Program

Liability Limitations for Offshore Drilling (capped at $75 million)

Category

Energy - Fossil Fuels

Subsidy Type

Insurance

Committees of Jurisdiction

Senate Environment and Public Works Committee

N/A FY 16 Budget Score (in mil.)
N/A FY 16-25 Budget Score (in mil.)

Federal law caps at $75 million the amount that oil companies must pay in oil-spill related damages for economic losses and other impacts above and beyond oil-spill removal costs from spills related to offshore drilling operations. The cap can be waived if the company violates a federal safety regulation or if there is proof of gross negligence. This does not include whatever the company still pays for liabilities for violations of environmental laws. In 2014, the Bureau of Ocean Energy Management (BOEM) recently administratively increased the limit from $75 million to $134 million for offshore facilities in federal and state waters, the maximum amount allowable absent legislative change. Large oil spills, like the 2010 Deepwater Horizon spill, can cost tens of billions of dollars in damages. The cap was put in place in the U.S. Oil Pollution Act of 1990.

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