Why Limit Oil Spill Liability?

Saturday, Jun 12, 2010

In 1990, the U.S. government passed the Oil Pollution Act in response to the Exxon Valdez spill. It added regulations and a response authority which have failed for the latest Gulf oil spill, but worse, added a $75 million limit of liability to the companies causing spills. Why did they add this? It's just another example of corporations using the government to increase their monopolies.

Some say the provision was added to encourage more oil drilling in the Gulf, which means that more companies drilled more recklessly than would have otherwise naturally drilled. This is a classic example of the unintended consequences of the government trying to "encourage" and centrally plan the allocation of resources. There should be no limit of liability on such ecological disasters, which would not only punish the companies for their mistakes, but be a sign to other companies to be safer. If there was any criminal negligence, then the executives and those at fault should also be criminally prosecuted.

The Oil Pollution Act (OPA) was signed into law in August 1990, largely in response to rising public concern following the Exxon Valdez incident. The OPA improved the nation's ability to prevent and respond to oil spills by establishing provisions that expand the federal government's ability, and provide the money and resources necessary, to respond to oil spills.

Oil Pollution Act Overview, U.S. Environmental Protection Agency, http://www.epa.gov/oem/content/lawsregs/opaover.htm.

The total of the liability of a responsible party under section 2702 of this title and any removal costs incurred by, or on behalf of, the responsible party, with respect to each incident shall not exceed... for an offshore facility except a deepwater port, the total of all removal costs plus $75,000,000.

Oil Pollution Act, United States Code, Title 33, Chapter 40, Subchapter 1, http://frwebgate.access.gpo.gov/cgi-bin/usc.cgi?ACTION=RETRIEVE&FILE=$$xa$$busc33.wais&start=4683182&SIZE=13816&TYPE=TEXT.