Bill to Eliminate Oil Liability Limit Comes Under Fire

By | July 29, 2010

Republicans and some moderate Democrats in the U.S. Senate Wednesday began picking apart a new energy bill that they complained goes too far in holding oil companies responsible for accidents like the massive Gulf of Mexico spill.

“I think people who are very serious about responding to the spill in the Gulf should be offended by what has been presented” this week by Senate Democratic Leader Harry Reid, said Republican Senator Lisa Murkowski.

Murkowski said that while there were some good ideas in the bill — such as incentives for the U.S. trucking industry to use cleaner-burning natural gas as a fuel — she singled out the “complete elimination of the liability cap” for criticism.

The Alaskan is the senior Republican on the Senate Energy and Natural Resources Committee.

Industry analysts also see the Senate bill coming down hard on the offshore drilling industry with measures that they say will drive up insurance and other costs.

“Not only would the bill retroactively remove oil spill liability limits for offshore facilities, it would also require undefined and potentially very steep proof of financial responsibility to participate in offshore activities,” said Whitney Stanco, analyst at the Washington Research Group.

Republicans have their own energy bill, which would bring an end to President Barack Obama’s Gulf of Mexico oil drilling moratorium. It also rejects retroactive, unlimited oil spill liability on companies like BP in favor of a targeted approach.

Indicative of the partisan fight that is heating up over the energy bill, Reid spokesman Jim Manley portrayed the Republican energy bill this way: “Republicans want taxpayers to foot the bill for BP’s disaster and allow BP to use endless legal battles to run out the clock … just like Exxon did to victims of the Valdez spill” in Alaska 21 years ago.

TOUGHER HOUSE BILL

The House of Representatives is scheduled to debate Friday its own offshore oil drilling bill that is in some ways tougher than the Senate’s. For example, oil companies like BP, with poor safety records, would be barred from drilling on federal lands for up to seven years.

Not only Republicans were complaining about the Senate energy bill though.

Senator Mary Landrieu, the Louisiana Democrat whose state has been hit most directly by the BP spill and whose economy relies heavily on oil production, said, “It is very unlikely that I can vote for anything related to the oil spill without making sure that the Gulf Coast is adequately compensated” for losses related to the oil spill.

The energy bill Reid is pushing does not have such federal compensation, instead relying on BP to clean up the mess.

Aaron Sanders, a spokesman for Landrieu, also said the senator is trying to win changes to the liability language that would ensure there is no cap on BP but guarantees “that smaller independent companies are still able to operate in the Gulf.”

Reid himself seemed unsure whether the energy bill will overcome likely procedural roadblocks and move along in the Senate next week, before a scheduled six-week recess.

Asked by a reporter whether he would let senators offer amendments to his energy bill, Reid said: “If we get on the bill, we’ll see.”

Michael Levi, energy policy analyst at the Council on Foreign Relations, said passage of the Senate bill comes down to how upset voters are with BP over the oil spill.

“It fundamentally depends on how angry people are. To pass this bill, a number of senators will have to hear constituents telling them that they demand it be passed,” Levi said.

All week, Senate Republican aides have accused Reid of navigating his energy bill in a way that would ensure failure on the Senate floor but allow Democrats to campaign during the August recess as having tried to get tough on Big Oil and foster clean energy jobs.

Democratic leadership aides insist they are pushing for quick passage of the bill.

Republicans also worry that Democrats later this year, after November elections are out of the way, might attach climate control legislation to a narrow energy bill. White House spokesman Robert Gibbs alluded to the possibility of capping carbon dioxide emissions through such a ploy.

Kevin Book, an analyst with ClearView Energy Partners LLC, was skeptical. “I don’t think there’s a great deal of hope that the climate bill in any form can be resurrected in any process,” he told Reuters.

“It’s not just the challenge of how you would do it or which parliamentary procedure you would use. You can’t jam things through the Senate … it’s seldom successful and on energy in the past it’s been extremely unsuccessful,” he said.

(Additional reporting by Timothy Gardner and Tom Doggett; Editing by Eric Walsh)

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