Interior delays hike in oil spill fines

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The Interior Department is delaying a rule that would raise the penalties on offshore facilities that are responsible for oil spills amid pressure from industry groups.

The Independent Petroleum Association of America (IPAA) and National Ocean Industries Association (NOIA) both wrote to the Interior Department requesting an extension of the comment period, which the agency granted Tuesday, so these groups will have more time to review and respond to the rule.

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“What we're trying to figure out is how it would impact our members,” IPAA vice president Dan Naatz said in an interview.

The Interior Department's Bureau of Ocean Energy Management (BOEM) announced the proposed rule last month, which a top agency official admitted was long overdue in the wake of the 2010 BP oil spill in the Gulf of Mexico.

“It's something that probably should have been done a long time ago,” said Peter Meffert, director of regulations at the Bureau of Ocean Energy Management. 

Nevertheless, the agency will give the industry more time to respond by extending the comment period by another month, through April 25.

Currently, oil companies are held liable up to $75 million for the damage caused by spills, under the Oil Pollution Act of 1990. But the agency wants to nearly double the liability limit to more than $133 million, which would help the penalties keep pace with inflation, it argues. 

On Feb. 24, the agency proposed increased fines for companies that cause oil spills in order to “preserve the deterrent effect and 'polluter pays' principle,” the agency said at the time.

“The Department of the Interior has determined that this change would further protect the environment by ensuring that any party that causes an oil spill would pay an increased amount of any potential damages,” the agency wrote.

The Obama administration would like to raise the liability limit as high as $1 billion, Meffert said, but without congressional approval it can only raise the penalties to match the growth of inflation.

The agency is using numbers from the Commerce Department to measure the rate of inflation. 

The Interior Department noted in the Federal Register that it “did not anticipate” the pushback it would receive from industry groups on the rule, which would nearly double the fines for oil spills.

“The department originally limited the rulemaking comment period to 30 days since it did not anticipate receiving significant comments on this rulemaking,” the agency wrote in Wednesday's edition of the Federal Register.

“Since the publication of this proposed rule ... numerous comments have been received and various groups have requested that additional time be provided for them to review and analyze the implications of this proposed rule. For that reason, the comment period is being extended.”