On July 30, 2010, the U.S. House of Representatives passed the Consolidated Land, Energy and Aquatic Resources (CLEAR) Act by a 209-193 margin. If enacted, this legislation could bring considerable change to the offshore oil industry.
The CLEAR Act, HR 3534, was introduced by Natural Resources Committee Chairman Nick Rahall, D-W.Va. Since it left the committee in mid-July, though, there have been significant deletions as well as additions to the bill.
Rahall stated that the bill’s original onshore aspects have been eliminated, and the proposed legislation now focuses entirely on offshore activity. The bill also no longer contains a provision establishing a commission of oil and gas experts to investigate the spring 2010 Gulf oil spill. According to Rahall, House Democrats decided it would better to support President Obama’s existing commission. However, Republicans argue that Obama’s commission comprises members who are either opponents of offshore activity or have extremely limited knowledge of offshore oil.
Safer Deepwater Well Designs
The bill includes additions from Energy and Commerce Committee bill HR 5626 that establish blowout preventer, well design and cementing requirements for deepwater wells. It also would require:
- Redundant systems for foreseeable blowout scenarios
- Oil company chief executives to certify the safety of their design
- Certification by an independent third party selected by federal regulators (but paid for by the oil company)
Removal of Liability Cap
One major part of the proposed legislation is language from Transportation and Infrastructure Committee bill HR 5629 that would remove the current $75 million cap on liability for offshore operators. In addition, it would require any offshore rig operating in U.S. waters to be domestically flagged. According to Representative James Oberstar, D-Minn., this would allow the U.S. Coast Guard more time conduct inspections because the Coast Guard is limited to seven-hour inspections of foreign-flagged vessels while it has two to three weeks to inspect U.S.-flagged vessels.
A similar bill, the Clean Energy Jobs and Oil Company Accountability Act, has been introduced in the U.S. Senate by Harry Reid, D-Nev. While there are large differences between the bills for some provisions, both include strong new safety standards for offshore drilling that aim to effectively prevent and respond to oil spills.