BP’s Spill Liability Not Capped If Company Guilty Of Wrongdoing, Senate Panel Told

BP could be subject to unlimited damages and liability for the massive, month-old oil spill unfolding in the Gulf of Mexico if the disaster was caused by the company’s wrongdoing, a top Justice Department official says.

That means the energy giant could be liable for billions of dollars for the damage being caused as upwards of 100,000 barrels of crude leaks daily into the waters off the Louisiana coast, even if Republicans are successful in blocking legislation designed to raise the current $75 million maximum liability BP faces under current law.

The catastrophe was caused by an April explosion on an offshore oil drilling platform called Deepwater Horizon, leased by BP.

BP will be responsible for the full cost of removal and cleanup for the spill no matter what, Associate Attorney General Thomas Perrelli told members of the Senate Energy and Natural Resources Committee. There is no cap on such a responsible party’s liability for removal costs under the Oil Pollution Act of 1990, Perrelli says. The act defines removal costs as the costs of removing spilled oil from water and shorelines or taking other actions as may be necessary to minimize or mitigate damage to the public health or welfare, including wildlife and public and private property, he adds.

The responsible party, which in this case has been identified as BP and the platform’s owner, Transocean, must pay in full for the removal costs incurred by the federal government, state governments, and others, Perrelli says.

He testified in the latest of what has becoming an ongoing series of hearings on Capitol Hill seeking answers and accountability for a disaster expected now easily to eclipse the notorious 1989 ExxonValdez incident.

In addition, responsible parties are liable to pay damages resulting from a spill. It is those damages which currently are capped at $75 million. Several Democratic senators have introduced legislation that would raise that cap to $10 billion, but Republicans are blocking that bill.

‘Gross Negligence’

Regardless, the cap may be irrelevant, Perrelli says.

“The liability cap does not apply if the discharge was caused by the gross negligence or willful misconduct of the responsible party or of any of its agents, employees, or contractors,” he says. “Similarly, no liability cap applies if the spill resulted from the responsible party’s – or its agent’s, employee’s, or contractor’s – violation of an applicable Federal safety, construction, or operating regulation. Under such circumstances, a responsible party would be strictly liable for all damages covered by the statute.”

The Justice Department has dispatched a team of attorneys to the spill site to begin probing the cause of the BP spill. Further, a group of Democratic senators recently wrote to Attorney General Eric Holder seeking a full civil and criminal investigation, based on what the lawmakers say appear to be fraudulent statements made by BP.

Perrelli also told the Senate energy panel that the Obama administration supports “a significant increase in liability for offshore oil and gas developers whose actions pollute our oceans and coastlines.”

The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.

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