Reacting to the devastating BP oil spill in the Gulf of Mexico, a New Jersey legislative committee yesterday released a bill (S-2108) that would increase the state Spill Fund’s current liability cap of $50 million to $1 billion. The measure was amended to also increase the per-vessel cap from $1,200 to $3,000 per gross ton.
However, after hearing testimony from petroleum and chemical industry lobbyists objecting to the 20-fold increase for on-shore spills, bill sponsor Bob Smith (D-Middlesex) agreed to consider floor amendments that would increase the cap to some yet undermined level for on-land spills while leaving unchanged the bill’s $1 billion cap for off-shore spills.
New Jersey Petroleum Council Executive Director James Benton told members of the Senate Energy and Environment Committee that the current $50 million cap had been sufficient for all spills at petroleum facilities since the Spill Fund was instituted in 1976 and that an oil tanker spill in the Delaware River that totaled $100 million was covered by the shipping company’s insurance carrier and did not require the use of Spill Fund money.
Smith said that while major corporations may be able to cover cleanups in excess of the law’s current $50 million liability cap, he was concerned about a potential $350 million spill at a mom-and-pop-sized facility. “This bill is designed to cover that situation,” he said.
New Jersey Chemistry Council Executive Director Hal Bozarth questioned whether the more than 300 chemical and pharmaceutical companies also covered by the state Spill Fund law would be able to find insurance carriers willing to provide coverage for spills with a $1 billion cap—and at what cost. He said that pollution premiums currently run between 8 and 15 percent of the liability exposure.
A representative of the state Department of Environmental Protection, which supports the legislation, agreed to the committee’s request that the department research the history of Spill Fund payouts and make a recommendation as to a new liability level for on-shore spills.
The New Jersey Audubon Society and the New Jersey Sierra Club registered their support for the legislation.
Related:
Congress moves to lift oil spill liability cap
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