• New law establishes oil spill liability in the U.S. for foreign-based offshore exploration and production facilities.
  • Owners and operators of existing or planned foreign offshore exploration and production facilities must consider potential liability for spills reaching U.S. waters.
  • “Responsible parties” liable for damages and penalties include owners and operators of foreign-based offshore and abandoned oil facilities

After failing to pass the Foreign Spill Protection Act in previous legislative sessions, both houses of Congress recently passed the bipartisan measure, and President Trump signed it into law as part of the National Defense Authorization Act for Fiscal Year 2018 (Public Law 115-91) on December 12, 2017. The law expands the Oil Pollution Act and portions of the Clean Water Act to specifically include owners and operators of foreign-based offshore facilities as “responsible parties” liable for damages caused by spills that enter U.S. waters, and subject to significant civil penalties for the same.

As offshore drilling expands—both in and outside the U.S.’s exclusive economic zone—Congress has become increasingly concerned that a spill emanating from a foreign-based facility could have major impact on U.S. waters and shorelines. Because of a gap in the definition of “responsible parties” under the Oil Pollution Act and Clean Water Act, Congress was concerned that owners and operators of foreign facilities situated relatively close to U.S. waters would not be held fully liable for spills impacting the U.S. The amendments make clear that “any person owning or operating” a foreign facility, and “any leaseholder, permit holder, assignee, or holder of a right of use and easement granted under applicable foreign law for the area in which the facility is located,” is a “responsible party” for purposes of Oil Pollution Act and Clean Water Act liability.

This forward-looking legislation anticipates the risks of a foreign-based oil spill impacting American waters and coastlines, ensuring foreign entities responsible for an oil spill affecting U.S. waters and our coastline are also responsible for all cleanup costs, regardless of where the spill took place.

—U.S. Rep. Carlos Curbelo (R-Fla.)

The legislation also extends to abandoned foreign facilities, making the persons or entities that would have been responsible parties immediately prior to the abandonment of the vessel or facility liable for discharges occurring after abandonment if those discharges affect U.S. waters or shorelines.

In addition to expanding the definition of “responsible party” under the Oil Pollution Act, the amendments also expand the Clean Water Act’s definition of “offshore facility” to include facilities located seaward of the U.S.’s exclusive economic zone. This expansion is somewhat limited in that it applies only to particular subsections of the Clean Water Act, § 311. Those subsections relate to administrative and civil penalties for spills of oil and/or other hazardous substances (§ 311(b)), Federal removal authority (§ 311(c)), civil enforcement (§ 311(e)), and the savings clause for existing state, local and federal law (§ 311(o)).

Through these amendments, Congress is seeking to insulate the U.S. from damages caused by foreign-based offshore operations. In the wake of the Deepwater Horizon incident in 2010, the U.S. is particularly cognizant of the catastrophic impact major incidents can have on its coastal communities and industries. If a similar-sized incident occurs in foreign waters, Congress wants to ensure that the government has a basis for redress, and in addition, Congress may also be hopeful that the very threat of the laws’ applicability will serve as an incentive for foreign-based facilities to operate at higher safety and environmental standards.

While it could be years or even decades before a live case or controversy allows it to be tested, it is likely that any foreign entity facing liability under OPA or the CWA as amended by the Foreign Spill Protection Act would raise jurisdictional and extraterritoriality defenses that will require resolution.