Maritime Laws Protect BP, Not Gulf Coast Residents

06/22/2010 11:59 am ET | Updated May 25, 2011

BP's epic mess has left thousands of Gulf Coast workers, families and small businesses depending on the civil justice system to ensure the company will provide fair compensation for lost lives and livelihoods.

But with multiple corporations dodging blame, millions of gallons of spilled oil, and billions of dollars in damage, are the existing maritime laws up to the challenge?

Unfortunately, today they are not.

This disaster has exposed the flaws in current maritime liability laws, which are antiquated and inadequate. And unless these laws are amended, BP can look forward to significant immunity while the families of the workers killed and injured by the original explosion, as well as shrimpers, oystermen, fishermen, hotels and restaurants, and even Gulf Coast states with lost tax revenue, will face an uphill battle to receive justice for the damage and havoc BP's spill has wreaked.

The number of involved parties and applicable laws complicate an already chaotic situation. But the most obvious first step is one that Congress is already examining: an elevation of the $75 million cap on BP's liability for economic damages inflicted on area residents and businesses. This cap is comically low. It would barely scratch the surface of the catastrophic damage the spill has caused or even begin to hold BP accountable, which made almost that much per day -- $62 million -- in the first quarter of 2010.

This cap is an example on a grand scale of why arbitrary liability caps are just not reasonable: you cannot decide the expense of a disaster before it happens. Those decisions are for judges and juries after an injury has occurred, and this is as true for tragedies of medical negligence as for those of corporate negligence. Liability caps allow companies like BP to avoid bearing the responsibility for the full cost of the damage they inflict.

But the inadequate legal remedies are bigger than the $75 million cap. Changes also need to be made to the Death on the High Seas Act (DOHSA), which is the law under which the families of the 11 people that died in the original rig explosion can bring wrongful death suits against BP. Under DOHSA, the responsible party pays economic damages only -- leaving BP immune from entirely compensating families for the horrible way in which their loved ones died and the relationship they have now lost.

DOHSA doesn't just significantly discount the worth of a lost loved one's life, but it is also inconsistent, as victims of offshore commercial aviation accidents are not similarly limited. The law was amended in 2000, following the TWA Flight 800 crash into the Atlantic Ocean, to allow the victims' survivors to be fully compensated. DOHSA needs to be updated so that the law and BP similarly respect the families of the victims of the Deepwater Horizon explosion.

Transocean, as the owner and operator of the rig, also certainly bears responsibility for the spill in the Gulf. But Transocean is already looking towards an outdated law -- passed in 1851 -- for a bailout that will limit its liability to $27 million. This relic of a law is called the Limitation of Liability Act, and it limits an owner's liability to the worth of the vessel at the end of a voyage. It was passed to protect owners who did not have control over their vessels - like, for instance, if pirates overtook and set fire to a ship, the ship's owner would only be on the hook for an amount equal to the worth of the ruined ship. The act was intended to protect the value of a ship's cargo, not human life.

In a day when having insurance and modern communications technology is standard, Transocean should not be allowed to shield itself behind an antiquated 160-year-old law. The real question, however, may not be how much liability protection Transocean is entitled to, but whether they should be entitled to any at all. The Deepwater Horizon was a foreign flagged rig, which allowed Transocean to conveniently skirt U.S. taxes and regulations. Allowing Transocean to also abuse U.S. liability protections just goes too far.

The corporations involved in this spill have clearly demonstrated that they cannot be counted on to police themselves. BP and Transocean already attempted to dodge liability when company representatives forced waivers on their own workers, then days after the explosion offered affected parties a small pittance if they would sign an agreement not to sue the company.

The last major U.S. oil spill happened in 1989 when the Exxon Valdez tanker ship spilled 11 million gallons of oil into Alaska's Prince William Sound. Exxon dragged the legal proceedings out for 20 years before compensating victims with just $300 million of the $5 billion a jury originally set as punitive damages. Exxon's profits that same year totaled $36.1 billion.

The Gulf Coast spill is on pace to dwarf Exxon Valdez, and BP and Transocean certainly have the resources to engage in a protracted legal battle to avoid fairly compensating all the workers, families, and small businesses that are affected. All of this underscores why a strong civil justice system -- with updated maritime laws in tow -- is needed to protect the future of the Gulf Coast and its residents.