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Will Shell voluntarily waive the $75 million cap on damages in the event of a catastrophic spill in the Arctic Ocean?

BP voluntarily waived the $75 million cap on damages after Deepwater Horizon spill. Will Shell voluntarily wave the $75 million cap on damages in the event of a catastrophic spill in the Arctic Ocean?

By a Guest Author, a Regular Contributor

The Oil Pollution Act of 1990 limits oil company liability for damages resulting from an oil spill to a maximum of $75 million. The Act was instituted largely in response to a public outcry over the Exxon Valdez oil spill. Attempts have been made to raise that cap to $10 billion, but they have failed.

The following links highlights some of the features of this act:

Oil Pollution Act of 1990, United States

This link gives you the full text of that Act:

33 USC § 2701 – Definitions | LII / Legal Information Institute

Of course, BP voluntarily waived the $75 million cap on damages after the Deepwater Horizon spill. Royal Dutch Shell has said nothing about any such voluntary waiver of this limit should they have a catastrophic problem.

What is most disturbing about Shell’s conduct is their willingness to try and ‘game the regulations’ by requesting waivers for deficiencies for permits at the last minute. Shell has spent (or so they say) $4.5 billion getting ready to drill in the Arctic, and at this late date they are not yet ready.

It is clear from the problems that Royal Dutch Shell has had elsewhere that they have project management issues, on a company scale, and it appears their Alaskan operations are no exception.

It is these kinds of management issues and shortcomings that could lead to a serious problem. It is no surprise then that Shell is keeping mum about this liability cap.

Here are some further related links:

BP Confirms Waiver of $75 Million Liability Cap | Houston Personal …

BP Waiver of $75 Million Spill Damage Cap May Recognize Liability …

BP Waives $75 Million Cap for Some Oil Spill Claims

BP apparently recognised that trying to invoke the cap would be a major PR disaster for them. I would suggest that Royal Dutch Shell would face the same problem if they had a major incident in the off-shore Arctic. Any major spill associated with a Shell well would easily cost the company in excess of $10 billion. Given those potential types of damages it is amazing that the company has taken the approach they have for the drilling these wells.

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