Peters, Colleagues Introduce Legislation to Hold Companies Accountable for Disastrous Oil Spill Damages

WASHINGTON, D.C. – U.S. Senator Gary Peters (D-MI) today joined his colleagues in introducing a pair of bills to increase accountability for big oil companies responsible for disastrous spills, improve the federal government's ability to help areas affected by an oil disaster, and eliminate bailouts for the multi-billion-dollar oil and gas industry.

“Michiganders know the devastating impacts of an oil spill far too well, following the disastrous pipeline rupture that spilled into the Kalamazoo River,” said Senator Peters. “This legislation will hold big oil companies financially accountable for their actions – and their accidents – in order to ensure the health and safety of our people and our environment.”

The Big Oil Bailout Prevention Legislation Package is consists of the following separate bills:

• Big Oil Bailout Prevention Unlimited Liability Act of 2016 – eliminates the $134 million liability cap for economic damages caused by an offshore oil spill

• Big Oil Bailout Prevention Trust Fund Act of 2016 – eliminates the $1 billion per-incident cap on claims against the Oil Spill Liability Trust Fund (OSLTF), along with the $500 million cap on OSLTF monies used for natural resource damages

Federal law currently protects oil companies by capping their offshore oil spill liability for economic damages at $134 million—an amount that pales in comparison to the more than $90 billion in profits the five largest oil companies enjoyed in 2014, and is easily surpassed by an oil spill as shown by the 2010 Deepwater Horizon disaster. 

That cap means an oil company responsible for an offshore spill does not have to pay more than $134 million for economic 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 $134 million cap on economic damages.

In the event that damage claims from a spill exceed the amount in the Oil Spill Liability Trust Fund, the legislation allows the U.S. Treasury to temporarily refill the fund and be repaid with interest once it is replenished.  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 $134 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 United States.  However, there is a $1 billion per incident cap, which be eliminated under this legislation, on payouts from the fund. 

Senator Peters introduced the legislation with Senator Bob Menendez (D-N.J.), Sens. Edward J. Markey (D-Mass.), Jack Reed (D-R.I.), Richard Durbin (D-Ill.), Barbara Mikulski (D-Md.), Al Franken (D-Minn.), Jeff Merkley (D-Ore.), Sheldon Whitehouse (D-R.I.), Bill Nelson (D-Fla.), and Cory Booker (D-N.J.).

In the Senate, Peters has worked to protect Michigan from devastating oil spills. In May, Peters sent a letter to Department of Transportation (DOT) Secretary Anthony Foxx urging DOT to hold pipelines that cross the Great Lakes to the same standards as other offshore pipelines given the potential for significant economic and ecological harm from an oil spill in the Great Lakes. Pipelines crossing the Great Lakes, including Enbridge’s Line 5 under the Straits of Mackinac, are currently regulated as onshore pipelines, which are held to less stringent regulatory standards than offshore pipelines. Regulating Great Lakes pipelines as onshore facilities raises concerns that current requirements are not adequate to prevent, respond to, or pay for an oil spill.