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Oil Companies Face Unlimited Liability in Bill Passed by House
2010-07-31 04:00:31.0 GMT
(For more on the Gulf spill, see SPILL <GO>.)
By Jim Efstathiou Jr.
July 31 (Bloomberg) -- Oil companies drilling in U.S.
waters would face unlimited liability and BP Plc would be barred
from new offshore leases under legislation passed by the House
three months after the worst spill in U.S. history.
House Democrats on a 209-193 vote yesterday pushed through
the overhaul of drilling safety and environmental rules over
Republican opposition. The bill also puts into law the Obama
administration's elimination of the Minerals Management Service,
the Interior Department agency cited for lax oversight.
Gulf Coast lawmakers and oil-industry officials say lifting
the liability cap will hurt companies, and Republicans say the
measure would make the U.S. more dependent on imports. The
Senate may act on its version of oil-spill legislation next
week.
"The House bill passed today will kill jobs, threaten our
fragile economic recovery and place our energy security at
risk," Jack Gerard, president of the Washington-based American
Petroleum Institute, said in a statement after yesterday's vote.
"The unlimited liability provisions will drive the vast
majority of American companies out of U.S. waters because they
will not be able to obtain insurance coverage."
The bill includes an amendment, adopted 216-195, that would
set aside President Barack Obama's suspension of deep-water
drilling as rigs meet new safety standards. Republicans said the
measure didn't go far enough to eliminate the ban. The House
also passed legislation that would shield oil-rig workers who
report health or safety concerns from retaliation by their
employers.
'Cozy Relationships'
The Gulf disaster began April 20 when the Deepwater Horizon
drilling rig, which BP leased from Transocean Ltd., exploded and
caught fire, causing it to sink and killing 11 workers. The well
gushed from 35,000 barrels to 60,000 barrels of oil a day before
it was stopped on July 15.
"While we may not know the exact cause of the incident, we
clearly know what contributed to it," Representative Nick
Rahall, the West Virginia Democrat who sponsored the bill, said
yesterday. "A culture of cozy relationships that had regulators
interviewing for jobs on the same rigs they were supposed to be
inspecting. Drilling plans that were rubber-stamped in a matter
of minutes with only the most cursory environmental reviews."
In hearings and in debate on the House floor, Republicans
accused Democrats of taking advantage of the Gulf crisis to pass
provisions unrelated to the spill. Two Republicans voted for the
measure.
'Far Beyond' Drilling
"This bill is supposed to be about the Gulf oil spill, yet
it goes far, far beyond offshore drilling," said Representative
Doc Hastings, a Washington Republican. The legislation would
impose a $22 billion tax on Americans and raise spending by $30
billion, Hastings said.
The administration has said the pause in deep-water
drilling is needed until it's determined that companies can
operate safely and contain and clean up accidents.
The moratorium may be adjusted to allow some new wells to
go forward before it is scheduled to end Nov. 30, Michael
Bromwich, director of the Bureau of Ocean Energy Management,
Regulation and Enforcement, said this month at a hearing in New
Orleans. Bromwich has scheduled public hearings beginning Aug. 4
in New Orleans to determine what additional safety measures are
needed.
The amendment, sponsored by Representative Charles
Melancon, a Louisiana Democrat, would lift the July 12
suspension for companies that meet requirements set by Interior
Secretary Ken Salazar.
'Sounds Good'
While the proposal "sounds good," it ultimately gives new
authority to Salazar to continue the drilling ban, said Steve
Scalise, a Louisiana Republican who opposes the drilling pause.
BP objected this week to language disqualifying from new
offshore leases companies with safety violations greater than
five times the industry average in the past seven years, or that
have had more than 10 fatalities at exploration and production
facilities in the same period.
The provision "would harm the ongoing effort to increase
America's energy independence," David Nagel, executive vice
president of BP America, said in a July 28 letter to House
Speaker Nancy Pelosi, a California Democrat, and House
Republican Leader John Boehner of Ohio.
Representative George Miller, a California Democrat who
drafted the provision, said BP wouldn't qualify for new leases
based on its past violations.
'Americans' Expectations'
"BP does not fit Americans' expectations of how a
responsible company should act," Miller said in a statement.
Under the House bill, companies such as Exxon Mobil Corp.,
Royal Dutch Shell Plc and Chevron Corp. would have to prove they
can bring leaking wells under control and clean up any spills
when seeking new leases.
House Republicans say scrapping liability limits would shut
down smaller, independent drillers that can't insure themselves
against potential spill costs. A Senate version also would lift
the limits.
Other amendments would impose civil penalties on chief
executive officers who give false information about a company's
ability to prevent a spill, and require manufacturers to
disclose the chemical formulas of dispersants used to fight oil
spills.
The bill is H.R. 3534.
For Related News and Information:
More on the Gulf of Mexico spill: SPILL <GO>
Top oil, energy news: OTOP <GO>, ETOP <GO>
Nymex crude oil futures curve: CLA <Cmdty> CCRV <GO>
BP results by region: BP/ LN <Equity> FA GEO CHART <GO>
BP income statement chart: BP/ LN <Equity> FA IS CHART
<GO>
--Editors: Steve Geimann, Larry Liebert
To contact the reporter on this story:
Jim Efstathiou Jr. in New York at +1-212-617-1647 or
jefstathiou@bloomberg.net.
To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
LLiebert@bloomberg.net.
