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

1st Jul 2010 23:21

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 Congress steps up oversight of offshore drilling as the spill continues. By voice vote, the U.S. House Transportation and Infrastructure Committee moved to discard the current $75 million on claims for damage caused by offshore production facilities that goes beyond the cost of cleanup. A U.S. Senate panel cleared a similar measure on Wednesday, though the path to law remains unclear as the Senate plans to tie up the liability-cap measure with a broader energy package that Democrats are struggling to develop. 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. "It is plausible that any limitation on liability, no matter how large, actually encourages risky behavior by externalizing the true cost of an oil-spill response or damages over and above the cap," the committee said in summarizing the legislation. Under the measure, 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 18:21 ET (22:21 GMT)