UPDATE: US Senator Landrieu Develops New Oil-Spill Liability Plan

28th Jul 2010 00:38

(Updates to include details on timing of Senate's energy bill and the likelihood of amendments) By Tennille Tracy Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Sen. Mary Landrieu (D., La.) is pushing a potential compromise to break an impasse on legislation involving caps for oil-spill liability claims. Under Landrieu's proposal, which has not been formally introduced, an existing liability cap on economic damages resulting from an oil spill would be raised from $75 million to $250 million, according to an aide. The proposal would also set up a $10 billion mutual insurance fund that energy companies would collectively pay for. Each company would contribute different amounts, based on their oil and natural gas production, as well as bonus bids. "The senator is working with her colleagues to find a third way on the liability cap," a spokesman for Landrieu said. As a Democrat and a senator from a Gulf Coast state, Landrieu plays a pivotal role in the debate over energy legislation. In crafting this liability plan, Landrieu's goal is to ease the liability burden on small to medium-size energy companies, which say that unlimited caps--which Senate Democrats have proposed--would be prohibitively expensive. If an oil spill causes economic damages worth more than $10.25 billion, Landrieu's plan shifts responsibility to the companies that are responsible for the spill. Congress began to look at liability caps after the Deepwater Horizon oil spill. Under the Oil Pollution Act, energy companies have to pay for the full value of spill-related cleanup costs, but their liability for economic or environmental damages are capped. BP PLC (BP, BP.LN) has said it will pay for all damage claims, but Democrats said they wanted to seal those promises into law and ensure energy companies would be held to the same standards in the future. Senate Majority Leader Harry Reid (D., Nev.) unveiled an energy bill this week and said he wants to pass the bill before members leave for a summer break in August. In order to meet that deadline, Reid might block other lawmakers from offering amendments and that threatens the outlook for Landrieu's proposal. It is also becoming increasingly unclear, however, whether Reid will be able to meet his deadline in the first place, Senate aides said. And if the Senate doesn't move the bill before the recess, Landrieu wants to continue to pursue her liability plan as an alternative to existing proposals, a spokesman said. -By Tennille Tracy, Dow Jones Newswires; 202-862-6619; [email protected] (END) Dow Jones Newswires July 28, 2010 19:38 ET (23:38 GMT)