http://www.businessweek.com/news/2010-05-19/republicans-put-taxpayers-on-hook-for-oil-damage-obama-says.html
Business Week May 19, 2010, 12:04 AM EDT
By James Rowley and Jeff Plungis
May 19 (Bloomberg) — Senate Republicans threaten to leave taxpayers “on the hook” for damages from the BP Plc spill in the Gulf of Mexico by blocking legislation to raise the liability limit, President Barack Obama said.
“This maneuver threatens to leave taxpayers, rather than the oil companies, on the hook for future disasters like the BP oil spill,” Obama said yesterday in a statement. “I urge the Senate Republicans to stop playing special-interest politics and join in a bipartisan effort to protect taxpayers and demand accountability from the oil companies.”
A Democratic bid to pass a bill raising liability to $10 billion from $75 million was blocked yesterday by Republican Senator Jim Inhofe of Oklahoma. Inhofe said a higher limit would make it impossible for independent producers to drill in the Gulf, where they account for 63 percent of natural-gas production and 36 percent of oil pumped from wells.
“Big Oil would love to have these caps there so they can shut out all the independents,” Inhofe said.
The legislation would apply retroactively to companies, such as BP and Transocean Ltd., in the April 20 explosion of the Deepwater Horizon drilling platform. The rig sank two days later about 40 miles (64 kilometers) off Louisiana’s coast, triggering a spill that threatens the Gulf Coast with oil.
Obama plans to consult with Congress on setting an appropriate level to cap economic damages in spills, Interior Secretary Ken Salazar said yesterday at a Senate Environment and Public Works Committee hearing.
BP Pledge
BP has pledged to compensate for losses even if costs exceed the $75 million limit without seeking aid from taxpayers, Salazar said, citing the company’s response to a May 14 letter he sent with Homeland Security Secretary Janet Napolitano.
“In our view, that liability limitation doesn’t apply to BP because they have affirmatively stated that they will pay for all damages,” Salazar told Inhofe during the hearing.
Salazar in a separate appearance told the Senate Energy Committee that U.S. drilling companies are resisting efforts by the administration to beef up oversight of offshore oil and natural-gas operations on federal leases.
An overhaul at the Minerals Management Service, which oversees platforms such as the Deepwater Horizon, “raised the ire” of companies, Salazar said in remarks at the energy panel’s hearing. Lawmakers have said the MMS failed to ensure that BP and other drillers were operating under proper safety guidelines.
‘Impediments, Roadblocks’
“In the past 16 months, our efforts at reform have been characterized as impediments and roadblocks to the development of our domestic oil and gas resources,” Salazar said.
Obama has vowed to end the “cozy relationship” between companies and regulators. The administration is splitting MMS to separate inspection and safety enforcement from leasing and royalty collection. The agency generates about $13 billion a year for the U.S. by partnering with companies to develop oil and gas, trailing only the Internal Revenue Service in revenue.
Obama is planning to create a commission to investigate the accident, similar to presidential probes of the 1979 Three Mile Island nuclear accident and the 1986 Space Shuttle Challenger disaster. The president has suspended issuing offshore drilling permits for 30 days.
“There’s plenty of responsibility to go around,” Salazar said. “That responsibility, I will say, starts first with the Department of Interior and the Minerals Management Service. We need to clean up that house.”
Oil Collecting
The well is leaking an estimated 5,000 barrels of oil a day, according to BP, the U.S. Coast Guard and the National Oceanic and Atmospheric Administration. BP yesterday said it doubled the amount of oil it’s able to collect from the leak using a mile-long pipeline connecting the well to a ship on the surface.
Regulators have authorized BP to employ a technique that uses chemicals under water to disperse oil near the seabed, EPA Administrator Lisa Jackson told the Senate Environment and Public Works Committee. The dispersants are toxic and must be monitored, she said.
“Dispersants are generally less toxic than the oils they break down,” Jackson said. “However, the long-term effects of dispersants on aquatic life are unknown.”
‘Scot Free’
Florida Democratic Senator Bill Nelson said “there is no logic” to the Republican opposition on the liability limit because it suggests that a small oil company that causes a big disaster should get off “scot-free.”
“The Republican opposition will collapse because they simply cannot stand there with a straight face and support the oil industry and say the taxpayers going to have to pay for all these economic devastations,” Nelson told reporters.
The National Oceanographic and Atmospheric Administration had confirmed that some of the oil slick is now in the loop current that flows around the edges of the Gulf, “and professors at the University of South Florida are telling us it will be in the Keys in five days,” Nelson said.
–With assistance from Julianna Goldman and Jim Efstathiou Jr. in Washington. Editors: Steve Geimann, Larry Liebert
To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net.
To contact the editors responsible for this story: Mike Tackett at mtackett@bloomberg.net; Larry Liebert at lliebert@bloomberg.net. Special thanks to Richard Charter