Text: S.3514 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in Senate (06/21/2010)


111th CONGRESS
2d Session
S. 3514


To amend the Outer Continental Shelf Lands Act to prohibit a person from entering into any Federal oil or gas lease or contract unless the person pays into an Oil Spill Recovery Fund, or posts a bond, in an amount equal to the total of the outstanding liability of the person and any removal costs incurred by, or on behalf of, the person with respect to any oil discharge for which the person has outstanding liability, and for other purposes.


IN THE SENATE OF THE UNITED STATES

June 21, 2010

Mr. Begich (for himself, Mr. Wyden, and Ms. Klobuchar) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works


A BILL

To amend the Outer Continental Shelf Lands Act to prohibit a person from entering into any Federal oil or gas lease or contract unless the person pays into an Oil Spill Recovery Fund, or posts a bond, in an amount equal to the total of the outstanding liability of the person and any removal costs incurred by, or on behalf of, the person with respect to any oil discharge for which the person has outstanding liability, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

This Act may be cited as the “Guaranteed Oil Spill Compensation Act of 2010”.

SEC. 2. Findings.

Congress finds that—

(1) the Oil Pollution Act of 1990 (33 U.S.C. 2701 et seq.)—

(A) was passed directly in response to the Exxon Valdez oil spill;

(B) establishes strict liability for parties responsible for the discharge of oil into navigable waters, shorelines, or the exclusive economic zone;

(C) establishes liability for damages, including damages related to all cleanup and removal costs, natural resources, real or personal property, subsistence use of natural resources, government revenues, diminished profit and earning capacity, and increased public services; and

(D) limits the liability of responsible parties for damages beyond removal costs by vessel and facility type;

(2) the annual report of the Coast Guard on liability limits under the Oil Pollution Act of 1990 (33 U.S.C. 2701 et seq.) for fiscal year 2009 indicates that 51 vessel oil spills since the date of enactment of that Act caused damages that exceeded the liability limits for the applicable class of vessel;

(3) in the Coast Guard and Maritime Transportation Act of 2006 (Public Law 109–241; 120 Stat. 516), Congress increased the liability limits under the Oil Pollution Act of 1990 (33 U.S.C. 2701 et seq.) for single- and double-hulled vessels and gave the Coast Guard the ability to further adjust those limits for inflation;

(4) the Internal Revenue Service estimated the balance of the Oil Spill Liability Trust Fund established by section 9509 of the Internal Revenue Code of 1986 to be $1,700,000,000 at the end of fiscal year 2009, pending resolution of outstanding claims against the Fund;

(5)(A) the cleanup of the oil spill resulting from the grounding of the Exxon Valdez on Bligh Reef in Prince William Sound on March 24, 1989, was declared complete in 1992 by the Coast Guard and the State of Alaska and cost Exxon $2,000,000,000;

(B) in a settlement approved by a United States district court on October 9, 1991, Exxon paid the State of Alaska and the Federal Government the equivalent of $900,000,000 (made in annual payment over 10 years) to settle the civil claims associated with the Exxon Valdez oil spill, of which a portion was made for reimbursement for cleanup costs;

(C) under a separate settlement of Federal criminal charges, Exxon also paid $25,000,000 in fines and $100,000,000, divided equally between the United States and Alaska, as restitution for criminal conduct by Exxon;

(D) in a case consolidated into the case styled Exxon Shipping Co. v. Baker (128 S. Ct. 2605 (2008)), a jury awarded $287,000,000 for damages to private parties and an additional $5,000,000,000 in punitive damages; and

(E) after nearly 2 decades of appeals, on June 25, 2008, the Supreme Court issued a judgment limiting punitive damages to compensatory damages, calculated at $507,500,000, a reduction to essentially 10 percent of the initial jury award;

(6) as of June 16, 2010, a scientific team under the direction of Secretary of Energy Steven Chu, Secretary of the Interior Ken Salazar, and the Chair of the National Incident Command’s Flow Rate Technical Group, Dr. Marcia McNutt (Director of the United States Geological Survey), announced an estimated flow rate of between 35,000 and 60,000 barrels per day of hydrocarbons into the Gulf of Mexico from the Macondo Prospect well, known as MC 252, resulting from the blowout and explosion of the mobile offshore drilling unit Deepwater Horizon that occurred on April 20, 2010, and resulting hydrocarbon releases into the environment;

(7) that estimate greatly exceeds the estimated 10,800,000 gallons (250,000 barrels) spilled by the grounding of the Exxon Valdez on Bligh Reef in Prince William Sound on March 24, 1989, and is now the largest known oil spill in United States waters;

(8) the Gulf Coast region produced 1,273,424,000 pounds of seafood in 2008 worth $697,591,000 to the fishermen in the Gulf of Mexico, which is the second most productive fishing region in the United States, boasting 4 of the top-10 commercial fishing ports of the United States in Empire-Venice, Intracoastal City, and Cameron, Louisiana, and Pascagoula-Moss Point, Mississippi;

(9) recreational fisheries are important to the Gulf Coast economy, with (according to the National Marine Fisheries Service) 3,200,000 individuals taking 25,000,000 recreational fishing trips in the Gulf region in 2008 in which 194,000,000 fish were landed;

(10) as of June 7, 2010, the National Oceanic and Atmospheric Administration closed 78,264 square miles of the Gulf of Mexico to fishing, an area equivalent to 32.3 percent of the total exclusive economic zone of the Gulf; and

(11) commercial sectors employing a wide spectrum of the Gulf Coast population (including residents involved in tourism, oil and gas exploration, and a host of support and service industries) are experiencing a severe economic disruption due to the blowout and explosion of the mobile offshore drilling unit Deepwater Horizon that occurred on April 20, 2010, and resulting hydrocarbon releases into the environment.

