With the explosion of the Deepwater Horizon drilling rig and subsequent spilling of more oil into the ocean every day, one thing is clear: The rules for offshore drilling will change. Right now, applicable regulations and the federal agencies overseeing them are in flux as the Obama Administration grapples with the fallout from the spill. Companies can expect Congress and a multitude of federal and state agencies to enact new requirements and to take a more pro-active role. As a result, the permitting process will become longer and require a more detailed environmental analysis. This will likely increase costs and limit operational freedom.
For example, Congress is considering raising the Oil Pollution Act (OPA) damage liability cap on economic damages for oil drilling accidents from $75 million (unlimited liability if grossly negligent) to $10 billion. Under a new bill, if damages exceed the $1.6 billion held by the OPA Trust Fund, claimants could collect damages, with interest, from future OPA Trust Fund revenues.