BP's legal liability round-up

[Kurt_and_Hunter]

Under the law BP is responsible for the full costs of restraining and cleaning up the oil. That is not the same as being responsible for the effects of the oil.

The cost of bad effects of the oil, aka damages, will be partially paid out of the industry trust fund. ($1 billion available.)

For any damages not covered by the trust-fund $1 billion BP's total liability is capped at $75 million. (Which is almost the same as being capped at zero, given the likely scale of damages. If real damages were 10 billion then BP's liability would be capped at 0.75% of damages.)

It appears that under the law BP has reduced financial incentive to clean up the oil in a way that most reduces damages. (If they had to pay for all damages would they be thinking in terms of three-month solutions? Are there more expensive approaches that are faster but wouldn't be cost effective for BP? I don't know, but it's a question worth asking. )

The White House refrain that BP will pay for this spill is fine-print double-talk. They will pay for the spill, but not for the effects of the spill. It's like one of those bank ads with the guy double-talking little kids. "Egg management fee..."

The WH line on this has been politically wrong-headed. If you know that BP will not bear the real costs of the disaster than implying it will pay for everything becomes a time-bomb. It's not like there won't be a zillion stories about people with damages left holding the bag, and about large government expenditures to deal with economic damage.

Given the composition of the SCOTUS, it is close to 100% that changing the liability cap retroactively will be found to be unconstitutional. (The Super Fund example is probably not good precedent. Apples and Oranges. Even a liberal court might well find it to be unconstitutional but we don't have a liberal court so in real application the law is gonna be unconstitutional.)