BP Oil Spill Lawyers Blog

The Times-Picayune reports that the Coast Guard has begun responding to an oil platform explosion and fire in the Gulf of Mexico. What's more, all 12 individuals reported to have been working on the oil platform have escaped danger, with reports of "people in the water.''

The platform explosion, taking place in the Gulf of Mexico 90 miles south of Vermilion Bay, has led to a fire and large amount of smoke in the air. Coast Guard Petty Officer Bill Colclough has stated all 13 individuals that were on the platform are accounted for with one reported to be injured.

Check into this blog for breaking news as it becomes available regarding this matter.

Our entry yesterday profiled the recent troubles that claimants have been having with the timeline in which they have been receiving responses or payments from the Gulf Coast Claims Facility (GCCF). The delays, which the GCCF has claimed to be a result of the influx of claims and the newness of the process, has come in contrast with the facility's efforts to payments to approved claims within 48 hours and reports that the analysis/review of claims can take as long as three weeks. In all, these conflictive timelines have only resulted in additional stress for claimants who have been suffering harshly in a bad economic climate further aggravated by this ecological disaster.

Delays and problems with payment programs instituted by Kenneth Feinberg are not a new thing, however. Mr. Feinberg, as head of the 9/11-based claims fund faced similar criticism from victims looking for compensation after the national tragedy. According to a New York Times article, Feinberg's promised timelines were a source of ire for attorneys and families who were relying on payments to make ends meet. According to the article

Family members, along with lawyers and company officials whose colleagues were killed or injured in the attacks, have complained that the fund's special master, Kenneth R. Feinberg, often promises decisions within a week or two, only to repeat the same promise for weeks, then months, without delivering. They have also accused Mr. Feinberg and his staff of being inconsistent; one relative said that he once got three different responses to the same question on pension benefits.

These ideas of inconsistency and timeline delays likely sound familiar for individuals who have faced similar problems in the wake of the GCCF taking over the process. What's more, dating back to 2003 individuals were complaining about the amount they received and how it conflicted from statements by Feinberg. One individual went so far as to create a website that demanded fixes to the fund, something that could very easily emerge from this issue.

While complaints will assuredly come out of any tragedy in which a system of financial assistance is created to try to help those who are hurting from their plight, these similarities are troubling. In the wake of complaints from individuals against the 9/11 Fund, Feinberg assured that changes would be made to fix the problems that existed and work to help people as much as possible. However, that these similar problems of conflictive reports on timelines for claims and delays, as well as significantly lower payments made compared to public assurances, is worthy of review and public attention.

The GCCF will likely review their processes in light of complaints and try to make changes to help people receive the money they need. These problems, though, present a problem in the claims process that can hamper financial recovery for some. By consulting with an attorney about your legal rights, you may find that having a legal expert prepare your claim can help make sure that your claim is prepared in the most complete and professional way possible to avoid the need to refile or submit additional information.

While taking the role of head of the Gulf Coast Claims Facility (GCCF), Kenneth Feinberg assured the public that the claims process would continue to move along at a speedy rate and was encouraging with his remarks. Reality, however, has proven to be a little more pessimistic. An effort on the behalf of ProPublica has tracked the process of BP claim volunteers to monitor how the process is handled and the results have been disappointing to say the least: some are reporting that the GCCF has not only exceeded 48 hours in analyzing their claims but, in one case, was unsure how much longer it would take after 72 hours.

While a response within two days of filing is an aggressive effort, the fact that the process is lagging is the more relevant news in this matter. Though a spokeswoman for Feinberg acknowledged that the first couple weeks could feature delays in responses, the extended timeline now being faced is more indicative to a more concerning issue: documentation expectations and claim denials. The GCCF has provided statistics showing only 6% of total claims, for businesses and individuals alike, had been paid out as of Monday. Conflicting reports of payouts, ranging from 48 hours of receipt of a claim all the way to after three weeks of review have left many frustrated and a significant lack of transparency or consistency with the process.

