Representatives of Britain’s oil industry voted last week to more than double their pooled assumption of liability for oil spills offshore of the United Kingdom and Northern Europe. While Britain has no liability cap on damages from oil spills, under the Offshore Pollution Liability Agreement (OPOL), which became effective in 1975, oil companies have voluntarily agreed each to contribute up to $120 million per incident to pay damage claims not satisfied by the company responsible for the spill. The companies voted to raise each of their obligations to $250 million per incident.
A parliamentary committee in India has agreed to triple the proposed liability limit for suppliers of nuclear power equipment to 15 billion rupees ($321.8 million). The proposal, which is likely to be approved by both house of the Indian Parliament, is expected to clear the way for Indian approval of a 2008 nuclear-power agreement with the United States. The Civil Liability for Nuclear Damage legislation was blocked last month in part by protests that the liability limits were set too low. Abhrajit Gangopadhyay, India Acts to Get U.S. Nuclear Pact, Wall Street Journal, Aug. 19, 2010. The proposal was quickly approved by the Indian cabinet. The legislation contemplates that nuclear power plants will be run by the Indian federal government.
Last week I received a copy of a new order issued on August 10th by the Supreme Court of Argentina in the long-standing Mendoza litigation to clean up of the polluted Matanza-Riachuelo river basin near Buenos Aires. In July 2008 the Court ordered all levels of government and polluting companies to participate in a comprehensive, long-term cleanup operation. In response to the Court’s order, the Argentine Congress created and funded a river Basin Authority to conduct the cleanup under the supervision of the Federal Court of Quilmes. While some polluting facilities have been shut down, the Supreme Court’s latest order reflects its concern that there has been considerable slippage in the implementation of the cleanup plan. The order demands an explanation of the reasons why there has been noncompliance with mandates to reduce industrial pollution, remediate contaminated landfills, expand the potable water supply and improve sanitation, and it requires implementation of a publicly accessible digital information system to enable better monitoring of cleanup operations.
On Monday August 16 the Council on Environmental Quality released a 41-page report on the Minerals Management Service’s compliance with the National Environmental Policy Act with respect to oil and gas development on the Outer Continental Shelf. A copy of the report is available online at: http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=42036. The report was commissioned by the White House on May 14 in response to the BP oil spill in the Gulf of Mexico. It finds that the process of tiered environmental reviews under NEPA was “not transparent,” raising concerns about their adequacy. The report makes several recommendations to “ensure robust environmental reviews for future oil and gas exploration and development activities.” It suggests that the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) should:
“Perform careful and comprehensive NEPA review of individual deepwater exploration activities, including site-specific information where appropriate.
Track and take into account all mitigation commitments made in NEPA and decision documents that are used to determine the significance of environmental impacts, from the initial Programmatic EIS through site-specific NEPA analyses and decisions.
Ensure that NEPA analyses fully inform and align with substantive decisions at all relevant decision points; that subsequent analyses accurately reflect and carry forward relevant underlying data; and that those analyses will be fully available to the public.
Ensure that NEPA documents provide decisionmakers with a robust analysis of reasonably foreseeable impacts, including an analysis of reasonably foreseeable impacts associated with low probability catastrophic spills for oil and gas activities on the Outer Continental Shelf.
Review the use of categorical exclusions for OCS oil and gas exploration and development in light of the increasing levels of complexity and risk – and the consequent potential environmental impacts – associated with deepwater drilling. Determine whether to revise these categorical exclusions.
Continue to seek amendments to the Outer Continental Shelf Lands Act to eliminate the 30-day decisional timeframe for approval of submitted Exploration Plans.
Evaluate supplementing existing NEPA practices, procedures, and analyses to reflect changed assumptions and environmental conditions, due to circumstances surrounding the BP Oil Spill.”
Embracing the report, the Department of Interior (DOI) announced last week that it will limit categorical exclusions to “activities involving limited environmental risks” and that it will prepare a supplemental environmental impact statement for oil drilling in the Gulf of Mexico. The American Petroleum Institute (API) criticized DOI’s effort to expand environmental reviews, arguing that it will delay permitting of offshore drilling without providing additional environmental benefits. On August 17 API disclosed plans to hold “citizen rallies” to resist new laws and regulations on oil exploration and development. Stephanie Kirchgaessner and Sylvia Pfeifer, Oil Groups Ready to Fight Tougher Rules, Aug. 18, 2010. The “Rallies for Jobs” will be held in Beaumont, Corpus Christi and Houston, Texas; Farmington, New Mexico; Grand Junction, Colorado; Canton, Ohio; and Peoria, Illinois.
Companies whose securities are traded on Wall Street are pushing back against provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act. These include “conflict minerals” provisions that require disclosure of the sources of minerals these companies use, Jean Eaglesham and Jeremy Lemer, Business Groups Lobby Against “Conflict Minerals” Disclosure Rule, Financial Times, Aug. 18, 2010, at 1, and a requirement that oil companies disclose payments they make to foreign government for oil concessions. These provisions were discussed in my May 23, 2010 and July 18, 2010 blog posts. While expressing sympathy for the goal of cutting off the supply of “conflict minerals,” companies are arguing that the SEC should not require detailed tracing of their supply chains. Oil companies are arguing that disclosure of payments to foreign governments will put them at a competitive disadvantage to other companies who are not subject to the disclosure requirement, such as predominately state-owned oil companies like CNOC.
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