June 11, 2010
The Missing Good Samaritan: Are Hopes of Acquiring BP Dragging Out the Oil Spill?
I can't seem to stop thinking about Andrew Ross Sorkin's column from Tuesday's New York Times, Imagining the Worst in BP’s Future. He wrote that, as the possible costs from BP's oil spill continue to rise, BP becomes more and more likely to be a takeover target. Others are considering ways in which BP can figure out a way to segregate BP's potential losses in a prepackaged bankruptcy, separating the cleanup costs into a separate entity. All of these considerations makes sense, given that BP still has strong assets and pulled in $17 billion in profits last year.
I have been wondering during all of this, where are the other oil companies? As I have noted before, the government doesn't have the equipment, training, or personnel to do much of anything about the ongoing spill. But shouldn't Shell, Exxon, Chevron or Anadarko? If anything, those companies appear to be better run, better managed, and better prepared for such an event than BP. In early May, BP asked other companies for help, and Exxon Mobil suggested injecting dispersants "directly into the oil stream," and Royal Dutch Shell "pitched in," by giving "BP access to subject-matter experts to help them resolve the situation." Beyond that, I haven't seen anything indicating that the industry has mobilized to address what seems, at least in part, like an industry issue. It is certainly a major environmental issue that should warrant action given the widespread damage that is still happening.
Of course, the other oil companies have some motivation to try to lay low and let this seem like a BP-only issue. BP's safety record and public statements have certainly helped in that process. I appreciate that other companies might want to keep their distance, although it would seem that being the hero in this case would have long-term benefits if another company could help in some significant way. There should also be value (beyond being morally right) in trying so the other companies can show they were on the right side of things as Congress starts moving forward on new legislation.
Sorkin's article, though, notes that there may be another reason no one is rushing in to help: "Shell and Exxon Mobil are both said to be licking their chops." Apparently both Shell and Exxon could take over BP without a problem, as long as BP's liability exposure could be segregated in some way.
I have no inside knowledge or any way to know if there is something the other oil companies could actually do to help, and perhaps I have missed something or there is a lot going on behind the scenes. But all of this seems a little like watching the neighbor's store burn in the hope of gaining customers. It may be legal, but it's definitely not right.
June 11, 2010 | Permalink
If another oil company gets involved in containment, how does it avoid getting sued along with BP for contributing to the damage along the coastline? I'm sure in house counsel would tell the CEO not to get involved.
Posted by: David | Jun 11, 2010 6:10:40 PM
Certainly advice not to get involved would help avoid liability. That's always the easy answer, but again, not necessarily the right answer.
I have a hard time imagining liability would attach to a newcomer for the damage already initiated by BP, but to the extent there's risk, I am confident that could be worked out through an indemnification agreement with BP. If it really is too hard to overcome the potential liability for trying to help stop the oil from gushing into the Gulf, then Congress needs to create a carve out immediately.
You may be right, but I just don't think potential liability is keeping Shell from trying to fix it. Either they think they can't (a distinct possibility) or they won't for other reasons.
Posted by: Josh Fershee | Jun 12, 2010 7:33:00 AM
And what will the indemnity be worth when BP declares bankruptcy?
And every first year law student knows that if you come to the rescue, you owe a duty of care.
Posted by: David | Jun 13, 2010 7:26:25 PM
David, if finances for a carve out could be figured out for a Shell or Exxon takeover, it could be figured out for indemnity. Furthermore, a bond or other financial protection could be purchased.
Second, I hope first-year students understand that the duty is care is related to the rescue; those coming to help don't become suddenly liable for the initial accident itself.
Finally, my point if it's really a problem, Congress could codify a Good Samaritan law in this circumstance and insulate (or limit) liabilities for someone coming to help.
Posted by: Josh Fershee | Jun 14, 2010 5:21:08 AM