Skip to main content

Democrats renew push for removal of oil liability cap

By the CNN Wire Staff
  • Top Democrats say removal of oil spill liability cap needs to be permanent
  • The 1990 Oil Pollution Act caps liability at $75 million
  • Republicans warn a removal of liability caps would create an oil monopoly
  • It "could set back this nation's energy future for decades," senator warns

Washington (CNN) -- Top congressional Democrats renewed their push Wednesday for legislation that would remove all oil spill liability caps -- a move some Republicans warn would lead to stronger monopolies in the energy sector while increasing U.S. dependence on foreign oil sources.

Among other things, Democrats are targeting the 1990 Oil Pollution Act, which could limit BP's liability for economic damages incurred by the Gulf disaster to $75 million. Critics note that the amount is a small fraction of the cost a major oil spill like the Gulf disaster will inflict on communities. BP has said it will waive the cap on damages and pay "all legitimate claims" as a result of the Gulf spill, the largest in U.S. history.

Democratic leaders on the Senate Environment and Public Works Committee, however, said during a hearing Wednesday that the caps need to be permanently lifted under the law. The issue was also broached during a meeting of the House Transportation and Infrastructure Committee.

The Senate Judiciary Committee held a separate hearing on the hotly disputed matter on Tuesday.

"If you or I ... got into an accident that we caused, (we'd be) responsible for all the damages," said Sen. Barbara Boxer, D-California, the Environment and Public Works Committee's chairwoman. There would be "no caps in that case, and there should be no caps in this case."

The proposal now under consideration originally would have raised the cap to $10 billion. Democrats later changed it -- with the backing of the White House -- to eliminate the cap completely.

"The person who makes the mistake ought to be responsible," said Florida Democratic Sen. Bill Nelson, one of the bill's sponsors. "And if the penalty is that they're going to be responsible and have to pay, they're sure going to be a lot more careful about what they're doing."

But Sen. Kit Bond, R-Missouri, argued that the proposal would give the largest energy companies a virtual monopoly by making oil drilling in places like the Gulf of Mexico prohibitively expensive.

It will "kill all competition that big oil faces" and turn the Gulf "into big oil's own private pond," he asserted. "We cannot close down the Gulf ... without putting ourselves at hostage even further to the Venezuelans, the Chinese, Russia (and other oil producers) that don't have to follow" the same standards.

If we get this wrong, Oklahoma GOP Sen. James Inhofe said, it "could set back this nation's energy future for decades." We need to approach the issue "logically and not emotionally."

Sen. Bob Menendez, D-New Jersey, dismissed GOP concerns about the potential creation of a new energy monopoly. This isn't about mom-and-pop drillers, he said. "This is about safe versus unsafe companies."

"If you're an unsafe company that's also small, we should (all) be concerned," he said. "Small safe companies should be able to continue operating in the Gulf without fear."

Sen. Lamar Alexander, R-Tennessee, suggested that Congress should adopt for oil companies the liability standard currently used by the nuclear industry, under which every company is held responsible for any accident.

"All of the operators ... are interested" in what's happening at other reactors, he said. Under that standard, "you wouldn't have the prospect of Chevron or Exxon sitting on the sidelines watching BP" trying to deal with the current spill.

Sen. David Vitter, R-Louisiana, in turn pushed an alternative measure specifically holding BP liable for the current Gulf disaster without permanently repealing liability caps.

Menendez slammed Vitter's plan, calling it "bad public policy and also (probably) illegal."

The $75 million cap is one of several potential limitations on oil companies' liability now being targeted by Democrats. Several senators have also blasted a 2008 U.S. Supreme Court ruling that cut the amount of punitive damages a jury awarded to victims of the 1989 Exxon Valdez oil spill by $2 billion.

They've also criticized an 1851 law limiting shipowners' post-accident liability to the value of a sunken vessel. Rig owner Transocean used the law in the days immediately following the April 20 Gulf explosion to attempt to limit its liability to $26 million.