The reality is all of these problems are hitting a population that has already been hit financially by the oil spill and subsequent hardships. The company has stated it will work on claims around the clock but the delays caused by transfers of paperwork, refiling claims once the GCCF took over the process and the need for refiling when documentation was incomplete has led many to stretch themselves financially, or close their businesses indefinitely while waiting for their payment.

All of this means that a lot of struggle has become a part of the claims process in an otherwise stressful time. By hiring an attorney to help you through this difficult process you can feel comfortable that the claim is moving forward with an expertise and careful documentation review that will help prevent further delay. Though the GCCF claims to have paid out nearly nearly $10 million since taking charge, the fact the facility is in the midst of receiving and reviewing 31,000+ claims means that delays are nearly inevitable. Such delays will further increase the likelihood that claimants will have to consider litigation, further increasing the importance of one consistent representative through the claims and judicial process.

A friend of our firm recently vacationed in Florida and came back with photos demonstrating that tar balls are still very much a reality in the Gulf Coast.

While national attention has shifted away from the spill after the well was capped, these tar balls demonstrate that the issue is far from over. What's more, it demonstrates that even though the oil is not still gushing into the ocean, the effects of months of leakage are still causing detriment to tourism and the beautiful scenery of the Gulf Coast.

On April 20, 2010, the beginning of the world's worst offshore oil spill began that continues to impact the entire Gulf Coast region. The timeline of events leading up to the oil spill are as significant as the events that have followed. Many of the decisions that were made resulted in the Deep Horizon explosion that killed eleven men. BP is now facing a massive amount of claims and will continue to do so for years to come.

To start with, many federal agencies explored worst case scenarios prior to the BP oil spill, concluding that off shore drilling could result in a massive crisis that would be hard to contain. Specifically, in May of 2000, the Minerals Management Service (MMS), estimated deepwater-drilling worst case leak at 116,000 barrels per day, and declared that "There are few practical spill-response options for dealing with submerged oil." The United States Coast Guard also explored worst case scenarios and aided in spill-response practice runs. In April of 2002, oil companies in response to the practice runs, convinced regulators to ease public notification rules, this was at the same time that the practice runs revealed that oil companies, including BP, were relying on over 30-year-old technology, yet no regulations were drafted or implemented as a result. Further, MMS faced the decision of whether or not to mandate remote control shut-off switches for blowout preventers, but in March 2003, decided against requiring oil companies to put in such switches. Time and time again, potential safety regulations and oversight controls were not implemented and left to the way side.

BP, after fighting against MMS's potential regulations, experienced their first major catastrophe in Texas City, in March 2005. BP's Texas refinery faced a significant explosion, killing fifteen men and injuring over a hundred and fifty. After this tragic event, the company faced the conclusion that it was cheaper for them to pay the injuries and harms to their workers than to remedy the potential accidents. Many may see this analysis as an obvious attempt to evade paying to fix problematic issues such as outdated equipment, and a lack of safety technology in order to maintain profit. However, as we have recently witnessed with the Gulf Coast oil spill, the number of claims that BP is facing may outnumber the price that could have been paid to fix such problems to avoid such an incident.

The Deep Horizon oil spill is now regarded as the world's largest offshore oil spill in history, yet since the beginning of the crisis, BP attempted to deny and minimize the scale of the oil spill. In fact, NOAA on March 22, 2010 estimated 64-100,000 barrels per day of oil spilling into the Gulf, yet, BP estimated that at the most, 1,000 barrels per day was spilling. Then, BP CEO Tony Hayward infamously declared that, "The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water." Estimates continued to soar, independent scientist on May 20, 2010 stated that at that point, over 100,000 barrels per day of oil were escaping into the Gulf, BP maintained that it was not over 5,000 barrels per day. Following the battle of estimates, the EPA demanded BP to start using less toxic dispersant, BP refused.

