BOEM wants to increase oil spill liability

The Bureau of Ocean Energy Management has proposed increasing the limit of liability for responding to an offshore oil spill from $75million to $134 million. The liability limit, mandated under the Oil Pollution Act of 1990 and applying to both federal and state waters, sets a maximum liability for damage caused by an oil spill. Under the law, the entity responsible for a spill is liable for the cost of removing spilled oil from the environment and for the cost of any damage caused by the spill. The liability limit applies to the cost of the damage.

The current limit of $75 million was set in 1990 upon passage of the Oil Pollution Act.

“This proposed change is the first administrative increase to the liability cap since the Oil Pollution Act came into effect twenty-four years ago and is necessary to keep pace with the 78 percent increase in inflation since 1990,” said BOEM Director Tommy Beaudreau on Feb. 21 when announcing the change. “This adjustment helps to preserve the deterrent effect and the ‘polluter pays’ principle embodied in the law.”

The proposed regulation change also includes a mechanism to periodically alter the liability limit in the future in line with the consumer price index.

BOEM says that the liability limit increase is consistent with recommendations from the National Commission on the BP Deepwater Horizon Oil Spill. Comments on the proposed rulemaking are required by March 26.

—Alan Bailey