Posted on April 19, 2023
The Bureau of Ocean Energy Management (BOEM) will administratively increase the limit of liability for oil-spill-related damages from $137.66 million to $167.8 million for offshore oil and gas facilities.
The inflation adjustment is mandated by the Oil Pollution Act of 1990 (OPA) and is based on the increase in the Consumer Price Index (CPI) that has occurred over the 6 years between 2016 and 2022. BOEM says the increase is needed to keep pace with inflation and will go into effect 30 days after publication in the Federal Register.
The increase applies to facilities handling oil and gas in federal and state waters seaward of the coastline. The limit of liability cap applies to damages that result from oil spills but does not apply to other liabilities such as oil-spill removal costs, which remain unlimited.
The liability cap is set by statute and may only be adjusted to address significant increases in the CPI. The increase to $167.8 million represents the maximum increase that may be implemented without new legislation.
By regulation, BOEM must regularly update (at least every 3 years) the limit of liability cap in the future to reflect changes in inflation over time based on the CPI.
BOEM last adjusted for inflation the OPA offshore facility limit of liability for damages in 2016. In February, BOEM raised the limit of civil penalties for violations under the Outer Continental Shelf Lands Act to $52,646 per day per violation and to $55,808 for violations under the Oil Pollution Act of 1990. That increase also was made because of inflation.
BOEM has published a final rule to reflect the changes in the Federal Register here.