allows students to take graduate level classes from one of the nation’s premier natural resources programs.

ASL has also built an advisory Task Force of leading attorneys and representatives of the energy industry, the environmental community and regulatory agencies. The Task Force meets regularly and advises ASL on the real-world legal, industrial and environmental landscape in order to develop the strategic direction of the NRLP. 

Of course, none of the NRLP’s ambitious goals can be met without the generous institutional support of ASL and further support from several of its friends.  The NRLP has received over $300,000 in significant gifts from area foundations, industry and individuals to further its mission. The W. Arthur & Frankie Mae (McGlothlin) Street Distinguished Visitor Fund provides for faculty, staffing and program initiatives, and a local foundation issued a matching challenge of $25,000 per year for five years. 

A leading energy company has met the challenge with a $25,000 scholarship; subject to annual review, the scholarship will be renewed for four additional years. An anonymous individual donor celebrated the holidays in December with a $10,000 gift to the NRLP to honor family and friends. In addition, Dominion Energy made a $95,000 grant award to Professor Buzz Belleville to examine wind energy development in Virginia.

Career Benefits of the NRLP

                Between the partnerships ASL has fostered and the training ASL provides, ASL students are finding increasing career opportunities in natural resources, environmental and energy law.  Current and former employers of ASL grads in these areas of law include:

• Alpha Coal Sales                                                              
• Mountain Institute
• Alpha Natural Resources                                              
• Noble Energy
• British Petroleum                                                           
• Penn, Stuart & Eskridge
• CNX Land Resources                                                       
• Rhino Energy
• Creekmore Law Firm                                                      
• Shell Oil
• Environmental Protection Agency                           
• Steptoe & Johnson
• Equitable Resources                                                      
• Teco Coal Corporation
• EQT Production Company                                            
• VA Dept. of Environmental Quality
• Frontier Energy Group                                                   
• Western Land Services
• Jackson Kelly Wyatt, Tarrant and Combs         
• Jones & Associates
• York Professional Land Services
• The Street Law Firm

Our Student Organizations and Moot Court Teams

Among ASL’s many student organizations, two of its most active are the Energy and Mineral Law Society (EMLS) and the Environmental Law Society (ELS).  Both organizations have organized speakers and panels at ASL.  In addition, EMLS hosted a successful CLE program on black lung in 2013, arranged for student trips to working coal mines, and frequently arranges tree-planting at abandoned coal mine sites on Arbor Day.  ELS hosts an annual “Green Bowl,” a Frisbee football tournament to raise funds.  In the past, those funds have been used to send local high school students to outdoor recreation camps in Roanoke and to purchase a recycling bin for the ASL campus.

ASL students also put out a dynamic Journal of Natural Resources Law (JNRL).  In addition to its own edition, the JNRL partners with EMLF to provide cite-checking and editing for the publication of EMLF’s Annual Institute.  The JNRL will also be publishing a journal of papers from the Biennial Natural Resources and Energy Law Symposium.

ASL fields highly successful moot court teams at competitions in all areas of the law.  Over the past several years, it has sent teams to nationally-recognized competitions in areas of environmental law and energy law.  In 2012, an ASL team reached the semi-finals of the National Energy & Sustainability Moot Court Competition at West Virginia University; in 2013, ASL was the runner-up at the 72-school National Environmental Law Moot Court Competition at Pace University.

Externship, Internship, Summer Courses, and Scholarship Opportunities

ASL has a nationally recognized externship program for students between their first and second years at law school.  In recent years, with the help of the Task Force, ASL has been expanding natural resources law sites for externships.  Over the past year, ASL has more than doubled the number of natural resources and environmental law sites.

In addition, ASL has started a competitive program for placing 2Ls at select natural resources, environmental and energy law sites for paid summer internships.  As a result of the expansion of the externship program, ASL has arranged 11 “premier” internships for rising 2Ls that include the U.S. Environmental Protection Agency – Washington, D.C.;  Bristol Virginia Utilities - Bristol, Virginia;  Joanne Nolte, The Nolte Law Firm, P.C. – Richmond, VA; Josh Baker, Administrative Attorney for the Tennessee Department of Labor and Workforce Development - Workers' Compensation Division – Nashville, TN; Senator Mark Warner - Abingdon, VA; and Stephen W. Mullins, Stephen W. Mullins, P.C. - Dickenson County attorney for four local water authorities and two non-profit corporations.  

As part of its broader efforts, ASL has begun offering natural resources related summer courses, in order to provide greater curricular choices to ASL students, to allow the students to meet the certificate requirements, and eventually to attract students from other institutions.  Further, thanks to some of the partners listed above, ASL will begin awarding natural resources related scholarships.  This financial support will allow ASL to attract the most qualified students with an interest in natural resources law. 

Our Leadership and Faculty

Key drivers behind the NRLP launch include Program Counsel Dan Caldwell, a Principal and Shareholder of McElroy, Hodges, Caldwell and Thiessen.  Mr. Caldwell oversees the implementation of all aspects of the Program, coordinates the biennial Symposium, and leads efforts to establish relationships with representative consumers of the NRLP. 

The NRLP draws on ASL’s diverse and highly qualified faculty, all with significant relevant practice experience.  

• Professor Paula Marie Young, a nationally-recognized expert in alternative dispute resolution, is currently teaching Environmental ADR.  
• Professor Priscilla Harris is ASL’s authority on environmental statutes, and has been teaching environmental law at ASL since before the concept of an NRLP was developed.  
• Professor Buzz Belleville focuses on energy law and policy, climate change and the law of renewables.  He is working to assure the curricular foundation for the NRLP, advising the various student groups, and representing ASL with Virginia Tech and EMLF.  
• Professor Derrick Howard teaches the Natural Resources Law seminar and focuses on issues related to water law and environmental human rights.  As head of ASL’s externship program, he is working to expand site offerings and financial assistance for the summer placement of ASL’s natural resources students.  
• Professor Patrick Baker is ASL’s point person on hard mineral law.  He is also building relationships with professionals in relevant areas including lawyers with mineral rights specialties, corporate counsel for energy companies and representatives of governmental agencies.  
• Professor Danielle Kiser draws upon her considerable practical experience in mineral title abstracting in teaching real estate transactions.

Our Future

           With this foundation in place, it is easy to see that the future of the NRLP is an exciting one.  The 2013 launch is just the starting point.  In keeping with ASL’s commitment to community service and alternative dispute resolution, a central short-term goal is to develop a legal clinic both to provide a forum for addressing industry and community concerns, and to provide practical experience to ASL’s natural resources law students.  Developing dedicated physical space and the hard technology to support expansion of the NRLP is also on the short list of future plans.  Finally, the keystones described above give the NRLP great flexibility in offering, in the near future, a whole host of advanced opportunities for students. 

           By guiding students through the increasingly complex and ever-changing world of natural resources law, the NRLP will ultimately develop students into effective advocates and problem-solvers.  ASL envisions a place where students can be trained for rewarding careers in all aspects of natural resources law, where attorneys can advocate for the competing interests of natural resources commerce and protection, and where all can meet and find mutually sustainable solutions based on rational thought and cooperation.  

           ASL’s dynamism in launching the NRLP, its first real national initiative, will help secure the success of ASL for years to come.  

For more information, contact Associate Professor Pat Baker.