75M cap on damages

BP really protected by a $75 million cap on damages?

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Probably not. In the wake of the Exxon Valdez oil spill of 1989, Congress passed the Oil Pollution Act of 1990, known as OPA (pronounced like 'Oprah' without the 'r'). For leaks from offshore oil rigs like this one, OPA limits the liability of the responsible party -- BP in this instance -- to $75 million in economic damages, but there are several mammoth exceptions. To begin with, the limitation does not apply to any of BP's liability for state and federal cleanup costs, for which BP (BP) is 100% responsible. As of early June, these costs had already come to about $990 million, according to BP, and the company seems to be just getting started. (BP has also committed to spending another $360 million to fund the building of barrier islands off the coast of Louisiana.)

But the key, ginormous loophole in the $75 million OPA limit is that BP isn't allowed to take advantage of it if the company -- or any of its contractors, Kende stresses -- acted with gross negligence or violated any federal safety law or regulation. In other words, if either BP or rig-owner Transocean Ltd. (RIG), or cement contractor Halliburton Energy Services (HAL, Fortune 500), or the blowout preventer manufacturer Cameron International (CAM, Fortune 500) violated some safety rule -- the limit vanishes. (If a subcontractor is the one responsible, BP might then be able to go after that company for contribution or indemnification.)