EXCERPTS:
"Congress should consider policy changes, such as lifting the current $75 million limited liability ceiling. Offshore operators should expect to be responsible for the full costs of any environmental damage related to their activities.
There is one hitch: smaller offshore companies could accept full liability but then take shelter under bankruptcy laws in the event of a disaster. This means some additional steps must be taken.
In addition to removing any limits on liability, Congress should require that any offshore operator provide an insurance policy guaranteeing full liability coverage.
Full liability insurance not only protects taxpayers from bearing the cost of cleaning up environmental disasters, it also adds another layer of protection against future disasters. You can bet that private insurers like Lloyds of London would inspect very carefully the safety practices of those it insures.
Furthermore, by relying on private markets, taxpayers are saved the expense of monitoring offshore operations. Full liability without the option of invoking bankruptcy laws assures that offshore operators will have no incentives to cut corners.
A great advantage of this proposal is that it leaves the decision of how best to avoid disasters to the most knowledgeable agents involved: the oil operators and their insurers. These are relatively simple changes to make, and in principle the requirements involved are no different from those any homebuyer would expect of her builder.