Albert Einstein once said, "You learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning." The oil spill can teach us many lessons, such as the need to implement safety measures, such as remote control shut-off switches for blowout preventers. Also, the need for emergency worst case scenario plans to be fully thought out, researched, and available for implementation if such scenario occurs. Further, BP was over 30-year old technology, current, up to date methods are vital in operating such serious procedures. These changes are not a complete list, nor are they a total solution, but they are part of the necessary steps in order to protect both workers and environments in which such drilling is taking place.

The Louisiana Oil Spill Coordinator's Office (LOSCO) has implemented a training program specifically tailored to government officials required to observe and respond to oil spills within the state for some years now. The Louisiana Oil Spill Response Management Training Program works to help industry personnel feel prepared and ready to handle emergency spills both in the Gulf and throughout the state. Offered free-of-charge, the course is offered as a public service to help maintain a qualified and prepared "army" of personnel capable of putting the brakes on an oil emergency.

Each year roughly 200 individuals, including contractors, regulators, governmental employees, and others, go through the oil spill education LOSCO has to offer. What's more, subject-specific training courses are made available to help further the understanding of the "oil spill students." These courses serve as an invaluable resource for the state as they help insure that, should disaster strike, a capable and well-trained group of people are responding when catastrophe arrives. Such courses have requirements, though, in their content as they serve to provide the specific information required by Mineral Management Service (MMS) Regulations for all oil spill response supervisors.

The way in which the training helps engage participants is by simulating oil spill conditions and situations in a participation-based "classroom" of sorts. Topics range from the variety of Louisiana environments, the National Response System, safety of individuals involved in repairing the oil spill, waste disposal, public affairs, decision making and a variety of other topics. One such topic, Fate and Effects of Oil in the Environment, touches specifically on the recovery effort of natural resources and just how dangerous oil cab be to the wildlife and variety of marshes, islands, waterways and other components of the state of Louisiana.

Beyond these topics, LOSCO hopes to keep abreast of developments as they become available by instructing participants on a variety of case studies, research, technological developments and current events. Training has obviously developed since LOSCO began sponsoring the Management Training Program in 1997. While the Oil Pollution Act of 1990 (OPA) helped define the state powers inherent to handling oil spills, the Louisiana Oil Spill Prevention and Response Act
of 1991 (OSPRA) gave the states the right to determine the role and manner in which they would use funding to manage current and future oil spills. The training courses described herein are just one of those ways that Louisiana has conducted this right.

On its website, LOSCO profiles the importance of effective training on its website. The amount of foreshadowing on it is alarming, however, when it describes the importance of such training in the event of a Gulf oil spill

In March 1989, the Exxon Valdez spill in Prince William Sound, Alaska, focused national and worldwide attention on oil spills. As a result, the Oil Pollution Act of 1990 (OPA), 33 USC 2701 et seq. was passed. In spite of the notoriety of the spill, it was a relatively small spill in comparison to spills worldwide, ranking 58th in size. However, the Exxon Valdez spill, if superimposed on coastal waters of Louisiana, would affect coastal Louisiana from the Sabine River to the Pearl River, and would cause major environmental and economic injury.

This imposition of an Exxon-level spill happened on April 20, 2010 with the sinking of the Deepwater Horizon oil rig. There is no doubt that a large number of those who have been involved in the response to the spill in the past three months have no doubt been participants in this LOSCO training. It is assuring that many of those responders have been trained by a system that focuses on making sure preparedness and education was key. Educated using spill response tabletop exercises with a variety of scenarios including offshore and inshore catastrophes, these classrooms have effectively prepared officials from all areas and industries of Louisiana to help prevent the impact of an oil disaster.

While the world watched BP inundate the Gulf Coast with oil and natural gas from the Deepwater Horizon spill, another BP environmental disaster went unnoticed only a few hundred miles to the west. In Texas City, which only five years ago was the scene of a huge industrial explosion, a fire caused BP to release over half a million (500,000) pounds of poisonous gases into the atmosphere. Included in the release were seventeen thousand pounds of benzene, which is a carcinogen known to cause leukemia. Although the event has gone nearly unreported, it was one of the largest releases of toxic gasses in Texas history.

