NU Online News Service, July 1, 2:30 p.m. EDT
A Senate committee on Wednesday approved a bill to retroactively eliminate the current liability cap for damage from oil spills.
The Senate Environment and Public Works Committee approved the Big Oil Bailout Prevention Liability Act (S3305), sponsored by Sen. Robert Menendez, D-N.J., to remove the current $75 million liability limit for companies responsible for a spill.
The retroactive nature of the measure, which now goes to the full Senate for consideration, would mean BP is on the hook for all expenses related to its latest spill in the Gulf of Mexico. The company has said it will cover costs of the clean-up and has agreed to set up a $20 billion compensation fund for claims.
Included in the bill are provisions to improve oil spill contingency plans and improve the claims process.
Following the approval of the measure, the American Petroleum Institute (API) said lifting the liability limits would make "insurance on exploration and production in the Gulf unavailable," putting jobs, the economy and the country's energy security at risk.
At a House committee meeting late last month Robert Hartwig, president of the Insurance Information Institute, said a $10 billion cap once proposed in S3305 was beyond the capacity of the industry to handle.
The bill did not move out of the committee without reservations. Several senators spoke of its potentially detrimental implications. Sen. James M. Inhofe, R-Okla., attempted, but failed to add an amendment to the bill that would require President Barack Obama to consider caps on a case-by-case basis.
"An injudicious decision to rashly remove caps could mean that the only producers left standing in the Gulf will be BP and Big Oil, as well as China's state-owned oil company," Sen. Inhofe said in a statement.
Sen. Lamar Alexander, R-Tenn., said removing the cap would "bring more dependence on foreign oil."
The cap of $75 million is part of the Oil Pollution Act, passed in 1990 after the Exxon Valdez oil spill.
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