Extent Of BP's Liability Still Murky

Oil from the Deepwater Horizon spill floats on the water on Barataria Bay off Louisiana. i i

Oil from the Deepwater Horizon spill floated on the water Monday as the sky was reflected in sheen on Barataria Bay off the coast of Louisiana. Charlie Riedel/AP hide caption

itoggle caption Charlie Riedel/AP
Oil from the Deepwater Horizon spill floats on the water on Barataria Bay off Louisiana.

Oil from the Deepwater Horizon spill floated on the water Monday as the sky was reflected in sheen on Barataria Bay off the coast of Louisiana.

Charlie Riedel/AP

As BP struggles to cap the largest oil spill in U.S. history, lawmakers are considering a cap of their own — one that limits how much the company must pay for the disaster.

Heard On 'Morning Edition':

The White House said this week that it supports Democratic legislation to raise the $75 million cap on economic damages under the Oil Pollution Act to $10 billion. That would cover claims ranging from payments to individual shrimpers for lost wages to money for states to rebuild their tourism industries — and is separate from the expense of cleaning up the massive Gulf of Mexico slick.

Estimates of the total cost of the disaster vary widely, reaching as high as $40 billion. Because BP is self-insured, it would bear the full cost.

Senate panels were holding liability hearings this week, but some legal experts say the very issue of a cap may be moot.

Coast Guard Demands Claims Transparency

Push To Raise Liability 'Redundant Theater'?

Jeffrey Rachlinksi, a Cornell University professor specializing in environmental law, calls the current push by Senate Democrats to lift the upper liability "largely redundant theater."

Language already in the Oil Pollution Act, established after the 1989 Exxon Valdez spill, eliminates the cap if the party responsible for a spill is found to have been grossly negligent or violated federal regulations governing the construction, safety or operation of an offshore rig such as the Deepwater Horizon. The rig was destroyed seven weeks ago in an explosion that killed 11 workers.

It's "highly unlikely that the events of April 20 did not include one or more deviations from these codes," Rachlinski told NPR.

Vermont Law School professor Pat Parenteau agrees that what happened aboard the Deepwater Horizon very likely invalidated the liability cap. "I think the push to raise the cap and to find BP criminally liable is more of a signal than anything else," he said.

An official in Louisiana's Plaquemines Parish lifts his boot out of thick oil at Queen Bess Island. i i

An official in Louisiana's Plaquemines Parish lifts his boot out of thick beached oil at Queen Bess Island in Barataria Bay, just off the Gulf of Mexico. Gerald Herbert/AP hide caption

itoggle caption Gerald Herbert/AP
An official in Louisiana's Plaquemines Parish lifts his boot out of thick oil at Queen Bess Island.

An official in Louisiana's Plaquemines Parish lifts his boot out of thick beached oil at Queen Bess Island in Barataria Bay, just off the Gulf of Mexico.

Gerald Herbert/AP

Attorney General Eric Holder announced last week that the Justice Department has opened a criminal investigation into the Gulf spill. The probe focuses on rig owner Transocean Ltd., rig operator BP and Halliburton Co., which was working on the well prior to the deadly blast.

"The initial reports indicate there may be situations in which not only human error was involved, but you also saw some corner-cutting in terms of safety," President Obama told NBC's Today show.

But Robert Menendez of New Jersey, one of three Democratic senators sponsoring legislation to raise the cap, says the law should be amended to guard against oil spills "now and in the future."

"The bottom line is that BP should be held fully accountable for the economic damage it is causing, no matter what," Menendez told NPR. "We have to get rid of the liability limit to protect any coastal community that gets damaged."

GOP Cites Chilling Effect On Small Companies

In May, Republicans blocked a similar move to amend the Oil Pollution Act. Sen. James Inhofe of Oklahoma charged that raising the cap on liability would be a boon to large oil companies at the expense of smaller ones.

David Purcell, a former petroleum engineer turned energy analyst at Houston-based Tudor, Pickering, Holt & Co., says the Deepwater Horizon disaster also could make it impossible for independent operators to get deep-water drilling permits, leaving the field to big companies like BP.

"Small players won't be able to show the financial or operational ability to react to a worst-case scenario, because we now know what the worst-case scenario looks like," Purcell said.

BP has agreed to foot the bill for the Gulf cleanup and all "legitimate" claims. CEO Tony Hayward has acknowledged that the $75 million cap would "inevitably be exceeded," but a BP spokesman declined to say whether the company's actions at the time of the accident would negate the cap on liability.

The British oil giant says it has spent more than $1.2 billion so far on the disaster, including $49 million to pay out more than 40,000 individual claims. The company also has put $360 million in escrow to build protective barrier islands off the coast of Louisiana.

Experts differ on whether payments made to people affected by the spill will affect their ability to collect from BP in the future.

