June 26, 2010 / 7:11 AM / 10 years ago

New U.S. oil rigs face inspections, fines in proposed law

WASHINGTON (Reuters) - New U.S. oil rigs and wells would face strict new design and inspection rules under a draft law circulated by a key House of Representatives committee on Friday.

The House Energy and Commerce Committee will discuss the draft bill at a June 30 hearing — one of several congressional initiatives to crack down on the oil industry in the wake of the environmental disaster caused by BP’s(BP.N) Deepwater Horizon spill in the Gulf of Mexico.

The 34-page draft “blowout prevention act” outlines the conditions for drilling and operating new “high-risk” wells — offshore or on land — and aims to prevent future disasters.

(To see the draft, click on: r.reuters.com/fej34m)

Oil companies would not be allowed to drill unless they installed blowout preventers designed to cut off the flow of oil in worst-case scenarios, the bill said.

The bill addresses the design of safe wells, and would require independent technical inspection of new rigs before they begin operating.

Third-party inspectors would need to review the rigs at least every six months, and the bill also calls for surprise visits from government inspectors.

Oil companies would need to be able to demonstrate they could control a spill within 90 days of a disaster, the draft said.

The draft defines “high risk wells” as those within 200 nautical miles of the U.S. or those onshore where a blowout “could lead to substantial harm to public health and safety or the environment.”

Those Companies found breaking the rules could be penalized $75,000 a day, or twice that amount if a blowout hurt the environment. The bill also allows for criminal penalties in the event rules are not followed.

The U.S. Interior Department also has issued tougher rules for existing rigs in the wake of the disaster that include requirements for blowout preventers.

Editing by Jackie Frank

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