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Judge H. Lee Sarokin

Judge H. Lee Sarokin

Posted: May 31, 2010 12:00 PM

Is the Limitation of Liability for Oil Spills the Poster Boy Against Tort Reform?

What's Your Reaction:

If BP's liability for the oil spill is limited to $75 million, who pays for the damages over that amount? If some fisherman loses a business he has had for 50 years and BP has paid out a day or two of its earnings for damages -- reached the cap -- does the fisherman absorb the loss or does the government (the taxpayer) pay the difference? I expect that in reality, BP will be responsible for more than the $75 million in damage claims, but I have to wonder what Congress was thinking when it adopted the limitation of liability.

There are other instances in which industries have been granted immunity or limitations on liability, but they usually have been to protect those companies or persons who are satisfying some national need or emergency, such as the production of a vaccine to prevent an epidemic. I suppose that it can be argued that the spill limitation was enacted to encourage offshore exploration for oil, but there are hundreds of other endeavors far more worthwhile that do not receive such protection.

In the constant conservative cry for tort reform and caps on liability, the same question needs to be asked: Who pays or absorbs the balance over and above the cap? Limitations of liability by their very definition protect the wrongdoer and adversely affect the victim. If ever there was a need to question limitations on liability, it is in the case of oil companies who literally earn billions, but can say to a fisherman whose business they have destroyed: We've paid our maximum---the cap has been reached. Sorry you are on your own.

As I have said in an earlier post, Congress should not be debating increasing the limitation but rather eliminating it entirely.