Should the US punish BP shareholders?

This is the question posed in a recent Room for Debate article for the New York Times. Actually, they asked "Can the U.S. Punish BP’s Shareholders?", but there seems little doubt that they can; the real question is whether they should.

As usual, Jeffrey Miron is the voice of reason:

In an unprecedented move, the Obama administration is calling on BP to abandon the protection of the Oil Pollution Act of 1990, which limits BP’s liability under federal law to $75 million in damages, plus cleanup costs.

As horrible as the damage from the spill might be, abandoning the rule of law, which is what the administration’s proposals imply, is worse. BP has not been convicted of anything yet, nor is the magnitude of damages known, so BP should be free to operate as a legal company in the meantime. This might mean that, when judgments occur in future years, BP will be bankrupt and unable to pay. That is unfortunate, but it is what the rule of law requires.
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The rule of law can have unpleasant consequences in specific cases. But abandoning that rule is worse because it means that politicians can reward the business or individuals they like without regard for consistency, fairness or economic efficiency. Businesses operating without rule of law learn that political connections, not good business decisions, are the path to profits.

The U.S. should not fix past mistakes, by government or BP, by punishing BP in inappropriate ways. The way to balance cheap oil and the environment is to hold BP accountable as much as possible under existing policies and then design better policies for the future.