The release occurred as a result of a fire in a hydrogen compressor, which reduces emissions by trapping noxious chemicals for reuse elsewhere in the factory, and in an oddly named piece of machinery called an "ultracracker,"which turns petroleum into gasoline. The fire, in turn, was caused by a buildup of iron sulfide inside the machinery. Local environmental and industry watchdog groups say that this sort of illegal emission is very common and is caused by the industry's practice of running its machinery into the ground.

The Texas Commission on Environmental Quality (TCEQ) agrees. According to it, this sort of wear and tear is entirely preventable and requires relatively little maintenance. BP, unfortunately, has provided no such maintenance; the very same pieces of machinery had been involved in the 2005 explosion at the site, which left five people dead and over one hundred and seventy injured.

When the fire broke out, rather than shutting down the affected portions of the refinery entirely, BP decided to keep its operation running. The refinery kept running, albeit at a 55 percent reduced capacity, and simply rerouted the chemicals into an emergency flare device. The flare works like a pilot light on a stove, burning gases as they come in contact with the flame. BP rerouted chemicals to this emergency flare for forty continuous days, beginning on April 6, and ending on May 16.

The first problem with that is the flare does not burn up all the gas. Under ideal conditions, the best available technology allows 2 percent of the gas to escape. At this point, it is unclear whether the particular flare in Texas City was performing at capacity. Although BP denies it, local environmental groups claim the company had no monitoring technology near the flare to measure its performance. It is also unclear whether BP had the best available technology installed in its refinery, in the first place. When BP reported the emission, however, they did so assuming that 2 percent of the gas escaped. As such, the figure they reported, half a million pounds, may be much higher.

The second problem is that BP failed to inform anyone of the emission until after the fact. BP even failed to inform its own employees, who worked beneath the toxic cloud for forty days. As a result, two thousand BP workers and over twelve thousand local residents claim to have been exposed and claim to have been suffering from several symptoms, including dizziness and nausea. One resident who is suing BP claims that her six month old boy died as a result of the release. Although no cause of death was officially determined, the doctors noted that the infant's lungs were flooded with fluid.

In addition to private lawsuits, BP is facing a lawsuit brought by the Texas Attorney General's Office. Unlike the private litigants, who are collectively asking BP for 10 billion dollars in damages, the Attorney General is asking for 1 million dollars in fines. If 1 million dollars sounds like a small price to pay for exposing at least twelve thousand residents of the Houston-Galveston area to seventeen thousand pounds of carcinogenic toxins and half a million pounds of other chemicals, that's because it is.

The Texas Clean Air Act provides for a twenty five thousand dollar fine for every day of violations. Over the course of forty days, that figure stacks up to 1 million dollars. To be fair, the Attorney General is also asking for attorneys' fees and research costs associated with the lawsuit. Doing so, however, is extremely common; nearly every plaintiff asks for costs. It's also likely to be irrelevant because BP will almost certainly settle the lawsuit before the case goes to court. The settlement amount will be at the Attorney General's and BP's discretion, rather than the hard number of twenty five thousand dollars per day as prescribed by law.

The Texas Attorney General could be asking for much more. In addition to the twenty five thousand dollars per day fine, the Clean Air Act allows states to ask the court for interest and the economic benefit gained by the defendant. Adding the defendant's economic benefit to the claim is extremely important; it makes breaking the law a zero sum game. Private lawsuits aside, with only a twenty five thousand dollars per day fine, BP is incentivized to violate the Clean Air Act whenever they stand to gain more than twenty five thousand dollars per day by doing so.

Anyone affected by these spills, whether the air release or oil leak, should contact a legal expert immediately to discuss their legal rights in the coming months for their losses or health damages.

