Feds boosting oil spill liability limits

WASHINGTON — The Coast Guard moved Tuesday to boost the liability limits capping how much companies must pay for oil spills that foul U.S. waters.

The administrative move — which would mean a 15.6 percent increase in the cap for onshore facilities, to $404.6 million — is designed to ensure that the liability limits keep up with inflation.

The Oil Pollution Act that established companies’ liability for oil spills and set the legal framework for cleaning up the accidents also authorized the federal government to adjust the limits as frequently as every three years.

“These regulatory inflation increases to the limits of liability are required by (the law) and are necessary to preserve the deterrent effect and ‘polluter pays’ principle embodied in (the statute),” The Coast Guard said in a notice outlining the proposed rule in the Federal Register.

The liability caps in the law place a ceiling on the amount companies must pay in economic damages in cases of accidental spills — those where there is no finding of gross negligence, willful misconduct or other violations. Regardless of the liability caps on economic damages, companies must pay the entire cost of cleaning up spills.

The adjustment comes after a series of spills offshore and pipeline accidents onshore, including the Deepwater Horizon disaster in 2010, the collision of vessels in the Houston Ship Channel in March and the Enbridge Pipeline spill into the Kalamazoo River in 2010. In its notice, the Coast Guard acknowledged “the nation’s recent experience with costly oil spills.”

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The proposed limits would apply for spills from deep-water ports, offshore vessels and onshore facilities. Historically, most vessel-related spills have stayed within the existing liability limits. According to Coast Guard data, 62 vessel incidents exceeded the cap from 1991 through 2012 — an average of about three per year.

The liability cap change also could affect a wide range of onshore facilities, including pipelines. “Because of the large number and diversity of onshore facilities, it is not possible to predict which specific types or sizes of onshore facilities might be affected by this proposed rule,” the government notice said. Since the pollution law was enacted in 1990, only one onshore facility incident — the 2010 Kalamazoo River spill — resulted in removal costs and damages exceeding the current liability limit of $350 million.

The proposed liability limits would lift the caps for:

  • Single-hull tank vessels to $25,422,700 or $3,500 per gross ton (whichever is higher), from $23,496,000 or $3,200 per gross ton previously.
  • Tank vessels greater than 3,000 gross tons to as much as $18,489,200 from $17,088,000 previously.
  • Single-hull tank vessels less than or equal to 3,000 gross tons to a maximum of $6,933,500 from $6,408,000 previously.

The government is accepting public comment on the proposal through Oct. 20.