House Set to Debate Oil Liability Bill

By Richard Cowan | July 30, 2010

Three months after the catastrophic oil rig explosion that sent millions of gallons of crude spewing into the Gulf of Mexico, the House of was poised Friday to debate legislation clamping down on the industry’s offshore drilling practices.

The Democratic-led House is expected to pass the legislation that could have a far-reaching impact on deep-water drilling in the Gulf, a major supplier of domestic energy.

Passage just before the House is scheduled to begin a six-week recess would give lawmakers the opportunity to return home boasting that they had moved to rein in Big Oil and hold BPfinancially responsible for the worst offshore oil disaster in U.S. history.

But the legislation still has a long way to go before it can become law.

A similar bill is pending in the Senate, but there were doubts that it would pass before that chamber begins its summer recess on Aug. 6.

A sticking point in the Senate is opposition from Republicans and some moderate Democrats to removing all liability limits oil companies would face for economic damages stemming from the BP disaster and any future spills.

Current law requires companies to only cover up to $75 million for damages to local economies. The BP spill could end up costing billions of dollars in lost tourism, fishing and other Gulf Coast revenues.

BP has said it would pay for all costs related to the spill, but many lawmakers worry that the company could put victims through years of litigation.

WHITE HOUSE BACKING

On the eve of the House debate, the White House said in a statement that it strongly supports passage of the legislation.

Besides lifting the liability cap, key provisions of the bill include:

  • New safety standards for offshore drilling, such as independent certifications of equipment and tougher measures to ensure that oil well blowout preventers operate. Officials suspect that a failure by BP’s Deepwater Horizon blowout preventer contributed to the Gulf disaster.
  • New worker safety provisions for offshore drilling projects. Eleven workers were killed in the BP explosion.
  • Granting subpoena power to the independent commission now investigating the Gulf of Mexico disaster.
  • Instituting reforms already taken by the Obama administration to break up the Interior Department’s Minerals Management Service with the goal of removing conflicts of interest that plagued the old agency
  • Closing royalty loopholes the industry has enjoyed in federally-controlled drilling areas.
  • Setting new procedures for using chemical dispersants to break up spilled oil.
  • Barring companies that have poor safety records, like BP, from getting new leases to drill offshore for up to seven years.

The Senate energy bill has an added component: new incentives to encourage more natural gas-powered trucks and electric vehicles to clean up the environment. It also provides $5 billion to help improve home energy efficiency.

But Senate Democrats abandoned attempts to attach climate change provisions that would have set mandatory limits on some companies’ carbon dioxide emissions.

Senate leaders plan to hold a test vote next Wednesday to gauge support for the bill, according to a Democratic aide. But Republicans, and possibly some moderate Democrats, might block a full debate, forcing senators to take up the effort again in mid-September.

(Editing by Xavier Briand)

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