Oil giant BP has exhibited three specific responses to the Deep Horizon oil spill: denial, minimization, and an eventual out of sight out of mind mentality. Currently, the well is capped and the company has maintained that the spill is now remedied. However, visitors to the beaches of Pensacola, Florida, would tell a different story: tar balls the size of my fist rolled back and forth, painting over the sand. The scene was contrary to what the news outlets and BP have declared for the past few weeks. Though cleanup crews wearing respirators, gloves, and high rubber boots were nearby working, visitors had no warning to the danger surrounding them. The timeline of events leading up to what is now evident on our shores and in our waters demonstrates a lack of federal oversight and a desperate need for stronger regulations.

BP began to minimize the oil spill as soon as it occurred on April 20, 2010, when the blowout preventer on the Deep Horizon offshore rig failed. This failure resulted in an explosion killing eleven men and then sinking two days later in the Gulf. Estimates began to fly all over the number scale as to how much oil was spilling out. Initially, NOAA on April 22, 2010 demonstrated a white board on video with the estimate of "64-100,000 barrels of oil per day spilling out." Yet, BP estimated on April 24, 2010 that at the most, 1,000 barrels per day "might" be spewing out into the Gulf of Mexico. At this point, the controversial dispersant was utilized and sprayed both on the surface of the water, and subsurface, at the well's head. The dispersant used, Corexit, was banned in the UK and had never been used subsurface, yet BP continued to use it.

Attempting to deny the seriousness of the crisis and minimize its effects, BP CEO Tony Hayward declared on May 14, 2010, that "The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water." However, the estimates of the oil spilling out into the Gulf consistently grew larger. On May 20, 2010, BP stated that 5,000 barrels per day were being spilled into the Gulf, yet, independent scientists declared it was well over 100,000 barrels per day. On that same day that the independent scientists gave their estimates, the EPA demanded that BP start using less-toxic dispersants. However, BP refused. Further, the company consistently denied access to media outlets. In fact, on May 18- June 3rd 2010, "CBS reporters were threatened with arrest if they filmed the oil on the beach. Pilots were told they could not fly any press over the spill site. Also, Federal authorities informed Sen. Bill Nelson (D-Fla.) that he could not bring a cameraman with him on tour of the sites. Additionally, on July 16, 2010, BP attempted to place numerous scientists on the company's payroll for $250 an hour, provided that the scientists did not share with the public the research performed or their results.

George Santayana, a philosopher and poet once said, "those who cannot remember the past are condemned to repeat it." Thus, exploring the actions that resulted in the world's largest offshore oil spill will hopefully shed light upon the steps necessary to prevent such incidents from ever occurring again.

Some Louisiana shrimpers returned to the Gulf last week as the commercial season opened in the wake of the BP oil spill. A report issued last week by the National Oceanic and Atmospheric Administration (NOAA) stated that 75 percent of the oil that leaked from BP's underwater well has been removed from the Gulf or has been otherwise dispersed or contained. Yet, according to a recent post on the BP Oil Slick Blog, boaters returning from recreational fishing trips have reported "stories of crabs whose lungs are black with oil, or of oysters with shells covered in sludge." Naturally, this is extremely unsettling to the thousands of Louisiana fishermen who are part of the state's $318-million-a-year seafood industry.

The Food and Drug Administration (FDA) reports that none of the samples of seafood from the Gulf it has tested so far have shown evidence of contamination. According to a Yahoo News article, the FDA's seafood testing begins once oil is no longer visible in a particular area of water. Inspectors smell fish and shellfish samples for oil, and then send them off for testing at federal or state laboratories. In order to clear an area for seafood harvesting, the samples from the area must test below the FDA's set levels of concentration for 12 potentially toxic substances found in oil. While these tests are considered reliable, the FDA has not yet developed a test to detect the presence of the chemical dispersants extensively used by BP to break up the oil. While the chemical dispersants are thought to be less toxic to wildlife than a buildup of oil alone, it is not clear how those dispersants may affect the health of humans who ultimately consume seafood that was exposed to the chemicals.

