Following what the Obama Administration is calling “a massive and potentially unprecedented environmental disaster” in the Deepwater Horizon oil spill in the Gulf of Mexico, the president has sent Congress a legislative package, including a measure to raise the liability caps for oil firms.
Carol Browner
Among the provisions in the legislation, introduced by Carol Browner, assistant to the president for energy and climate change, would be an increase in the statutory expenditure limitation for the Oil Spill Liability Trust Fund from $1 billion to $1.5 billion. Another provision would raise the cap on natural resource damage assessments and claims from $500 million to $750 million for any single incident, according to the White House.
Officials said they will work with Congress to develop levels for the various caps “that provide for substantial, and proportional, increases.”
Created in 1990 as part of the Oil Pollution Act, the Oil Spill Liability Trust Fund consolidated previous federal oil pollution laws and supporting funds, and added a tax on the petroleum industry to come to $1 billion. The fund is used for various reasons, including removal costs incurred by the Coast Guard and Environmental Protection Agency, state access for removal activities and payment of claims for uncompensated removal costs and damages.
In addition to raising the liability caps, the Obama Administration is also pitching legislation to increase the excise tax for the fund, from 8 cents per barrel (per 42 gallons) to 9 cents per barrel, beginning this year.
While geared to aid clean-up and damages associated with an oil spill, officials noted that the fund is financing ongoing federal government activities in responding to the Deepwater Horizon spill. It will provide the legal authority for the government to seek full reimbursement from the “responsible party” for these activities, according to a White House statement.
This increase in the oil spill liability tax moves forward a planned increase in 2017 of 1 cent per barrel, and sets a tax of 10 cents per barrel starting in 2017 to make sure that there is long-term oil industry financing for the fund, the administration said.
Other parts of the legislation provide for funding advances to the Coast Guard in case of an oil spill, environmental studies and monitoring and improving off shore oil exploration.
Browner, in a conference call with reporters, said the Deepwater Horizon spill, which began April 20 following an explosion that killed 11 workers, “is a massive and potentially unprecedented environmental disaster, which can seriously damage the economy and environment of our Gulf states and jeopardize the livelihoods of thousands of Americans who live throughout the Gulf region.”
She noted that BP, the owner of the oil rig, will be paying “all costs” of stopping the spill and cleaning it up and the company has pledged to cover all insurance claims as a result of the accident.
“The spill has also made it very clear that updates are needed to current laws governing the liability that companies have for any damages– for any damage they cause while drilling and transporting oil,” Browner said. “The Oil Pollution Act, for instance, was passed 20 years ago when offshore exploration and production in deepwater represented a small portion of our energy supply.”
White House proposes legislation raising liability caps for oil firms via IFAwebnews .