The Oil Pollution Act (OPA) of 1990 set a $75 million liability cap beyond direct cleanup costs for any offshore oil spill. OPA also created a $1 billion Liability Trust Fund paid for by a 5-cent-per-barrel tax on the oil industry, later increased to 8-cents-per-barrel. Politico’s David Rogers reported May 10th that “payments from the fund — which covers not only damage claims but also restoring natural habitat, for example — are capped at $1 billion per incident. And while BP, as the responsible party, is charged with paying the full cost of the cleanup and oil removal, its liability for economic damages under the fund is capped at $75 million.”

The words “under the fund” make this statement false. The liability for economic damages does not come from the Liability Trust Fund.

Although the two are established under the same law (OPA), the money collected from the Liability Trust Fund can only be used after the $75 million has been spent - in this case by BP. There is a $2.7 billion cap on the Liability Trust Fund and $1.6 billion has been collected thus far, but only $1 billion can be used on this incident. If BP is found to be negligent, the company could be on the hook for much more than $75 million; furthermore, BP executives have said they would pay all “legitimate claims” from the accident. Whether this is true remains to be seen, but it must first use the $75 million before the Liability Trust Fund can be tapped.