Harlon Pearce, a seafood dealer and the head of Louisiana's seafood promotion board, cited the concern over safety as the cause of the significant drop in demand for shrimp and other Gulf seafood about a month ago. The resulting price crash has left commercial fishermen nervous about the profitability of their upcoming season. And despite the reopening of waters for shrimping, many fishermen are reluctant to head back out right away because they distrust state and federal officials, said Patrick Hue, a shrimper out of Buras. "Nobody wants to rush into this and then someone gets sick on the seafood and the first thing you know, no one wants to buy our seafood," he said. Brian Zito, a commercial fisherman from Grand Isle, put it this way: "I know what's out there and I'm not going to mess up my equipment with oil. You can't even ride back there in a boat without stirring up tarballs, let alone put a net in the water."

In addition to shrimp, the state's seafood industry also relies heavily on crabs and oysters, the harvesting of which has been almost entirely shut down due to the oil. Most of the nearshore fishing grounds favored by shrimpers also remain closed.

Tourism is big business for the Gulf Coast states. Louisiana saw $1.36 billion of its more than $8 billion in tourism dollars generated in the Gulf region last year. Alabama's beaches produced 25% of the $9.2 billion in tourism dollars earned in 2009. While most beaches have remained open, lodging owners from Gulf Shores, Alabama, to Fort Walton, Florida, say bookings are down. In Mississippi, the spill could result in a $120 million loss to non-casino tourism in the state's coastal areas this summer alone.

However, Grand Isle, Louisiana, is getting hit the hardest. The town of 1,500 usually swells to 10,000 during the summer months. Needless to say, Grand Isle will not be seeing those numbers this year.

Blake Fleetwood, who owns five travel agencies in New York City, said that, as of early July, half of his clients who had booked Gulf Coast vacations were considering cancelling. The fear, more than anything else, forced one group of 20 to switch a tennis-playing excursion from Key West to South Carolina. This news comes just weeks after several Gulf cities reported promising numbers from April and May travelers. Hotels and eateries in New Orleans, many of which have struggled since Hurricane Katrina, have had their best year since the storm. Downtown hotels have had fewer than 2% cancellations since the oil leak began. The area around Pensacola had also been doing well. Lodging occupancy was up by double digits in May over the same time last year.

Unfortunately, those numbers are not expected to last. Tourism officials are predicting a 10%-20% drop in revenue and occupancy in June and July and a 20% plunge in August. Renee Lefeaux of Orange Beach, Alabama, recently got her condo into rental condition after Hurricane Ivan in 2004. She says before the spill she was completely booked through August. Now, there's not a soul booked for the rest of the year. Restaurants are not expected to fair much better. Those along the coast in the Florida panhandle are already reporting a 50% decrease in customers and 25% drop in sales.

From a legal perspective, cancellations are easy to account for. The reservation was there, and now its not. This is the best example of lost profits, especially because the loss can be documented with occupancy records and proven to be causally related to the BP oil spill. It becomes more difficult to document when vacationers simply make reservations elsewhere, instead of cancelling. In that situation, business owners need to be able to reproduce records for similar periods in the previous years. If you did $200,000 in rentals between June and August in both 2008 and 2009, and your projected rentals for June-August 2010 is only $50,000, you are in a much better position, particularly if you can show that the 75% decrease was in large part due to the oil spill.

The complexity of proving the financial losses related to the BP oil spill is one of the reasons why hiring an attorney to handle your claim is a necessity in these difficult times. Utilizing a wide variety of experts and documentation, an attorney can help prove in a claim, or litigation should that be necessary, that the oil spill was the direct cause for the plummeting revenue coming into the Gulf Coast. Further, by utilizing one consistent legal expert through the process, a claimant can make sure that, should the claim be underpaid or denied, they have consistent legal representation that knows the ins and outs of their loss and can fight strongly for their interests.

