State bill would strike cap on oil spill damages

Supporters hope to pass the measure before the slick reaches the N.C. coast.

STAFF WRITERJune 11, 2010 

  • A 1990 federal law caps the liability for a company responsible for an offshore platform leak at the cost of cleanup plus $75 million.

    BP has said it intends to pay more than the $75 million limit established by the federal law.

    North Carolina's law mirrors the federal liability limit, and a bill before the state House would allow the state to collect unlimited damages for a spill.

    The bill

    To follow the North Carolina bill, visit ncleg.net and enter the bill number, "S 836," in the bill search box on the right of the screen.

— Lawmakers hope to erase a cap on damages that the state could collect from BP before an oil slick arrives at the state's shores.

A state House committee approved a bill Thursday that wipes out a limit on damages the state could collect from an oil spill. Currently the state's cap mirrors a federal limit of $75 million. That cap was set for North Carolina in 1989 after the Exxon Valdez oil spill in Alaska.

The bill would apply to all spills of oil or hazardous materials in the state's waters, but the backers specifically aimed it at the oil gushing in the Gulf of Mexico, said Rep. Pricey Harrison, a Greensboro Democrat and one of the primary sponsors.

Experts fear the spill could be carried by the gulf loop current to the Atlantic Coast. Oil hitting the state's coast could wreak havoc, destroy wildlife and harm tourism and livelihoods for decades, Harrison said.

"If someone destroys our natural resources ... I don't know how you account for all those losses," Harrison said.

The bill has hurdles to clear before the full House and Senate vote on the proposal. Along the way, opponents will argue that unlimited liability on oil companies would force businesses to leave or avoid the state. The bill could not only affect the potential for offshore drilling but also any business that has a gas or oil storage tank or a company that hauls fuel or oil, said Bill Weatherspoon, executive director of the N.C. Petroleum Council, an arm of a national industry group.

Unlimited liability would create an impossible choice for businesses across the state, he said.

"What do you do? Do you stay in business and gamble every day, or do you find an insurance policy that will cost you through the teeth to cover you for some unlimited number?" he said. "The legislature needs to take it slow and easy on something like this and make sure they understand the law of unintended consequences."

North Carolina is one of at least four states that have introduced legislation in response to the April 20 explosion and sinking of the Deepwater Horizon oil rig in the Gulf of Mexico, according to the National Conference of State Legislatures.

New Jersey's legislation would ban offshore drilling.

South Carolina's would establish contingency plans for oil hitting its shores.

Louisiana lawmakers have filed several bills and resolutions related to the spill and the federal response to it.

Meanwhile, Congress has debated raising the cap on federal liability.

Also Thursday, U.S. Sens. Richard Burr and Kay Hagan of North Carolina joined senators from other coastal states in calling on federal officials to prepare for oil to hit the Atlantic Coast.

The North Carolina bill, which is backed by environmental groups, would also force a review of the requirements for permitting offshore drilling and the state's plan for handling an oil spill. Harrison said state officials are preparing for the possibility that oil from the BP spill would make it to the state's coast.

But lawmakers focused on the issue of liability Thursday. Opponents said the bill would end offshore drilling in North Carolina before it begins. With no cap on liability, a company might not be able to buy insurance, and therefore could not afford to explore for oil or natural gas off the coast.

"My only concern is we don't do anything that does prevent offshore exploration, because we won't have tourists coming in either if we have $8-a-gallon gas," said Rep. Pat McElraft, an Emerald Isle Republican.

Rep. Pryor Gibson, an Anson County Democrat, noted that the bill could have unforeseen consequences. He made a point of the fact that representatives of the petroleum industry have not talked to the sponsors yet.

"I think we're probably doing more than we know we're doing," Gibson said. "I think it's too much too fast."

Weatherspoon, of the petroleum council, said the debate would probably focus on whether to raise the liability cap instead of eliminating it entirely.

Harrison said she expected to hear from the industry, and supporters acknowledged the bill would have a lot more discussion and debate before it reaches a final form.

ben.niolet@newsobserver.com or 919-829-4521

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