The proliferation of headlines pertaining to various demands from all levels of government on BP for payment of various costs resulting from the Gulf oil spill - e.g. lost sales and state income tax revenue and salaries for laid off oil service workers, and perhaps lost revenues for tourism dependent firms - has major implications for our economy and legal system. It is certainly viscerally appealing for all concerned to hold out their hands to BP, which has almost certainly done something giving rise to civil liability. At the least, everyone, even BP, agrees that it is liable for direct clean up costs. It is also making voluntary payments to many impacted persons.
However, the efforts which are being pursued at the federal and state levels are at best superfluous, and at worst, seriously detrimental to the economy. There already exists an elaborate body of tort (and perhaps contract) law governing the liability of one who has wrongfully caused harm to another. In general, this body of law limits recoverable damages to what should have reasonably been foreseeable to the wrongdoer at the time of their wrongful act. Those with legal training will recognize and recall the infamous Palsgraf case involving a chain reaction of events on a train - premature movement, people falling, fireworks erupting, objects falling, etc. - which guides us today, and makes clear that the rule of damages which is applied in tort law is not a simple 'but for" standard, but one which limits damages to a much greater extent by defining a "zone of exposure." A moment's reflection indicates that doing otherwise would inhibit economic activity by exposing actors in all fields to vast and unpredictable claims - out of proportion to potential benefits - if anything were to go wrong. While far from perfect, this system has served us reasonably well as our economy has developed.
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