Continue reading "BP Oil Spill Ravages Gulf Coast Industries; Significant Losses in Tourism Industry Require Oil Spill Claims" »

Imagine that after your property or business was damaged in the recent Gulf Coast oil spill disaster you filed an oil spill damages claim. After going through an arduous process your claim is approved and you begin receiving payments for lost business income, wages, profits, or personal physical injury. The first thing on your mind is--what are the tax implications of this new income, right?? Of course not.

Anyone in this category will understandably be focused on rebuilding their life and livelihood with the help of what is probably meager compensation when compared to what has actually been lost. However, it is still important to be aware of the potential tax implications of claim payments to avoid being derailed by a huge tax bill down the road.

The IRS has provided guidance on this topic. The following are some important questions you may (and should) be asking yourself about oil spill payments, as well as the responses:

1. Do I have to include payments for lost business, income, wages or profits in gross income on my next tax return?

Yes. Any payments you receive for lost business income, wages, or profits should be included in your gross income calculation for the tax year. In addition, if you are self-employed and receive payments for lost income for your business, you should include the payment amount in your "earnings from self-employment" calculation for the purposes of calculating self-employment tax.

2. Will these payments be reported to the IRS by whomever is making the payment?

Most likely. If an individual makes a payment to someone for lost business income, profits, or wages, they must report that income on form 1099 MISC if the payments total $600 or more. If the payee does not provide their taxpayer identification number at or before the payment is made, taxes will be withheld at a rate of 28 percent. Any payment that is treated as wages will be reported on a W-2 form and will be subject to all applicable taxes for wage payments from employers to employees--including Social Security and Medicare tax.

Generally payments to corporations do not need to be reported. However, payments to LLCs, partnerships, or other non-corporate entities are reported as if they were payments to individuals.

3. Do I have to include payments for property damage in my gross income?

Not necessarily. If you receive payment for property damage or loss and the payment is less than your basis in the property, or what you paid for it, you do not have to report the payment as gross income. However, if the payment is more than your basis, the difference between the basis and the payment will need to be reported as a taxable gain. if the property has been subject to what is called an "involuntary conversion" you can defer the gain by purchasing qualifying replacement property. An involuntary conversion occurs when property is destroyed, stolen, condemned, or disposed of under threat of condemnation and you receive payment for the property such as a condemnation award or insurance.


4. Can I deduct a casualty loss on my next tax return even if I have received payment for property damage or destruction as long as the payment is less than what I paid for the property?

Yes. you may be able to deduct a casualty loss if the payment for the property is less than your basis in the property or what you paid for it.

5. If I can deduct a casualty loss how do I determine how much to deduct?

There are two different ways to determine how much to deduct. If the property is personal-use property you can deduct the lesser of the difference in the fair market value of the property before and after the casualty or your basis in the property. The deduction is then reduced by any payments or insurance proceeds you have received or expect to receive. Individuals must deduct $100 from each casualty loss deduction and deduct an amount equal to 10 percent of their adjusted gross income from all casualty loss deductions claimed.

For business (income-producing) property that is partially destroyed the process to calculate the deduction is the same with the $100 and 10 percent deductions not required. However, if the business property is completely destroyed and its basis is greater than fair market value (i.e. it has gone up in value) the deduction is equal to the basis minus the payments received or expected.

6. How do you determine the decrease in the fair market value of property after a casualty?

You can either hire an appraiser to determine this or use the cost you paid to repair and clean up the property to determine the decrease in value.

7. How do I report a casualty loss deduction?

The casualty loss deduction should be claimed in the tax year it occurred. It can be claimed on either IRS Form 4684 and Schedule A (personal use property) or Form 4684 and Form 4797 (business property).

8. Do I have to include payments for physical injuries, sickness, or emotional distress in my gross income?

No. Typically you do not need to report as gross income any payments received due to personal physical injuries or physical sickness. These include observable bodily harm or emotional distress that can be attributed to observable bodily harm.

9. What if the emotional distress is not attributable to physical sickness? Are those payments gross income?

Yes they are. If the payments are for emotional distress not attributable to physical sickness or personal physical injuries they must be included in gross income. However, you can exclude from income the amount of payments for emotional distress up to the amount you paid for medical care to treat the distress.

