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Begich Proposes Oil Spill Shared Liability Bill

Protects American taxpayers from picking up tab on oil spill damages

With the goals of ensuring that American taxpayers never have to pick up the tab for oil spill damages and protecting American jobs, U.S. Senator Mark Begich today released an oil spill liability bill that holds oil companies financially responsible for oil spills and provides four tiers of protection for taxpayers.

The senator released the draft to demonstrate progress of good faith negotiations among other senators and to gather necessary comment from oil and gas companies, the insurance industry, fellow lawmakers and the public.  It does not constitute a final bill.

The bill sets an initial level of individual company liability and requires all companies operating in the Outer Continental Shelf to share the cost of damages above that amount. The measure ensures multiple levels of liability protection between spillers and taxpayers.

"While most agree the current $75 million liability cap for economic damages is too low, simply lifting the cap is not a solution," Begich said. "This bill strikes a balance between encouraging independent American producers with proven track records to continue to produce offshore oil and gas and holding all development companies liable for spills. As we have witnessed in the Gulf of Mexico in recent months, the market strength of a company doesn't dictate their safety record."

Under Begich's concept draft, companies operating in the OCS, as a condition of leasing, would be required to carry insurance to a level determined by the Secretary of Interior through a public rulemaking process, subject to a minimum of $250 million. Beyond the $250 million of individual company liability, all OCS producers would collectively share liability for up to $20 billion in damages.  Lessees would pay collectively for economic damages based on their level of production and the number of acres under lease.

Should economic damages from a catastrophic spill exceed the $20 billion mark, the liability would return to the individual company for the portion above that amount. At that point, the bill provides the Secretary of the Interior the ability to require a spiller to deposit funds covering any further outstanding liability into an escrow account, ensuring that taxpayers would not be liable for the damages.

The draft also provides the Secretary of the Interior with broader powers to use the existing Oil Spill Liability Trust Fund (OSLTF) to assist citizen claimants.  The measure would allow the Secretary to borrow from the U.S. Treasury if the balance of the OSLTF on hand is insufficient.  The OSLTF is funded by an excise tax on all crude oil entering the U.S. market, and is intended to insulate taxpayers from oil spills by from bankrupt companies or of unknown origin. 

"The shared liability under this bill gives all OCS operators an incentive to argue for U.S. laws and safety regulations to be the best in the world," Begich said. "We can protect our oceans, wildlife and the public's pocketbooks while protecting good-paying American oil and gas jobs."

The bill is the latest in a package of oil spill legislation Begich has introduced to promote responsible energy development in the Arctic by ensuring the federal government has thoroughly planned and prepared for potential oil spills in the region.

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