"We don't know exactly what the settlements say, but in all likelihood individuals are foregoing future claims," said Cornell's Rachlinski. He noted that in dire circumstances such as those in the Gulf region, people are particularly vulnerable to settlements "on the cheap."

But BP spokesman Jon Pack says that assumption has no merit.

"Whatever we pay [individuals] now does not preclude them coming back in the future," Pack said.

Vermont Law School's Parenteau agrees. Unless people receiving payments have signed an agreement to the contrary, "I would say [getting payments now] is not going to bar them" later, he said.

Government Bears Burden In Criminal Case

"I think BP is probably working as hard on an intricate litigation strategy as they are on capping the well itself," said Rachlinski.

Transocean, the rig's owner, is also liable under the law, and the question of how much it will ultimately pay is the subject of "backroom machinations, you can be sure of it," said Rena Steinzor, an environmental law professor at the University of Maryland.

  • A boat uses a boom and absorbent material to soak up oil in Cat Bay, near Grand Isle, La., on June 28. A tropical storm is expected to hit the Gulf and impede cleanup efforts.
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    A boat uses a boom and absorbent material to soak up oil in Cat Bay, near Grand Isle, La., on June 28. A tropical storm is expected to hit the Gulf and impede cleanup efforts.
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  • Florida Gov. Charlie Crist and wife Carole Rome Crist (right) stand with others during a Hands Across the Sand event June 26 in Pensacola, Fla. The event was staged across the nation to protest offshore oil drilling.
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    Florida Gov. Charlie Crist and wife Carole Rome Crist (right) stand with others during a Hands Across the Sand event June 26 in Pensacola, Fla. The event was staged across the nation to protest offshore oil drilling.
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  • Oil clouds the surface of Barataria Bay near Port Sulpher, La., on June 19.
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    Oil clouds the surface of Barataria Bay near Port Sulpher, La., on June 19.
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  • Workers adjust piping while drilling a relief well at the site of the Deepwater Horizon oil spill.
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    Workers adjust piping while drilling a relief well at the site of the Deepwater Horizon oil spill.
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  • A dolphin rises up out of the water near Grand Terre Island off the coast of Louisiana on June 14.
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    A dolphin rises up out of the water near Grand Terre Island off the coast of Louisiana on June 14.
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  • President Obama stands with Mississippi Gov. Haley Barbour (right) and Gulfport, Miss., Mayor George Schloegel after meeting with residents affected by the oil spill.
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    President Obama stands with Mississippi Gov. Haley Barbour (right) and Gulfport, Miss., Mayor George Schloegel after meeting with residents affected by the oil spill.
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  • Crude oil washes ashore in Orange Beach, Ala., on June 12. Oil slicks, 4 to 6 inches thick in some parts, have washed up along the Alabama coast.
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    Crude oil washes ashore in Orange Beach, Ala., on June 12. Oil slicks, 4 to 6 inches thick in some parts, have washed up along the Alabama coast.
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  • A volunteer uses a toothbrush to clean an oil-covered white pelican at the Fort Jackson Oiled Wildlife Rehabilitation Center in Buras, La., June 9.
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    A volunteer uses a toothbrush to clean an oil-covered white pelican at the Fort Jackson Oiled Wildlife Rehabilitation Center in Buras, La., June 9.
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  • A shrimp boat skims oil from the surface of the water just off Orange Beach, Ala., as a family enjoys the surf. Oily tar balls have started washing up on Orange Beach and beaches in the western Florida panhandle.
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    A shrimp boat skims oil from the surface of the water just off Orange Beach, Ala., as a family enjoys the surf. Oily tar balls have started washing up on Orange Beach and beaches in the western Florida panhandle.
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  • Sand from a dredge is pumped onto East Grand Terre Island, La., to provide a barrier against the Deepwater Horizon oil spill, June 8.
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    Sand from a dredge is pumped onto East Grand Terre Island, La., to provide a barrier against the Deepwater Horizon oil spill, June 8.
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  • A dead turtle floats on a pool of oil from the Deepwater Horizon spill in Barataria Bay off the coast of Louisiana on June 7.
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    A dead turtle floats on a pool of oil from the Deepwater Horizon spill in Barataria Bay off the coast of Louisiana on June 7.
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  • Workers use absorbent pads to remove oil that has washed ashore from the spill in Grand Isle, La., June 6.
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    Workers use absorbent pads to remove oil that has washed ashore from the spill in Grand Isle, La., June 6.
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  • Plaquemines Parish coastal zone director P.J. Hahn lifts an oil-covered pelican out of the water on Queen Bess Island in Plaquemines Parish, La., June 5.
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    Plaquemines Parish coastal zone director P.J. Hahn lifts an oil-covered pelican out of the water on Queen Bess Island in Plaquemines Parish, La., June 5.
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  • Heavy oil pools along the side of a boom just outside Cat Island in Grand Isle, La., June 6.
