Cummings Hears Testimony on Oil Company Liability

Friday, June 11, 2010

Congressman Elijah E. Cummings (MD-07) took part in a hearing held by the House Transportation and Infrastructure Committee, called to examine the liability requirements for oil spills that are imposed by the Oil Pollution Act of 1990 (OPA) and related statutes on offshore facilities and vessels operating in U.S. waters. The Committee also considered the potential impact on the offshore industry of the liability claims arising from the loss of the Deepwater Horizon in the Gulf of Mexico and the subsequent oil spill from the Macondo well site.

To get more information on the issue of both claims and liability caps, Cummings and the Committee also questioned a panel of oil and insurance industry experts, hearing testimony regarding the potential of raising the liability cap.

“Although facilities are legally liable for all costs associated with cleaning up the oil they spill, the cap of $75 million in liability for the damages that a spill from an offshore facility might cause is unrealistically low given what are now the obvious risks associated with offshore drilling,” said Cummings. “It is imperative that this cap be raised to a level that reflects the extent of the potential consequences associated with spills from offshore facilities.

“Further, under current statutes, facilities are not required to demonstrate more than $150 million in financial responsibility although it is apparent their potential liabilities may be many times that figure. As we consider the appropriate liability level for offshore facilities, we must also assess the appropriate level of financial responsibility they should be required to demonstrate.  The current threshold of $150 million is unrealistically below the extent of the potential liability in light of what has happened in the Gulf.”

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