Despite Setback, Senate Continues Work on Oil Spill Bill

A fire and explosion occurred in April on the Deepwater Horizon deepwater drilling platform. (Flickr, SkyTruth)

Following Senate Majority Leader Harry Reid’s (D-Nev.) announcement this week that he will not hold a vote on oil spill legislation before the August recess, Democrats, Republicans and environmentalists alike said passing the legislation this year will be an uphill battle. Despite the odds, key Senate staffers continue to work behind-the-scenes to find a compromise that can garner 60 votes, in hope of passing a bill in September.

[Environment1] That compromise, it seems, will emerge from ongoing negotiations between Sens. Robert Menendez (D-N.J.), Mary Landrieu (D-La.) and Mark Begich (D-Alaska). Staff for the three lawmakers have been meeting for weeks to hash out a compromise on oil spill liability, or the maximum amount any one individual oil company will pay in damages associated with an oil spill. So far, according to Senate aides privy to the negotiations, staffers are making progress. But having learned from a string of negotiating failures over the last several months, the aides are hesitant to claim victory too soon.

A compromise on liability is just the first step toward passage of a bill. Gaining Republican votes will continue to be a struggle. On top of that, the Senate is only in session for four weeks before the Nov. 2 midterm elections, adding a severe time crunch to the mix.

Asked if an oil spill response bill would pass this year, a key environmental lobbyist said, “We’ll just have to wait and see. If we’ve learned anything this year, nobody wants to be that guy” who claims victory too soon.

Begich and Landrieu both pulled support for Reid’s oil spill response bill because of a provision, authored by Menendez, that would lift the $75 million cap on a company’s economic liability in the event of a spill. That, in part, caused Reid to delay a vote on the bill until September at the earliest.

The oil-state senators argue that small- and medium-sized companies would not be able to drill in the Gulf of Mexico if they were held liable for all of the economic damages related to an oil spill — damages that can run in the billions of dollars. They say that such a provision would hurt the economy by driving offshore drilling and the jobs that go with it overseas, where regulations are less stringent.

Despite their common concerns, the two lawmakers have thus far been unable to come to an agreement on the details of their liability compromise. Landrieu proposes that companies pay into a so-called Mutual Insurance Fund based on the amount of drilling they do on the Outer Continental Shelf. If an oil spill occurs, the responsible company would pay up to $250 million to pay for economic damages. If the costs exceed that number, the insurance fund would pay out up to $10 billion. If that’s still not enough, the responsible company covers the rest of the bill.

Begich has proposed requiring any oil company deemed responsible for a spill to set up an escrow account that would pay out economic damages from the spill. The escrow account would be similar to the $20 billion account established by BP to compensate oil spill victims. A senate aide told TWI that Begich is preparing to introduce legislation on liability that will include “four tiers of protection for taxpayers,” one of which will require responsible oil companies to set up an escrow fund.

The aide suggested that Begich and Landrieu have not yet come to an agreement on the compromise. “He continues to work with Sen. Landrieu to see if they can agree on their issues. But he may introduce alone if necessary,” the aide said.

Landrieu’s spokesman, Aaron Saunders, stressed that the two lawmakers have not yet come to a compromise on the liability language. Saunders said that staff-level meetings continue with Begich and Menendez, as well as staffers for Reid and Sen. Barbara Boxer (D-Calif.), the head of the Senate Committee on Environment and Public Works, which approved Menendez’s liability cap provision. The delay in floor action on the bill, Saunders said, gives the senators more time to work on the details. “This is still up in the air,” Saunders said.

While the lawmakers have not yet been able to work out the details of a compromise, it appears that Republicans are supportive of the Begich and Landrieu proposals in theory. Robert Dillon, spokesperson for Sen. Lisa Murkowski (R-Alaska), said the lawmakers’ proposals echo a bill Murkowski introduced in June. That bill would allow “the president to set the strict liability cap for offshore oil and gas projects on a case-by-case basis at the time of lease using a set of criteria, including a company’s safety record and the depth and pressure of the reserve being developed,” a summary of the bill from the senator’s office says.

But Dillon pointed to bigger problems in trying to pass the bill, arguing that Republicans will not vote for any bill that does not have an open amendment process and enough time for floor debate. “The wildcard here is the management of the majority leader,” Dillon said. “His style has been to cram things down the minority’s throat. I think it comes down to a management issue.”

Dillon also said Republicans believe the bill should be stripped down to focus completely on oil spill response measures. The bill currently includes a number of energy-related provisions, including one to provide homeowners with incentives for home energy retrofits.

Renewable energy advocates say they will take advantage of the delay to lobby for inclusion of a renewable energy mandate in the bill. While Reid has said he does not have the votes for such a provision, 32 Democrats sent him a letter this week advocating for the provision to be attached. Such a move, Dillon said, would be akin to “latching stones to [the bill] to see if it can float.”

If Reid brings to the floor a stripped-down oil spill response bill including a Begich-Landrieu liability compromise, and he opens the bill to amendments, Dillon said the bill will pass with major Republican support. “What’s likely to happen,” Dillon said, is that Reid will punt on the bill altogether.

Dillon also noted that there is very little time left on the Senate calendar to pass legislation. The Senate returns from its August recess on Sept. 13, and goes on its fall recess from Oct. 8 until Nov. 15. That means that the Senate is only in session for four weeks before the mid-term elections. In those four weeks, Reid plans to consider the extension of the Bush tax cuts, which Republicans want made permanent and the White House wants repealed for the wealthy, among other contentious provisions.

Dan Weiss, senior fellow at the Center for American Progress, agreed that a compromise on liability, though it “dramatically increases prospects for passage” of the bill, is just the first step. “The question is, are Republicans going to sign on?” he said, noting that Republicans like Sens. David Vitter (La.), Olympia Snowe (Maine), Susan Collins (Maine), Scott Brown (Mass.), George Lemieux (Fla.) and Lindsey Graham (S.C.) are the most likely to support the legislation.

Environmentalists, for their part, criticize Republicans for their opposition to the oil spill legislation. Athan Manuel, director of lands protection for the Sierra Club, said, “It’s just the same old, same old. The Republicans don’t want to cross the aisle to work with the Democrats.”

Hasan Nazar, legislative representative at the League of Conservation Voters said, “I think there’s certainly a wide recognition that throughout this Congress, Republicans, particularly in the Senate, have resisted any Democrat-led effort not just on energy, but on any piece of legislation. The cynical and probably the most likely view is it’s an effort that’s been masterminded to block any sort of perception of a Democratic sense of accomplishment.”

A third environmentalist, who requested anonymity to talk openly about the debate, said many environmentalists have lost hope that Republicans are willing to compromise. “I think the Republicans are very much dug in on this. I think now they’re getting every member to fall in line,” the environmentalist said. “It shouldn’t be that tough of a vote.”