In a June 16 op-ed for the Wall Street Journal, Richard Epstein offered a strategy to avoid major oil spills in the future. Epstein, who will join the faculty as the Laurence A. Tisch Professor of Law on July 1, calls for a combination of stricter government regulation of drilling and a tougher liability system.
The Oil Pollution Act of 1990 calls for the “total of liability...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,” though Epstein pointed out that the law removes the cap under certain circumstances. In this case, BP has itself waived the liability cap. Still, Epstein argueed that no cap should exist in the first place. “A tough liability system does more than provide compensation for serious harms after the fact,” he wrote. “It also sorts out the wheat from the chaff—so that in this case companies with weak safety profiles don't get within a mile of an oil derrick. Solid insurance underwriting is likely to do a better job in pricing risk than any program of direct government oversight.”
While encouraging improvements to inspection and regulation, Epstein called for a more complete environmental approach, including relaxing drilling permit restrictions. “Ultimately, the current BP disaster has its roots in the loss of our focus in developing a sound overall energy and environmental policy within the framework of a leaner and more responsive legal system,” Epstein concluded. “This disaster is proof we need to change course.”
Posted June 22, 2010