Negotiations Continue on Oil Spill Liability
Sens. Mark Begich (D-Alaska) and Mary Landrieu (D-La.) are still fine-tuning the details of a compromise on oil spill liability they hope will be incorporated into Senate Majority Leader Harry Reid’s (D-Nev.) oil spill response package. Landrieu and Begich withheld their support for Reid’s bill because it includes language that would completely remove the current $75 million cap on a company’s economic liability from an oil spill. This, coupled with broad opposition from Republicans, led Reid to announce yesterday that the Senate would not vote on the bill before the August recess.
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.