Begich unveils oil-spill liability bill

“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 in a prepared statement Friday. “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.”

Under his plan, companies drilling in federal waters must carry at least $250 million in insurance, but from there the shared cost system kicks in.

“Beyond the $250 million of individual company liability, all [offshore] 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,” states a summary of the plan.

If economic damages from a major spill exceed $20 billion, liability would revert back to the companies responsible for costs greater than 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 summary states.

Majority Leader Harry Reid (D-Nev.) plans to bring up oil-spill response legislation – including liability measures – after the August recess. Begich predicted Thursday that Reid would look favorably upon his plan.