He traces the oil spill narrative roughly like this: Outcry about the environmental effects of the spill turned into concerns about the moratorium on drilling, which, when the moratorium was lifted, turned into everybody moving on to something else.

At first, it seemed like an inevitability that the oil spill would become a major issue in the midterm elections. And in some cases it was — Grimm points to Florida Gov. Charlie Crist’s early Senate campaign rhetoric on the environmental impacts of the spill, and I’ve written before about how Sen. David Vitter (R-La.) and Rep. Charlie Melancon (D-La.) zeroed in on the drilling moratorium.

But oil spill rhetoric has faded significantly for a number of reasons. The first is time. It’s been more than six months since the spill, and the incident rarely gets front-page billing these days. The second, as Grimm points out, is the administration’s decision to overturn the moratorium. The decision took some of the wind out of arguments that the administration was destroying the Gulf economy, though Sens. Vitter and Mary Landrieu (D-La.) have both raised concerns that new drilling rules will slow the pace of new drilling.

The third is a little more complicated. On the one hand, many Democrats seem reluctant to make the oil spill an election issue, because in doing so, they would have to acknowledge one embarrassing little detail: The Senate has failed to pass an oil spill response bill. On the other hand, many Republicans would have to reconcile their support for expanded offshore drilling with the obvious safety concerns. At the end of the day, it’s a thorny issue for both sides of the aisle.

After the midterms, once our elected officials trek back to D.C. to do the less glamorous job of legislating, the big question is this: How will Congress deal with offshore drilling? Right now, it’s unclear. The momentum to pass an oil spill response bill is gone, and with it go the prospects that we’ll see stand-alone legislation on the issue. While it could come up in the lame-duck session, it seems more likely that oil spill response provisions will make their way into a broader energy bill next year that will focus on low-hanging fruit issues like electric vehicles and efficiency, possibly paired with a renewable energy standard. Of course, the outcome of the midterm elections will likely determine the lame-duck agenda.

Just how stringent oil spill response provisions will be depends largely on the outcome of behind-the-scenes liability negotiations between, among others, Sens. Robert Menendez (D-N.J.), who would prefer unlimited liability on any company responsible for a spill, and Sens. Landrieu and Mark Begich (D-Alaska), who are trying to devise a mechanism by which companies can pool their liability in the event of a large disaster.

The short answer: not much.

The long answer: Senate Majority Leader Harry Reid (D-Nev.) said at his National Clean Energy Summit in Las Vegas last week that it could be possible to move a significantly scaled-back energy bill before the November mid-term elections. The bill would include incentives for natural gas vehicles, and provisions to help make homes more energy efficient.

In addition, there is oil spill response legislation, which has already passed the House. In the Senate, Republicans and some Democrats opposed provisions requiring the company responsible for an oil spill to be fully liable for the spill’s economic damages. Lawmakers — including Sens. Mary Landrieu (D-La.), Mark Begich (D-Alaska) and Robert Menendez (D-N.J.) — are still working on a liability compromise. A Senate aide tells TWI, “If we are able to get the 60 votes to move forward, there is a chance to do it this work period, but it is more likely to come up during a lame duck session.”

On top of that, renewable energy advocates have been lobbying for passage this year of a renewable energy standard, which would require that a certain percentage of the country’s electricity come from sources like wind and solar. Reid has said he’s open to the provision. The question going forward is: Can an RES get the 60 votes necessary for passage? Renewable energy advocates say it can.

Climate legislation with a cap on carbon emissions — even a slimmed down utility-only cap — is, by almost all accounts, dead this year.

As always in the Senate, the time frame for passage of an energy bill and/or oil spill response bill is unclear. With the mid-term elections looming, it seems unlikely that the Senate will be able to get much accomplished before November. That leaves a lame-duck session to try to pass something.

According to a statement from Parnell’s office on the lawsuit, which was filed in U.S. District Court in Alaska:

Alaska is arguing that the Department of the Interior acted arbitrarily and capriciously and violated federal law by (1) failing to consult with state officials; (2) neglecting to properly consider the significant economic impact of a drilling moratorium; and (3) failing to issue a written decision explaining the basis for the moratorium

Sen. Mark Begich (D-Alaska) said last night that he supports the lawsuit:

I agree with the Governor’s message that an overreaching ban does not reflect Alaska’s unique conditions and fails to consider the impact on Alaska jobs and the Alaska economy. I will continue to work with the Governor, the State, and affected Alaskans to ensure a future for Alaska’s oil and gas.

Begich is currently working on the compromise language with Sen. Mary Landrieu (D-La.) and other oil-state Democrats who have raised questions about a liability language in oil spill response legislation. Such a compromise is key to winning the lawmakers’ votes and passing an oil spill response bill.

In a statement to TWI, API spokeswoman Cathy Landry said:

We fully support this move toward an insurance pool that would protect American taxpayers without reducing American oil and natural gas production. We are pleased to hear that consideration is underway to fix this job-killing provision of the Senate spill bill. Removing the liability cap, as currently proposed in the Senate bill, would push the vast majority of American producers out of the Gulf, cost American jobs and harm our economy. We hope the Senate works to improving the rest of the bill by taking out other job-killing provisions and by including language to end the current deepwater moratorium.

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.

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.”

“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

The bill will include “four tiers of protection for taxpayers,” one of which will require oil companies to set up an escrow account through which victims of a spill would be compensated. Begich introduced escrow account legislation in June.

While Landrieu and Begich have similar liability proposals, Landrieu’s spokesman, Aaron Saunders, stresses that nothing has been agreed to. Saunders said that staff-level meetings continue with Begich and Reid, as well as Sens. Barbara Boxer (D-Calif.) and Robert Menendez (D-N.J.), who crafted the current liability language. The delay in floor action on the bill, Saunders said, gives the senators more time to work on the details.

Landrieu and Begich argue that small- and medium-sized companies will not be able to drill in the Gulf of Mexico if they are held liable for all of the economic damages related to an oil spill. 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.

In order to address these issues, 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 prefers the idea of 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 spokeswoman for Begich did not immediately return a request for comment.

A Senate aide privy to the negotiations says Menendez is “willing to listen,” as long as the final liability language includes three must-have provisions. According to the aide, the final language must:

1. Get rid of the liability cap.

2. Guarantee that coastal families are compensated for all damages.

3. Guarantee that taxpayers don’t have to spend a dime.

This doesn’t appear to leave much room for negotiation, particularly since Landrieu, Begich and most Republicans oppose the legislation (which Menendez wrote) because it lifts the cap on companies’ liability in the event of an oil spill. If Menendez isn’t willing to budge on the cap, the negotiations are certain to fall flat.

More broadly, this is the latest indication (and there are many) that an oil spill response bill isn’t going anywhere before the August recess and maybe even this year.

As I noted earlier today, if there aren’t enough votes to clear the first procedural vote, the bill will likely be punted until after the August recess, given the tight floor schedule this week.

Looking forward a bit, can Reid’s bill pass after the recess? The answer may come down to a couple factors.

First and foremost is whether negotiations behind the scenes can get on-the-fence Democrats like Sen. Mary Landrieu (La.) and some Republicans on board. These negotiations will likely focus on language in the bill that removes a company’s $75 million cap on economic liability in the event of a spill. Landrieu and Sen. Mark Begich (D-Alaska), as well almost all Republicans, have raised concerns about the language.

Secondly, post-recess passage of the energy/oil spill bill will be dependent on the mood in the Senate after lawmakers talk to their constituents. It seems like it would be difficult to leave for the year without passing any legislation responding to the spill, but a lot will depend on pre-election jitters.