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    Heavy oil pools along the side of a boom just outside Cat Island in Grand Isle, La., June 6.
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  • President Obama walks alongside Grand Isle Mayor David Camardelle (from right), U.S. Coast Guard Adm. Thad Allen, who is in charge of the federal response to the spill, and Chris Camardelle after meeting with local business owners in Grand Isle, La., June 4.
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    President Obama walks alongside Grand Isle Mayor David Camardelle (from right), U.S. Coast Guard Adm. Thad Allen, who is in charge of the federal response to the spill, and Chris Camardelle after meeting with local business owners in Grand Isle, La., June 4.
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  • A brown pelican sits on the beach at East Grand Terre Island along the Louisiana coast after being drenched in oil from the BP Deepwater Horizon oil spill, June 3.
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    A brown pelican sits on the beach at East Grand Terre Island along the Louisiana coast after being drenched in oil from the BP Deepwater Horizon oil spill, June 3.
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  • U.S. Attorney General Eric Holder announces that the Justice Department has launched a criminal investigation into the BP oil spill. With him, from left: Stephanie Finley and Jim Letten, U.S. attorneys for the Western District of Louisiana; Ignacia Moreno, assistant attorney general for the Environment and Natural Resources Division; Tony West, assistant attorney general, Civil Division; and Do...
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    U.S. Attorney General Eric Holder announces that the Justice Department has launched a criminal investigation into the BP oil spill. With him, from left: Stephanie Finley and Jim Letten, U.S. attorneys for the Western District of Louisiana; Ignacia Moreno, assistant attorney general for the Environment and Natural Resources Division; Tony West, assistant attorney general, Civil Division; and Don Burkhalter, U.S. attorney for the Southern District of Mississippi.
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    The oil slick off the coast of Louisiana, seen from above.
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  • A worker leaves the beach in Grand Isle, La., on May 30. BP is turning to yet another mix of undersea robot maneuvers to help keep more crude oil from flowing into the Gulf.
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    A worker leaves the beach in Grand Isle, La., on May 30. BP is turning to yet another mix of undersea robot maneuvers to help keep more crude oil from flowing into the Gulf.
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  • Protesters cover themselves with a water and paint mixture during a demonstration at a BP gas station in New York City on May 28.
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    Protesters cover themselves with a water and paint mixture during a demonstration at a BP gas station in New York City on May 28.
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  • Workers clean up oil in Pass a Loutre, La.  The latest attempt to plug the leak was unsuccessful.
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    Workers clean up oil in Pass a Loutre, La. The latest attempt to plug the leak was unsuccessful.
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  • Residents listen to a discussion with parish officials and a BP representative on May 25 in Chalmette, La. Officials now say that it may be impossible to clean the hundreds of miles of coastal wetlands affected by the massive oil spill.
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    Residents listen to a discussion with parish officials and a BP representative on May 25 in Chalmette, La. Officials now say that it may be impossible to clean the hundreds of miles of coastal wetlands affected by the massive oil spill.
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  • An oil-soaked pelican takes flight after Louisiana Fish and Wildlife employees tried to corral it on an island in Barataria Bay on the coast of Louisiana. The island, which is home to hundreds of brown pelican nests as well at terns, gulls and roseate spoonbills, is impacted by oil from the Deepwater Horizon spill.
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    An oil-soaked pelican takes flight after Louisiana Fish and Wildlife employees tried to corral it on an island in Barataria Bay on the coast of Louisiana. The island, which is home to hundreds of brown pelican nests as well at terns, gulls and roseate spoonbills, is impacted by oil from the Deepwater Horizon spill.
    Gerald Herbert/AP
  • A sign warns the public to stay away from the beach on Grand Isle, La. Officials closed the oil-covered beaches to the public indefinitely on Saturday.
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    A sign warns the public to stay away from the beach on Grand Isle, La. Officials closed the oil-covered beaches to the public indefinitely on Saturday.
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  • Pelican eggs stained with oil sit in a nest on an island in Barataria Bay on May 22.
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    Pelican eggs stained with oil sit in a nest on an island in Barataria Bay on May 22.
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  • A bird flies over oil that has collected on wetlands on Elmer's Island in Grand Isle, La., May 20. The oil came inland despite oil booms that were placed at the wetlands' mouth on the Gulf of Mexico.
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    A bird flies over oil that has collected on wetlands on Elmer's Island in Grand Isle, La., May 20. The oil came inland despite oil booms that were placed at the wetlands' mouth on the Gulf of Mexico.
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  • Members of the Louisiana National Guard build a land bridge at the mouth of wetlands on Elmer's Island.