10. If I receive payments for emotional distress not attributable to physical sickness will the person making the payment inform the IRS?

Yes. Just like other payments they will reported on Form 1099 MISC as long as they are $600 or more.

IRS rules and regulations are some of the most complex laws out there. If you are struggling with filing your taxes after you have received payments for lost wages, profits, or income resulting from the oil spill, you would be well advised to contact an expert attorney with tax experience for help.

In the wake of the Deepwater Horizon BP oil spill and the variety of monetary claims made against the oil giant in hopes of making Louisiana citizens financially stable, many people have forgotten the ecological toll that is being dealt on the wildlife and shorelines of this state. The state of Louisiana, like many other Gulf states, has a system in place to deal with the oil spilled in the event of an unfortunate industrial accident. The Natural Resource Damage Assessment (NRDA) collaborates one particular unit, the Louisiana Regional Restoration Planning Program (RRP Program), to efficiently restore the environments harmed when these ecological disasters occur.

The RRP Program is composed of natural resource trustees dedicated to returning natural resources within Louisiana to its original state, while also compensating the public for damages suffered by the release of oil. The trustees operate as an extension of the public given the concept that the natural resources of the state belong to the citizens and the harm caused is, by extension, their harm. The RRP is an extension of this, working to quicken and efficiently carry out the NRDA process, utilize a series of practices that establish consistence of their efforts and understanding by the public, all in attempts of restoring the lost natural resources and/or services resulting from the oil spill.

Given its power by the Oil Pollution Act of 1990 (OPA) and the Louisiana Oil Spill Prevention and Response Act of 1991 (OSPRA), the RRP Program is a combination of federal and state efforts to effectively respond to oil pollution in the Louisiana environment. By streaming OPA and OSPRA efforts into one consolidated program that addresses the goals of those two pieces of legislation, the RRP Program attempts to return the state to its former glory in the wake of an ecological disaster.

It does this by separating the state of Louisiana into nine regions so as to assist in tracking, accounting and oversight of the program. The nine regions may be seen here. Within these regions, the RRP Program looks to

Define those natural resources and services at risk or already affected by oil spills. By identifying these components, the Program looks to expedite the process of finding ways to fix the problem and move forward in recovery.

Decide what manners of fixing the situation exist and categorize them as follows

1. Creation/Enhancement


2. Physical Protection of Habitat


3. Acquisition/Legal Protection


4. Stocking of Fauna


5. Physical Protection of Fauna


6. Restoration of Recreation Resource Services


7. Restoration of Cultural Resource Services

Selection criteria is used to determine which of these is the proper manner of moving forward in recovery. All of this is done to provide transparency to the process for the sake of public review.


Settlement alternatives are examined - in this, the trustees decide whether a plan should be implemented by the Responsible Party or whether a cash settlement should be reached and the trustees should execute the recovery process.

Finally, a screening process is carried out for the sake of transparency to the public. This is carried out by the committee determining through a certain list of criteria which recovery plan is best and most appropriate, etc.

The Louisiana RRP Program, as a result, works to facilitate effectiveness in the recovery effort, expedite restoration efforts, reduce costs, pool recoveries within regions, provide consistency and transparency for the sake of industry and the public, as well as improve relations between governmental organizations. Additionally, the program looks to enable trustees to fix ailments incurred by the state due to the oil spill, maximize partnership opportunities and encourage public participation in the process.

All of these facets to the RRP Program will come into effect assuredly when the state and BP begin working to return the Gulf Coast to what it once was. Using these series and processes that have been used in each recovery effort, the state will try to do with this unparalleled disaster what it has with every other industrial mishap. Keeping consistency within RRP-based recoveries not only helps the public feel comfortable with the process but also will, hopefully, lead to a speedy recovery process for all of the marshes, coastline, animal habitats, etc., that have been affected.

All information provided by the Louisiana Oil Spill Coordinator's Office.