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Salazar says Dem bill to raise oil company liability could hit smaller drillers
May 18, 2010

Posted by Matt Dempsey Matt_Dempsey@epw.senate.gov 

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Salazar says Dem bill to raise oil company liability could hit smaller drillers

By Ben Geman

05/18/10

Link to Article

WATCH: Inhofe-Salazar Share Concerns About Menendez Bill at EPW Hearing

WATCH: Salazar Shares Inhofe Concerns on Liability

WATCH: Inhofe: Menendez Amendment Good for Big Oil?

Link to Letter from Alliant Insurance Group

Link to Letter from Lloyd and Partners, London

Senate Republicans may have gained an unexpected ally in their battle against a Democratic bill to raise the cap on oil company liability for offshore spills: Interior Secretary Ken Salazar.

Twice in recent days, Republicans have blocked Democratic efforts to win quick passage of legislation that would raise the economic damages cap from $75 million to $10 billion.

Sens. Lisa Murkowski (R-Alaska) and James Inhofe (R-Okla.) -- who have blocked the Democratic bill -- argue that a cap too high would make it financially impossible for smaller and independent oil-and-gas companies to operate offshore.

Salazar made a similar argument before a Senate panel Tuesday. "You don't want only the BP's of the world to essentially be the ones that are involved in these efforts," he told Sen. Robert Menendez (D-N.J.) during a hearing on the Gulf of Mexico oil spill held by the Senate Energy and Natural Resources Committee.

The Obama administration wants Congress to raise the economic damages cap in the wake of the Gulf spill. But it has not provided a target figure. Salazar called for working with lawmakers to arrive at a figure that is not "arbitrary."

"It ought to be high enough so that we make sure that the responsible party will be able to live up to whatever consequences result from their actions," Salazar told Menendez at the hearing.

But Menendez attacked the idea that a cap too high would harm smaller companies. "That simply means that if you are smaller, you can get away with taking the same risks but having less liability," he said.

Menendez has even suggested that there should be unlimited liability, according to Reuters, a view that Senate Majority Leader Harry Reid (D-Nev.) endorsed Tuesday. "I think $10 billion is too small," Reid told reporters Tuesday, noting estimates of damages from the Gulf spill in the $14 billion range.

"I'm for no cap," Reid said.

Inhofe and Murkowski, for their part, say they believe the cap should be higher than $75 million, but that the issue needs more review.

"Certainly, we need to raise these limits. Now, where it should be raised, I don't know where the cap should be. And we're going to have to find out as this thing moves along," Inhofe said Tuesday on the Senate floor as he blocked the plan for a $10 billion cap that Menendez is pushing with Sens. Frank Lautenberg (D-N.J.) and Bill Nelson (D-Fla.).

"I would only say this, though, if you have it too high, you are going to be singling out BP and the other four largest majors and the nationalized companies such as China and Venezuela, and shutting out the independent producers. I don't want that to happen," Inhofe added.

BP has said that its damages payments will exceed the current $75 million cap and that it will pay all "legitimate" claims.

RELATED:

Inhofe Hearing Statement: Federal Response to the Recent Oil Spill in the Gulf of Mexico

 

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