UPDATE:US House Panel Votes To Discard $75M Spill-Liability Cap

2nd Jul 2010 01:00

(Updates with more details throughout.) By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--A U.S. House panel on Thursday voted to remove a cap on damages that BP PLC (BP, BP.LN) and other oil companies must pay for spills like the one in the Gulf of Mexico, as part of the first broad legislative effort to respond to the ongoing disaster. By voice vote, the U.S. House Transportation and Infrastructure Committee approved a bill to discard the current $75 million cap on claims for damage caused by offshore production facilities that goes beyond the cost of cleanup. The measure also would raise to $1.5 billion the minimum amount of insurance that facilities must hold, and make BP and other oil companies responsible for a new class of damages--those related to health problems associated with spill disasters. The Democratic-controlled Congress is increasingly in favor of eliminating a cap on damages after a spill that has lasted for 2 1/2 months so far. A Senate panel on Wednesday cleared a narrow bill to toss out liability caps, in spite of complaints from Republicans that only the largest oil companies would be able to operate offshore with unlimited exposure to liability. The path to law remains unclear, as the Senate plans to tie up the liability-cap measure with a broader energy package and as numerous House panels claim jurisdiction over spill legislation. Still, Rep. Jim Oberstar (D., Minn.), the chairman of the House Transportation Committee, said that while "the bill has a ways to go before it reaches the House," he expects that to happen in "the last part of July." The U.S. House Natural Resources Committee will consider its own bill on July 14. The U.S. House Energy and Commerce Committee is also advancing legislation to deal with blowout preventers, the valve-based equipment that is supposed to shut off deepwater wells in the event of a catastrophic blowout. BP has been unable to activate the blowout preventer sitting atop the Macondo well. Lawmakers have unearthed evidence that the company modified the equipment in ways that made it riskier, though more details won't be known until the device is recovered from the sea floor. In the House Transportation Committee, numerous lawmakers offered--and then withdrew--amendments, but the proposals made clear the breadth of the building congressional response. Among the amendments being pushed was one from Rep. Jerrold Nadler (D., N.Y.), who tried to ban the use of dispersants until the Environmental Protection Agency can issue rules on toxicity and effectiveness. "If these dispersants are safe, there should be no problem proving so," Nadler said. "In the meantime, we should not use massive quantities of toxic dispersants before we know they are safe." BP has been using Corexit, made by Nalco Holding Co. (NLC), to break up the oil that it has been unable to contain through a separate effort. Separately on Thursday, federal authorities announced plans to step up oversight of BP's management of oil, contaminated materials and wastes recovered from cleanup operations in the Gulf of Mexico. The EPA and the Coast Guard issued a directive that will require BP to give the EPA and state agencies access to storage sites where the material is being held. Under the directive, the EPA will also begin sampling the waste to determine if it is being properly managed. Eliminating a liability cap is controversial in Congress because smaller companies say they will be unable to operate offshore without limits to their liability for any oil spills. Republicans have warned about damage to the economy if smaller companies are shut out of coastal waters. Environmentalists say that limiting offshore drilling only to companies that can pay for all the damage might make sense, an idea that has gained traction in a Democrat-controlled Congress. Under the House Transportation Committee bill, which would make the removal of the liability cap retroactive in order to ensure that BP's liability is unlimited, companies would also have to pay health-related claims. Under current federal law, the Oil Pollution Act of 1990, damages are limited to include damages to natural resources, property, public services and economic damages such as a loss of livelihood. Instead, individuals have to pursue health-related claims in state court, where laws differ from state to state. With BP already paying more than $132 million in claims filed for economic damage stemming from the spill, the current cap is widely regarded as too low. The legislation also would repeal a century-and-a-half-old law that Transocean Ltd. (RIG) has sought to use to limit its liability in the Gulf oil spill disaster--and do so retroactively. The House Judiciary Committee has already approved a similar measure. Transocean, the owner and operator of the Deepwater Horizon rig, filed legal papers in May under the Limitation of Liability Act of 1851 to limit its liability to just under $27 million. The bill approved on Thursday, called the "Oil Spill Accountability and Environment Protection Act of 2010", is H.R. 5629. -By Siobhan Hughes, Dow Jones Newswires; (202) 862-6654; [email protected] (END) Dow Jones Newswires July 01, 2010 20:00 ET (00:00 GMT)