SEC. 3. Oil Spill Recovery Fund.

(a) In general.—The Outer Continental Shelf Lands Act is amended by inserting after section 8 (43 U.S.C. 1337) the following:

“SEC. 8A. Oil Spill Recovery Fund.

“(a) Definition of Fund.—In this section, the term ‘Fund’ means the Oil Spill Recovery Fund established under subsection (c).

“(b) Coverage of outstanding incident liability.—

“(1) IN GENERAL.—No person shall be eligible to enter into any Federal oil or gas lease or contract after the date of enactment of this section unless the person pays into the Fund, or posts a bond, in an amount equal to the difference between, as determined by the Secretary as of the date of the application for the lease or contract—

“(A) the total of the outstanding liability of the person under section 1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702) (without regard to any liability limit under section 1004 of that Act (33 U.S.C. 2704)) and any removal costs incurred by, or on behalf of, the person, with respect to any incident occurring before, on, or after the date of enactment of this section for which the person has outstanding liability; and

“(B) the outstanding balance in the Oil Spill Liability Trust Fund established by section 9509 of the Internal Revenue Code of 1986, that is attributable to the person.

“(2) NO EFFECT ON OTHER LIABILITY.—Payment into the Fund or posting of a bond in accordance with paragraph (1) does not, with respect to the applicable incident—

“(A) limit any civil or criminal liability of the person; or

“(B) determine or affect an appropriate level of claims or damages.

“(c) Establishment of Fund.—There is established in the Treasury of the United States a fund to be known as the ‘Oil Spill Recovery Fund’ to be administered by the Secretary, to be available without fiscal year limitation and without being subject to appropriation, for payment of covered removal costs and damages described in section 1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702) associated with any incident.

“(d) Transfers to Fund.—

“(1) IN GENERAL.—The Fund shall consist of such amounts as are appropriated to the Fund under paragraph (2).

“(2) FEES.—There are appropriated to the Fund, out of funds of the Treasury not otherwise appropriated, amounts equivalent to amounts collected as fees and received in the Treasury under subsection (b)(1).

“(e) Repayment.—

“(1) IN GENERAL.—In the case of any person who has paid into the Fund under subsection (b), on the date described in paragraph (2), the Secretary shall transfer to the person an amount equal to—

“(A) the amount of unexpended funds of the person in the Fund; plus

“(B) any accumulated interest on those funds.

“(2) DATE.—The date on which amounts described under paragraph (1) shall be repaid is the earlier of—

“(A) 5 years after the date on which the amounts were paid into the Fund; and

“(B) the date on which the Secretary makes a formal determination that all Federal and State natural resource damage assessments and all outstanding civil claims relating to the incident for which the amounts were paid have been satisfied.

“(f) Prohibition.—Amounts in the Fund may not be made available for any purpose other than a purpose described in subsection (c).

“(g) Quarterly reports.—

“(1) IN GENERAL.—Not later than 4 times during of each fiscal year beginning with fiscal year 2010, the Secretary shall submit to the Committee on Appropriations of the House of Representatives, the Committee on Appropriations of the Senate, the Committee on Energy and Natural Resources of the Senate, and the Committee on Resources of the House of Representatives a report on the operation of the Fund during the fiscal year.

“(2) CONTENTS.—Each report shall include, for the fiscal year covered by the report, the following:

“(A) A statement of the amounts deposited into the Fund.

“(B) A description of the expenditures made from the Fund for the fiscal year, including the purpose of the expenditures.

“(C) Recommendations for additional authorities to fulfill the purpose of the Fund.

“(D) A statement of the balance remaining in the Fund at the end of the fiscal year.

“(E) A statement of amount of outstanding liability determined under subsection (b) as compared to the balance remaining in the Oil Spill Liability Trust Fund established by section 9509 of the Internal Revenue Code of 1986 at the end of the fiscal year.”.

(b) Separate appropriations account.—Section 1105(a) of title 31, United States Code, is amended—

(1) by redesignating paragraphs (35) and (36) as paragraphs (36) and (37), respectively;

(2) by redesignating the second paragraph (33) (relating to obligational authority and outlays requested for homeland security) as paragraph (35); and

(3) by adding at the end the following:

“(38) a separate statement for the Oil Spill Recovery Fund established under section 8A(c) of the Outer Continental Shelf Lands Act, which shall include the estimated amount of deposits into the Fund, obligations, and outlays from the Fund.”.