BP Will Have to Pay, No Matter What

As politicians on the Hill debate raising or eliminating the liability cap on damages owed by oil companies after spills, it's worth pointing out that in the case of BP, the cap itself might not actually matter.

The Oil Pollution Act of 1990, which established the $75 million liability cap after the Exxon Valdez accident, also said that spills due to gross negligence or similar safety violations are subject to unlimited liability. The evidence is building that BP won't be able to hide from the gross negligence charge even if they try:

BP Plc's efforts to speed work and cut costs at a well in the Gulf of Mexico added to the danger of a disaster before the explosion that caused the biggest U.S. oil spill, two House Democrats said today.

"Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense," Representatives Henry Waxman of California and Bart Stupak of Michigan said in a letter to BP Chief Executive Officer Tony Hayward. "If this is what happened, BP's carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig."

This is just one reason why it makes sense for BP to work with the administration rather than stake a public battle against the escrow fund to handle damage claims through a third party.

Chris Good has more. Later today, I'll have an explainer on the liability cap and why it might make sense to kill it.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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