Bills would remove OPA ’90 liability cap

Washington, D.C. – Following the third anniversary of 2010’s Deepwater Horizon explosion and oil spill, Sen. Robert Menendez (D-NJ) and Rep. Rush Holt (D-NJ) introduced the Big Oil Bailout Prevention Legislation Package on April 25. The two bills are aimed at holding big oil companies accountable for oil spills and improving the federal government’s ability to help areas affected by an oil disaster.

“The best way to prevent oil spills is to make sure oil companies pay for all of the damages oil spills cause. This legislation delivers a simple message: If you make a mess, you clean it up. If you hurt small businesses or communities, you fix them. If you hurt someone, you make it right,” Menendez, a member of the Senate Banking and Finance Committee said in a release. “This bill removes the $75 million cap on big oil companies’ liabilities; helping to make sure those companies do the right thing by the American people when accidents happen.”

“If you or I were to walk into a neighbor’s yard and douse their grass with motor oil, a court would hold us personally liable for the full cleanup costs,” said Holt. “So it’s absurd that, under current law, Big Oil companies receive special legal immunity when their oil spills cause economic and environmental havoc.  Big Oil should play by the same rules as everyone else.”

Federal law currently caps oil spill liability at $75 million – an amount that is easily surpassed by an oil spill similar in scope to Deepwater Horizon.

The current cap means an oil company responsible for a spill does not have to pay more than $75 million for damages such as lost business revenues from fishing or tourism or lost tax revenues of state and local governments, unless, as in the case of BP and the Deepwater Horizon spill, the oil company was found to be grossly negligent or to violate federal law. Current law requires an oil company responsible for a spill to pay for all costs – without limit – related to mitigating or cleaning up the spill including the use of booms, cleaning up spills, rehabilitating wildlife, and skimming for oil, but arbitrarily imposes the $75 million cap on economic damages.

This legislation also makes significant improvements in the use of Oil Spill Liability Trust Fund monies following a spill. The Oil Spill Liability Trust Fund was established to provide quick relief for victims of an oil spill, to provide immediate funds to respond to a spill and help pay for damages after a company hits its $75 million liability cap, or if the culprit cannot be found or has gone bankrupt. It is funded by an 8 cent tax for every barrel of oil produced or imported into the U.S. However, there is a $1 billion per incident cap on payouts from the fund.

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