Managing Financial Liability

Under the Oil Pollution Act of 1990, "responsible parties" are strictly liable for cleanup costs and certain damages resulting from the spill. While liability for cleanup costs is unlimited, liability for damages (such as impacts on fisheries) is capped at $75 million for offshore facilities. There is little assurance that a "responsible party" causing a future spill will have sufficient resources to fully cover the cost of damages.

Drilling operators should be financially responsible for the consequences of failure. The current $75 million cap on liability for offshore facility accidents is totally inadequate and places the economic risk on the backs of the victims and the taxpayers. The cap should be raised significantly to place the burden of catastrophic failure on those who will gain the economic rewards, and to compensate innocent victims. Provisions should be made to ease the burden on small-scale operators—for example, including mechanisms for sharing risk such as insurance pools.