The U.S. Interior Department continues to play "slow ball" as it develops oil spill insurance requirements under the 1990 Oil Pollution Act (OPA).
Interior Asst. Sec. Bob Armstrong admitted last week Interior has tried to move as slowly as possible-and no one is urging speed, anyway-to promulgate rules under OPA, using the time to seek solutions to controversies the law has spawned.
The main problem is that the law, passed in reaction to the Exxon Valdez tanker spill, clearly requires offshore drillers and platform operators to carry $150 million in oil spill insurance.
Smaller oil companies complain that much insurance is excessive and too expensive.
INERTIA, KEY QUESTIONS
Little has happened on the issue in the past year (OGJ, Nov. 15, 1993, p. 26) except that Interior's notice of proposed rulemaking drew 1,900 written comments, by far a record for the department.
Interior hoped Congress would revise the law last year, but legislators made no effort to do so.
Armstrong explained, "For some reason it was so difficult to get an accommodation on OPA that congressmen, environmentalists, and companies are reluctant to reopen the law for fear it would be changed in ways they don't want."
Interior has asked its solicitor, which drafted the proposed rule industry has found so objectionable, to reexamine the question.
Armstrong said, "We have requested a formal legal opinion that will address the department's latitude in developing regulations.
"We've asked the solicitor to examine three issues critical to writing a rule that embodies OPA principles without imposing onerous financial burdens on large segments of our national economy. "
The issues are:
- What facilities fall within the "offshore facility" definition and thus are subject to OPA?
- Can the insurance requirement for an offshore facility be based on the pollution risk it represents?
- Can facilities be exempt if they handle small volumes of oil and are a minimal risk to the environment?
Last week Armstrong also asked the Interior secretary's advisory group, the Outer Continental Shelf Policy Committee, to appoint a subcommittee to help seek answers. That group may report back about May 1.
Armstrong stressed that even if Interior must proceed with a rule next year, it would not become effective until 1996.
OFFSHORE LEASING
Meanwhile, the Minerals Management Service soon will seek comments on a new 5 year leasing plan, starting a long process to schedule sales for 1997-2002.
Armstrong said it will be a challenge to continue offshore leasing "in the face of a fairly substantial number of moratoriums" set by Congress.
Interior will try to resolve offshore leasing conflicts basin by basin, but "there are obviously going to be some areas where we will not be allowed to lease, and we recognize that."
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
Issue date: 11/07/94