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    Members of the Louisiana National Guard build a land bridge at the mouth of wetlands on Elmer's Island.
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  • The hands of boat captain Preston Morris are covered in oil after collecting surface samples from the marsh of Pass a Loutre, La., on May 19.
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    The hands of boat captain Preston Morris are covered in oil after collecting surface samples from the marsh of Pass a Loutre, La., on May 19.
    Gerald Herbert/AP
  • Louisiana Gov. Bobby Jindal (center) and Plaquemines Parish President Billy Nungesser (right) tour the oil-impacted marsh of Pass a Loutre, La. "This is the heavy oil that everyone's been fearing that is here now," said Jindal.
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    Louisiana Gov. Bobby Jindal (center) and Plaquemines Parish President Billy Nungesser (right) tour the oil-impacted marsh of Pass a Loutre, La. "This is the heavy oil that everyone's been fearing that is here now," said Jindal.
    Gerald Herbert/AP
  • BP Chairman and President Lamar McKay (left), with Transocean President and CEO Steven Newman (center) and Applied Science Associates Principal Deborah French McCay, testifies during a Senate Committee on Commerce, Science, and Transportation hearing May 18 on response efforts to the Gulf Coast oil spill.
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    BP Chairman and President Lamar McKay (left), with Transocean President and CEO Steven Newman (center) and Applied Science Associates Principal Deborah French McCay, testifies during a Senate Committee on Commerce, Science, and Transportation hearing May 18 on response efforts to the Gulf Coast oil spill.
    Manuel Balce Ceneta/AP
  • This undated frame grab image received from BP and provided by the Senate Environment and Public Works Committee shows details of the oil spill in the Gulf of Mexico. BP has agreed to display a live video feed of the oil gusher on the Select Committee on Energy Independence and Global Warming Committee's website beginning Thursday evening.
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    This undated frame grab image received from BP and provided by the Senate Environment and Public Works Committee shows details of the oil spill in the Gulf of Mexico. BP has agreed to display a live video feed of the oil gusher on the Select Committee on Energy Independence and Global Warming Committee's website beginning Thursday evening.
    Senate Environment and Public Works Committee/AP
  • President Obama speaks with local fishermen about how they are affected by the oil spill in Venice, La., on May 2.
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    President Obama speaks with local fishermen about how they are affected by the oil spill in Venice, La., on May 2.
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  • Danene Birtell with Tri-State Bird Rescue and Research tends to a Northern Gannet in Fort Jackson, La., on April 30. The bird, normally white when full grown, is covered in oil from the oil spill.
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    Danene Birtell with Tri-State Bird Rescue and Research tends to a Northern Gannet in Fort Jackson, La., on April 30. The bird, normally white when full grown, is covered in oil from the oil spill.
    Alex Brandon/AP
  • Since the explosion, a third oil leak has been discovered in the blown-out well.
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    Since the explosion, a third oil leak has been discovered in the blown-out well.
    Gerald Herbert/AP
  • In this aerial photo taken April 21 more than 50 miles southeast of Venice, La., the Deepwater Horizon oil rig burns.
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    In this aerial photo taken April 21 more than 50 miles southeast of Venice, La., the Deepwater Horizon oil rig burns.
    Gerald Herbert/AP
  • Tendrils of oil mar the waters of the Gulf of Mexico in this satellite image taken Monday. An estimated 5,000 barrels of oil a day are seeping into the Gulf, after an explosion last week on a drilling rig about 50 miles off the Louisiana coast.
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    Tendrils of oil mar the waters of the Gulf of Mexico in this satellite image taken Monday. An estimated 5,000 barrels of oil a day are seeping into the Gulf, after an explosion last week on a drilling rig about 50 miles off the Louisiana coast.
    Courtesy of Digital Globe

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"There is likely to be a huge amount of litigation between BP and Transocean, and that's where a finding of criminal negligence might make a difference," said Steinzor, who is president of the Center for Progressive Reform, a think tank dealing with health and safety concerns.

To prove criminal liability, the Justice Department must prove that a company as a whole knowingly violated federal regulations, Parenteau says. Such a finding, he says, could have implications for future drilling permits and cause the company to be blacklisted from federal contract work.

Any criminal charges would very likely translate into millions of dollars in fines. But for any company executives or workers to be indicted individually, legal experts say the Justice Department will have to find evidence they orchestrated a cover-up, destroyed key documents or lied to government agents.

"One of the issues that government investigators are going to be focused on is whether individuals from BP and the other companies have been completely forthright," said David Uhlmann, a University of Michigan law professor who spent seven years as chief of the Justice Department's environmental crimes section. "The cover-up is often more serious than the crime, at least in terms of the charges sought."

Prosecutors could seek serious jail time — five years or more — if they charge anyone with obstruction of justice, making false statements to the FBI or other U.S. officials or conspiracy to hinder a federal probe.

But Parenteau says he didn't think it was likely the Justice Department would go after company officials individually.

Material from The Associated Press was used in this report.

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