White House asks $118 million for cleanup, hopes BP will pay

McClatchy NewspapersMay 12, 2010 

WASHINGTON — The White House is asking Congress to take up a $118 million oil spill response package, which includes a proposal to lift the current $75 million cap on liability for responsible parties — in this case, BP.

The White House wouldn't say what they'd like the new limit on liability to be. That's something they will negotiate with Congress, said Jeff Liebman, Acting Deputy Director of the Office of Management and Budget.

The White House emphasized they intend to hold BP to a pledge made Tuesday during a Senate hearing by Lamar McKay, the president of the company's U.S. operations.

Said McKay: "Let me be really clear: liability, blame, fault, put it over here. We are dealing with — we are the — we are a responsible party. Our obligation is to deal with the spill, clean it up, and make sure the impacts of that spill are compensated, and we are going to do that."

"We take BP at their word," said Carol Browner, assistant to the president for energy and climate change. "They say they intend to pay for all costs. And when we hear 'all,' we take it to mean all."

White House officials said they hope to recoup most of the cost of the $118 million package from BP. However, BP may not be responsible for all of the cost of the package, including $29 million that will go to the Interior Department to pay for increased inspections by its Minerals Management Service of other oil rigs operated by other companies.

The proposal also includes food stamp and unemployment insurance assistance for people affected by the disaster. It gives the Food and Drug Administration an additional $2 million to monitor the safety of seafood in the Gulf of Mexico, and gives the Environmental Protection Agency and the National Oceanic and Atmospheric Administration a total of $7 million to conduct environmental reviews of the oil spill's effect.

"The legislation that's been sent to Congress will ensure the federal government can act quickly," said Melody Barnes, director of the White House Domestic Policy Council. That's particularly in the event the parties responsible for such a disaster aren't paying claims to the people it hurts, Barnes said.

Also, the Obama administration is asking Congress to raise a per-barrel tax on oil that goes toward the Oil Spill Liability Trust Fund, which helps pay for clean-up and damages associated with an oil spill. That tax — which has already been proposed in Congress, too — would go from 8 cents per barrel to 9 cents per barrel beginning this year.

The trust fund cap would go from $1 billion to $1.5 billion — although some proposals, including one from Alaska's two senators — would raise the cap to $10 billion.

The trust fund is used to pay for the ongoing federal cost in responding to the spill, and also fives the government the power to seek full reimbursement from the responsible party for the federal cost of responding.

The increase in the oil spill liability tax will speed up a planned increase in 2017 of 1 cent per barrel, and sets a tax of 10 cents per barrel starting in 2017 to ensure there's long-term oil industry financing of the trust fund.

Also, the administration wants Congress to appropriate $15 million in toward compensation to out-of-work fishermen for their losses in the event of a declared fisheries disaster. BP should be responsible for that, the White House said, and the government would only tap into the money if the company didn't fulfill its obligations.

Congress is likely to increase the liability limit, though by how much is unclear. U.S. Sen. George Lemieux, R-Fla., wrote BP Group President Tony Hayward demanding that BP set aside $1 billion to help Gulf states pay for the cleanup, calling the $25 per state BP has pledged "welcomed but insufficient."

U.S. Sen. Ronbert Menendez, D-N.J., said he welcomed the White House's willingness to support a rise in the liability from $75 million, but suggested the limit should be set at $10 billion. He noted that BP had posted $5.6 billion in profits for the first quarter of this year alone, up 133 percent over the first quarter of last year. A chart from his office showed that five oil companies -- BP, Chevron, ConocoPhillips, ExxonMobil and Shell -- posted a total of $23.5 billion in profits during the first quarter.

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