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Introduction Of The Stand By Your Oil Pollution Act

Rep. Gerald E. Connolly

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Madam Speaker, in 1989 the Exxon Valdez oil tanker ran aground in Prince William Sound, spilling 10.9 million gallons of oil that eventually coated 1,100 miles of Alaskan coastline. Following this disaster, Congress passed the Oil Pollution Act in 1990 to require that oil companies pay the full cleanup costs of oil spills. However, this legislation has a couple of loopholes that need to be closed. If an oil company subsidiary is responsible for the spill, that subsidiary can declare bankruptcy and sell its assets, even to its parent company, without passing on cleanup cost liabilities. The SPILL Act, which the House will vote on this week, will close this loophole so that liability follows subsidiary assets. Whether or not the SPILL Act becomes law, there will be another loophole in the Oil Pollution Act: If a subsidiary is responsible for an oil spill, it can declare bankruptcy and not sell its assets, in which case the parent company would not inherit cleanup liabilities.

This is a realistic scenario, given the high cost of oil spills. Even a well capitalized company worth several billion dollars could be responsible for an oil spill that costs tens of billions of dollars to clean up. The Exxon Valdez spill cost over $2 billion just to clean up 10.9 million gallons of oil. As of late June, the Deepwater Horizon spill had already cost BP $2.65 billion with total cleanup cost estimates as high as $100 billion. Moreover, if Congress increases the cap on private liability under the Oil Pollution Act, oil companies could be responsible for much greater costs. The fishing industry in the Gulf is worth $5.5 billion annually. Just losing 50% of western Florida's tourism would cost the state $10 billion. If Congress eliminates the private liability cap under OPA then an oil company responsible for a spill could be responsible for tens of billions of dollars to reimburse property owners and workers for lost property and wages. Given the extraordinarily high cleanup and private liability costs of oil spills, we must close the loophole that allows parent companies to escape liability by letting subsidiaries go bankrupt.

I have introduced legislation, the Stand by your Oil Pollution (STOP) Act, to prevent oil companies from shedding liabilities of subsidiaries. This legislation is necessary to ensure that BP doesn't escape its cleanup responsibilities in the Gulf and to prevent oil companies from setting up subsidiaries to avoid liability for spills in the future.