Will British Petroleum Get Off Easy?

The White House has gone to extreme lengths over the weekend and today to convey that all the costs associated with the oil clean-up in the Gulf will be fronted by British Petroleum, the company leasing the rig that caused the spill. But might BP's financial responsibility be capped? Current federal laws designed for these situations limit non-clean-up liability of the offending company at $75 million, a hefty sum but no where near the full cost, easily into the billions, that some analysts are projecting may be required for a spill of this magnitude.

There are two kinds of expenses in an effort like this. One is the clean-up, which BP is responsible for entirely. But then there are the side effects: the fisherman who can no longer rake the seas, local businesses that see a drastic drop in tourist visits and farmers who rely on an environment muddied by thick crude. All oil companies, domestic and foreign who drill in U.S. waters, are required to pay into a federal bank called the Oil Spill Liability Trust Fund, which is essentially a big insurance policy for drilling companies for when a pipe bursts. In response to the federal $75 million limit, three antidrilling senators— Nelson of Florida and Lautenberg and Menendez of New Jersey—are planning to hurriedly introduce a bill this week that would extend that liability to $10 billion. If the cap stays low, the overflow cost will shift to the taxpayers and, disproportionately, the people in the region who are directly affected. The bill would also eliminate a current $500 million cap for damage to ecosystems.

“BP says it’ll pay for this mess. Baloney. They’re not going to want to pay any more than what the law says they have to, which is why we can’t let them off the hook,” Nelson said in a statement. Menendez and Lautenberg put out equally scathing statements pointing to BP. (Although the federal government isn’t entirely in the clear itself: it was revealed early Monday that federal responders to the scene had not a single fire boom on hand during the initial response.)

Beyond the moral obligations of covering the Gulf Coast economy, the Senate bill might also be good politics. Pushing a populist bill like this, further vilifying BP, shouldn’t have much trouble passing. It’ll also put GOP senators on the spot—especially ones who repeated the now awkward-sounding rally cry, “Drill, baby, drill”—to concede that these accidents do happen, and the lives of people and ecosystems are intimately affected. Yet it's still a valid question of whether it’s fair to legislate retroactively, essentially moving the goal posts in the middle of the game. When the Spill Liability Trust Fund was set up in 1990, $75 million was generally decided to be a sufficient amount. Now, only when tempers are high and blame needs assigning, may BP’s obligation have to change.