Policy Documents

What Cap? How the Alternative Fines Act Nullifies the OPA Liability Cap

William A. Anderson, II Michael Hipps –
September 1, 2010

The rediscovery by Congress of the Oil Pollution Act’s (“OPA”) $75 million cap on liability for damages in the wake of the Deepwater Horizon disaster spurred proposals to raise or eliminate that cap.  Senator Robert Menendez, joined by Senators Frank Lautenberg and Bill Nelson, introduced his “Big Oil Bailout Prevention Act” to raise the OPA cap to $10 billion. Led by Senator Vitter, Republicans proposed their own plan to raise the cap. Notwithstanding the OPA cap, BP P.l.c. has since agreed to establish a $20 billion escrow fund to address its liability. As BP’s escrow suggests, the cap is not likely to be practical impediment to the government’s ability to persuade the responsible parties to respond to damage claims without regard to the cap.  In addition to the power of public opinion and OPA’s own exceptions that nullify the cap,  the government has in its arsenal the threat of criminal prosecution invoking the Alternative Fines Act. In short, despite the show of shock and outrage in Congress, the OPA liability cap may be more political fodder than a practical limit on the responsible parties’ liability.