Via Mediaite. He’s not really defending BP, actually, just noting that between the liability cap and the feds’ regulatory scheme for drilling, safety incentives for oil companies are, shall we say, sub-optimal. Shep’s problem here, I think, is simply dogma fatigue: Whatever the topic, when you have the judge on, you know that the fault will somehow lie with the government. And needless to say, that attitude isn’t exactly Shep-friendly.

As for the liability cap, I don’t get Napolitano’s point. Yes, in theory it creates a moral hazard by limiting BP’s losses to $75 million, but in practice the cap doesn’t apply in cases involving gross negligence, willful misconduct, or violations of federal safety regs. No surprise, then, that BP has said it’ll waive the cap and pay all legitimate claims: In essence, by taking so many risks with the rig, they waived the cap long ago and accepted the prospect of catastrophic losses. Hence the real (unstated) dilemma between Shep and Nap: How do you coerce a bad actor to behave properly if he’s hell-bent on acting badly?