BOEM Proposes $134M offshore oil spill liability cap

The U.S. Bureau of Ocean Energy Management (BOEM) has proposed to administratively increase the limit of liability for oil-spill removal costs and related damages from $75 million to approximately $134 million.

The increase would apply to offshore facilities in federal and state waters under the Oil Pollution Act of 1990, and is consistent with recommendations from the National Commission on the BP Deepwater Horizon Oil Spill and other studies that called for a statutory increase in the limit of liability.

“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 P. Beaudreau. “This adjustment helps to preserve the deterrent effect and the ‘polluter pays’ principle embodied in the law.”

The rule would also establish the methodology BOEM would use for future inflation adjustments to the liability cap. The Department of the Interior has determined that these changes would further protect the environment by ensuring that any party that causes an oil spill would pay an increased amount of any potential damages. The adjustment is the maximum increase that may be implemented without legislation.

BOEM is publishing this proposed update to its regulations and is soliciting public comments on the adjustment methodology, the clarity of the rule and any other pertinent matters.