BOEM raises offshore oil spill liability limit to $134 million

Dec. 11, 2014
The US Bureau of Ocean Energy Management increased the liability limit for oil-spill related damages from offshore operations to $134 million from $75 million. The change will go into effect in January 2015.

The US Bureau of Ocean Energy Management increased the liability limit for oil-spill related damages from offshore operations to $134 million from $75 million. The change will go into effect in January 2015.

The 79% increase is consistent with recommendations from the National Commission on the BP Deepwater Horizon Oil Spill and other studies, and represents the maximum increase allowable under the 1990 Oil Pollution Act, the US Department of the Interior agency said.

“This is the first administrative adjustment since the Oil Pollution Act was enacted in 1990 and is needed to keep pace with inflation, which has increased 78% since then,” BOEM Acting Director Walter D. Cruickshank said on Dec. 11.

BOEM proposed the increase in late February (OGJ Online, Feb. 24, 2014). It said the change is based on a significantly higher Consumer Price Index than when OPA originally was signed into law. The increase also represents the maximum allowable without new legislation.

The increase applies to facilities handling oil and gas in federal and state waters seaward of the coastline, according to the agency. The liability cap applies to damages from oil spills, but does not apply to other liabilities such as oil spill removal costs, which remain unlimited.

The rule also contains a mechanism to regularly update the liability limit in the future to reflect changes in inflation over time based on the CPI, BOEM added.

Alaska Wilderness League Director Cindy Shogan applauded BOEM’s action. “Now, it is time for Congress to do more and act on the recommendations of the National Oil Spill Commission,” she said.

Shogan said 25 years have passed since the tanker Exxon Valdez ran aground in Prince William Sound off Alaska, spilling 257,000 bbl of the 1,264,155 bbl it was carrying. April 2015 also will mark the fifth anniversary of the Macondo deepwater well explosion and fire that took 11 lives, destroyed the Deepwater Horizon semisubmersible rig, and released nearly 5 million bbl of crude into the Gulf of Mexico, she noted.

“The failure of Congress to raise the liability cap is especially concerning in light of the continued push to drill in America’s Arctic Ocean,” Shogan said. “Marked by sub-zero temperatures, long periods of darkness, huge currents, shifting ice floes, hurricane force winds, and 20-foot seas, the Arctic is one of the most dangerous and risky environments in the world.”

Contact Nick Snow at [email protected].