Begich Releases Draft Oil Spill Liability Language

Sen. Mark Begich (D-Alaska) released today a draft oil spill liability bill, as expected. But, as I noted in my story this morning, Sen. Mary Landrieu (D-La.) and other key lawmakers have not yet endorsed the package, signaling that discussions on a liability compromise are still ongoing.

Opposition from Begich, Landrieu and other oil-state Democrats to the liability language was a key factor in Senate Majority Leader Harry Reid’s (D-Nev.) decision to cancel plans for a vote on the oil spill response bill this week. A liability compromise is key step to holding a vote on the bill when the Senate returns from the August recess.

The Begich draft incorporates a number of the provisions from a proposal outlined by Landrieu, including the concept of a mutual insurance fund in which companies share the liability from a spill once damages reach a certain amount. But there are differences between the two proposals that still need to be addressed.

Begich’s proposal allows the Secretary of the Interior, in a formal rulemaking process, to determine the amount of insurance that any company drilling in the Outer Continental Shelf must carry. Companies must be responsible for at least $250 million in liability. Beyond that point, all the companies operating in the Gulf of Mexico are responsible for a company’s liability, up to $20 billion. Companies pay for damages based on the size of their operations in the OCS.

For damages higher than $20 billion, the responsibility falls back on the responsible company. In this situation the Secretary of the Interior can force a company to set up an escrow account from which damages can be paid, as the Obama administration did with BP.

Here’s a graphic from Begich’s office explaining the proposal.

In a statement, Begich said:

The shared liability under this bill gives all OCS operators an incentive to argue for U.S. laws and safety regulations to be the best in the world. We can protect our oceans, wildlife and the public’s pocketbooks while protecting good-paying American oil and gas jobs.

Begich also stresses that the bill is still subject to change and notes that ongoing negotiations with Landrieu, Sen. Robert Menendez (D-N.J.), who authored the unlimited liability language in the current oil spill response bill, and other lawmakers continue. Begich released the draft “to demonstrate progress of good faith negotiations among other senators and to gather necessary comment from oil and gas companies, the insurance industry, fellow lawmakers and the public,” the statement from his office says.

Landrieu’s proposal, which her spokesperson said she formally introduced last night as part of an “omnibus oill spill relief bill,” is very similar to Begich’s proposal, though it caps the payout from her mutual liability fund at $10 billion, rather than $20 billion. It also does not give the Secretary of the Interior the authority to establish an escrow fund. Landrieu’s spokesperson, Aaron Saunders, said he would release more details on her proposal later today.