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Deterring And Compensating Oil-Spill Catastrophes: The Need For Strict And Two-Tier Liability, W. Kip Viscusi, Richard J. Zeckhauser
Deterring And Compensating Oil-Spill Catastrophes: The Need For Strict And Two-Tier Liability, W. Kip Viscusi, Richard J. Zeckhauser
Vanderbilt Law Review
The BP Deepwater Horizon oil spill highlighted the glaring weaknesses in the current liability and regulatory regime for oil spills and for environmental catastrophes more broadly. This Article proposes a new liability structure for deep-sea oil drilling and for catastrophic risks generally. It delineates a two-tier system of liability. The first tier would impose strict liability up to the firm's financial resources, including insurance coverage. The second tier would be an annual tax equal to the expected costs in the coming year beyond this damages amount. Before beginning a risky operation, the proposed liability scheme would identify a single firm-the …
Deepwater Drilling: Law, Policy, And Economics Of Firm Organization And Safety, Mark A. Cohen, Madeline Gottlieb, Joshua Linn, Nathan Richardson
Deepwater Drilling: Law, Policy, And Economics Of Firm Organization And Safety, Mark A. Cohen, Madeline Gottlieb, Joshua Linn, Nathan Richardson
Vanderbilt Law Review
Although the causes of the Deepwater Horizon spill are not yet conclusively identified, significant attention has focused on the safety-related policies and practices-often referred to as the safety culture-of BP and other firms involved in drilling the well. This Article defines and characterizes the economic and policy forces that affect safety culture and identifies reasons why those forces may or may not be adequate or effective from the public's perspective. Two potential justifications for policy intervention are that: (1) not all of the social costs of a spill may be internalized by a firm; and (2) there may be principal-agent …