The Cap on Oil Spill Damages
I didn’t even realize there was one. But there is. It is $75 million dollars, meaning that’s the highest amount that BP would be forced to pay for damages from its mess in the Gulf of Mexico.
Sens Ben Nelson, Bob Menendez, and Sen. Frank Lautenberg proposed legislation to raise that to $10 billion. Republicans blocked the measure, on the grounds that it would push the mom-and-pop offshore oil drillers.
In the Senate, Sen. Lisa Murkowski (R., Alaska) led the charge against a measure aimed at raising to $10 billion the limit on damage claims that BP must pay for the oil spill. The current limit, of $75 million, has been widely criticized by lawmakers as too low.
Republicans blocked efforts to proceed, saying independent offshore oil developers would not be able to stay in business under the legislation because small companies wouldn’t be able to self-insure against claims.
“The only companies that are going to be able to self-insure against this level of strict liability are the national oil companies, the super majors,” Ms. Murkowski said. She said that would create a “monopoly” on offshore drilling among giant companies such as BP. “We need to ensure that BP as the responsible party pays.”
That may be true—I have no idea—but that seems a weird end-run sort of excuse. The potential damages they might do would exceed the threshold that insurers would be comfortable with, so…lessen the amount of damages they’re responsible for so they can get a third party to pay for things when they screw up? I mean shit, nobody will insure me to conduct brain surgery either. That’s not really a compelling argument towards lessening the amount of damages a family gets if I perform brain surgery and kill a patient, so I can afford the malpractice insurance coverage.
This is why tort reform is such a bad idea.
Tort reform caps punitive damages, not compensatory damages.
Comment by Rojas — 5/14/2010 @ 1:59 pm
In general, artificial limits on damages.
Comment by Brad — 5/14/2010 @ 2:26 pm
Then this example doesn’t prove your broader point.
You very reasonably want BP to pay the full cost of cleanup, just as doctors would be required–under most proposed versions of tort reform–to pay the full cost of correction for any defective medical procedure for which they are responsible. The limits on damages that can be paid out for this purpose are essentially limits on those ameliorations which can be directly traced to the actual injury inflicted. Tort reformers will generally oppose massive “compensatory” awards for “pain and suffering” which would be analagous to, for instance, a claim against BP by the Louisiana Tourism Board claiming indirect damage to the state’s reputation.
Most tort reform proposals restrict additional damages beyond those required to correct the injury, which juries choose to award for punitive purposes. The analogy to BP would be some sort of additional punitive fine above and beyond the cost of cleanup just because they suck, which so far as I can tell, nobody on either side of the aisle is even considering.
Is there a reason why doctors should be treated worse under the law than criminally negligent oil companies?
EDIT: The initial version of this comment contained oversimplifications of tort reform proposals. So does the new one, I suppose, but these are more accurate. -R
Comment by Rojas — 5/14/2010 @ 2:33 pm
Alright alright, uncle. Sorry for the flippant tort reform mention. Tort reform is still a terrible idea (telling juries how they can and cannot value things), but we won’t get into it here.
In this case, any “cap” on compensatory damages is ridiculous.
Comment by Brad — 5/14/2010 @ 2:58 pm
Eh. See my brand-spanking new edit above. :) I think we can agree that letting BP off the hook for cleanup is wrong, and that any analagous restriction on medical compensation would be likewise bogus.
Comment by Rojas — 5/14/2010 @ 3:00 pm
Don’t make me start pulling quotes from your comments on jury nullification. :)
Comment by Rojas — 5/14/2010 @ 3:06 pm
Both are attempts at undercutting the sanctity of the jury trial.
Also: punitive damages can be a good thing, for certain types of sufferings that you’d rather a company not just deal with the payouts on (say, a car seat that might rip the legs off one child out of a million, but sell to such an extent that the profits would far exceed any compensatory payments to the one-out-of-a-million child).
Comment by Brad — 5/14/2010 @ 3:17 pm
Oh, and for the record, BP has already spent much more than 75 million on cleanup efforts (something like six times that amount). But according to present law, they have no obligation to do so, and I guess can quit any time.
Comment by Brad — 5/14/2010 @ 3:19 pm
Wait, this legislation is about BP specifically? Not oil drilling generally?
How is this not an ex post facto law?
Comment by Rojas — 5/14/2010 @ 8:46 pm
No, I think it’s general.
There is another bill though wherein the administration is seeking 10 million specifically to litigate BP.
Comment by Brad — 5/15/2010 @ 11:02 am
Yes, I can see the legitimacy of the litigation bill. But a retroactive re-working of a general cap on damages can’t be applied to BP after the fact, can it?
Comment by Rojas — 5/15/2010 @ 7:38 pm
Depends how its written I suppose; I don’t know that a “grandfather clause” has ever been litigated for ex post facto. And, for that matter, I’m not sure that anybody has legally obligated BP to pay for anything yet, or legally sought damages from them. Or in what way they would do that.
But, the law itself, as I understand it, is just a general raising of the cap.
Comment by Brad — 5/16/2010 @ 2:03 am