• About
    • Login
    View Item 
    •   Institutional Repository Home
    • Law School
    • Vanderbilt Law School Faculty Works
    • View Item
    •   Institutional Repository Home
    • Law School
    • Vanderbilt Law School Faculty Works
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

    All of Institutional RepositoryCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsDepartmentThis CollectionBy Issue DateAuthorsTitlesSubjectsDepartment

    My Account

    LoginRegister

    Deterring and Compensating Oil-Spill Catastrophes: The Need for Strict and Two-Tier Liability

    Viscusi, W. Kip
    Zeckhauser, Richard
    : http://ssrn.com/abstract=1866391
    : http://hdl.handle.net/1803/5657
    : 2011

    Abstract

    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 operator of an oil well-as responsible for generating the risk. That firm would be expected to contract with other participants in order to be reimbursed in the event of an accident. The proposed liability scheme would also require the responsible firm to demonstrate substantial ability to pay in the first tier before being permitted to engage in the risky activity. This structure provides for efficient deterrence for environmental catastrophes since the responsible party is expecting to bear the risks that it is imposing. The two-tier system also addresses the challenges posed by the fattailed distributions of catastrophic environmental risks and provides for more assured and adequate compensation of potential losses than do current liability and regulatory arrangements.
    Show full item record

    Files in this item

    Thumbnail
    Name:
    Deterring and Compensating.pdf
    Size:
    3.211Mb
    Format:
    PDF
    Description:
    article published in law review
    View/Open

    This item appears in the following collection(s):

    • Vanderbilt Law School Faculty Works

    Connect with Vanderbilt Libraries

    Your Vanderbilt

    • Alumni
    • Current Students
    • Faculty & Staff
    • International Students
    • Media
    • Parents & Family
    • Prospective Students
    • Researchers
    • Sports Fans
    • Visitors & Neighbors

    Support the Jean and Alexander Heard Libraries

    Support the Library...Give Now

    Gifts to the Libraries support the learning and research needs of the entire Vanderbilt community. Learn more about giving to the Libraries.

    Become a Friend of the Libraries

    Quick Links

    • Hours
    • About
    • Employment
    • Staff Directory
    • Accessibility Services
    • Contact
    • Vanderbilt Home
    • Privacy Policy