Oil is released into the environment from natural seeps and from human activities involved in the exploration, production, transportation, and refinement of oil and its distillation. The effect of oil on the marine environment depends on many factors including the type of oil and the characteristics of the environment into which the oil is released, along with related climatic and meteorological phenomena.

I. Background

Since the mobile offshore drilling unit Deepwater Horizon exploded and sank into the Gulf of Mexico in late April 2010, the resulting oil spill and the events that may have contributed to the disaster have captured the attention of the general public, as well as government officials, on a historic scale. Despite the length of time that has passed since the incident, the environmental, operational, and regulatory impact of the spill, and the full range of public and privatesector responses, remains to an extent uncertain.

Now that BP has stopped the flow of oil into the Gulf of Mexico from the Deepwater Horizon rig, scientists and regulators are in the initial stages of making a concerted effort to determine where the oil (and dispersants) went, in what form, and what, if anything, this means to the biota of the Gulf. Biologists, ecologists, and other scientists have the gargantuan task of trying to sort out, characterize, and quantify the scope and degree of the biological effects of the spill on Gulf and estuarine ecosystems.

The Deepwater Horizon oil spill in the Gulf of Mexico is a disaster of major proportions. The commercial and natural resources damages that will arise from the spill may ultimately be similarly significant. The Exxon Valdez oil spill in 1989 is often compared as the closest, if imperfect, historical example of how the Gulf spill will be treated. After the Exxon Valdez spill, fishermen claimed pure economic damages related to alleged depression of seafood prices in addition to losses from forgone catch in closed fisheries.

I. Premises

Failures, disasters, and tragedies occur. Catastrophic oil spills or toxic releases, mechanical breakdowns, technology failures, or software glitches may appear to be accidents, intentional acts, or environmental disasters, but almost always, human error will be involved. The human fault may occur in project design, construction, supervision, operations, maintenance, repairs and modifications, inspections, and/ or regulation. Emergency action plans (EAPs) can minimize the impact of human fault.

About two months after the Deepwater Horizon explosion, BP and the Obama White House announced a novel agreement under which BP created a new $20 billion oil-spill fund to pay individuals and businesses suffering losses arising out of the disaster. Kenneth R. Feinberg moved from his post as "pay czar" for financial institutions receiving federal assistance in order to undertake administration of this Gulf Coast Claims Facility (the Facility). Feinberg is the same Washington-based lawyer who ran the victims' compensation fund after Sept. 11 terrorist attacks.

On April 20, 2010, the Deepwater Horizon oil rig exploded off the coast of Louisiana. The explosion and subsequent fire killed 11 workers and injured several others, and started the release of millions of gallons of oil into the Gulf of Mexico from more than one mile beneath the surface of the water. It is still too early to tell, but it may very well be the biggest environmental disaster in the history of the United States. Was it foreseeable? Was it preventable?

"[N]early one-third of the Gulf of Mexico has been closed to commercial and recreational fishing." --U.S. District Judge Martin Feldman (June 22, 2010)

I. Introduction

Emissions trading is increasingly recognized as a cost-effective policy instrument to reduce the concentration of greenhouse gases (GHGs) in our atmosphere. The concept, which until recently was treated with suspicion by many countries, has seen in the last 12 months unprecedented proliferation and success.