Alaska's Murkowski blocks Senate on higher oil spill liability

McClatchy NewspapersMay 13, 2010 

WASHINGTON — Senate Democrats Thursday lost a bid to raise the liability cap for oil companies to $10 billion when Alaska Republican Lisa Murkowski raised objections. They vowed to try again.

Murkowski said she supports lifting the cap from $75 million, but contends the $10 billion figure would prevent smaller, independent companies from drilling along the Outer Continental Shelf.

The debate came as Transocean, the owner of the Deepwater Horizon drilling rig that caught fire and sank, touching off an oil leak that is still dumping 210,000 gallons of crude in the Gulf of Mexico daily, sought in federal court in Houston to use a 1851 maritime law to $27 million.

Referring to the Deepwater Horizon in the feminine, the petition said that because "she" was lost, her owners are responsible only for damages up to the rig's salvage value, which they pegged at $26,764,083. The peititon describes the offshore rig as "having a burden of 32,588 gross tons" and at the time of her final "voyage" being "tight, staunch, strong, properly and sufficiently manned, supplied, equipped and furnished."

In congressional testimony this week, executives from BP, the runaway well's owner, and Transocean pointed fingers at one another for blame in the incident.

In her comments on the Senate bill, Murkowski noted the White House supports lifting the cap, but didn't provide a figure, saying it would work with Congress. Murkowski said the $10 billion would "give all of America's offshore resources to the biggest of the big oil companies and make it impossible for smaller companies to operate in the Outer Continental Shelf."'

And she said that the law already allows for unlimited damages in state courts.

New Jersey Democrat Bob Menendez mocked the idea of independent companies as "mom and pop'' oil companies, noting some of the independents are $40 billion businesses.

"This isn't mom and pop in the grocery store around the corner,'' he said.

And he questioned why smaller companies shouldn't be held responsible. "The risk is what has to be calulated here. If you drill, you need to be able to pay for the damages,'' he said. He noted that BP in particular had made $5.6 billion in profit in the first quarter of the year.

"Ten billion dollars is a drop in the bucket,'' he said.

He noted that fighting in state court could take years, citing the two decades of Exxon Valdez litigation.

Menendez said the oil company executives testifying before Congress this week demonstrated "a lot of fingerpointing, but not a real commitment to responsibility here.''

"Either you want to fully protect the small businesses, individuals and communities devestated by a manmade disaster or you want to protect multi-billion dollar oil companies from being held fully accountable,'' Menendez said. "Apparently there are some in the Senate who prefer to protect the oil companies.''

New Jersey's Frank Lautenberg suggested the opposition stems from "sympathy for the oil company.'' He noted the $75 million cap "looked like a lot of money 20 years ago. And now I describe it as a spit in the ocean. It doesn't mean anything.''

"You want to make the money? Then pay the bills that come with it,'' Lautenberg said. Bill Nelson of Florida said he fears a huge economic loss in Florida, where tourism is already slumping, though no oil has washed ashore.

Nelson said a Florida tourism official told him occupancy rates along the Gulf coast have dropped to 18 percent -- compared to a season norm of 85 percent.

"I'm not sure $10 billion is going to be enough,'' Nelson said. "It was a target. Let's hope it never gets to that.''

Menendez said the trio plans to try to push the bill again. He said he's talked with Sen. Barbara Boxer, D-Calif., chair of the Senate Environment and Public Works Committee, about the bill.

"There's going to be other avenues to bring this to the floor,'' he said. "And we're going to see who stands with the average citizen, community, fishermen and others and who stands with Big Oil.''

Menendez said the $10 billion figure, per company, "seems to be a figure that could encompass the possibility of people getting relief right away.''

Nelson said the Senate Finance Committee is also looking at increasing the oil liability trust fund, which is now capped at $1 billion -- he suggested the tax per barrel would be raised between 25 to 32 cents to fund the trust fund. He said they'd try to put the legislation on a tax extenders bill.

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