Deepwater Horizon Oil Spill Disaster: Risk, Recovery, and Insurance Implications [July 12, 2010] [open pdf - 667KB]
From the Summary: "The April 2010 Deepwater Horizon oil spill disaster in the Gulf of Mexico is now being characterized as the largest spill to have occurred in U.S. waters. As efforts to contain the current spill proceed, the likely scale of clean-up costs and third-party damages has prompted congressional review of clean-up and damage compensation mechanisms, as well as of ways to facilitate future oil spill prevention, response, and recovery. A key element is the role of insurance in ensuring that costs of spills can be financed, while at the same time enabling the continued effective and responsible functioning of offshore energy exploration and production, as well as protecting related economic interests. The United States has an explicit oil spill liability and insurance mechanism to address the Deepwater Horizon incident. In 1990, Congress enacted the Oil Pollution Act (OPA) to strengthen the safety and environmental practices in the offshore energy exploration and production business, to create a system of so-called 'financial responsibility laws' and compulsory liability insurance combined with strict liability standards, and to place limitations on liability. Although liable for all removal costs, current law limits an offshore facility's liability for economic and natural resources damages to $75 million per incident. Damages in excess of the cap could be paid by the Oil Spill Liability Trust Fund, which is financed primarily through a fee on domestic and imported crude oil."
CRS Report for Congress, R41320