Oil-Rig Contractors’ Liability Takes Focus at Hearing


WASHINGTON — A proposal to extend liability for an oil spill to contractors such as Halliburton Co. and Transocean Ltd. was among the ideas floated Wednesday morning at a U.S. Senate hearing on the Deepwater Horizon incident.

Sen. Ron Wyden of Oregon (D., Ore.) pressed witnesses from a panel appointed to investigate last year’s spill on whether Congress should consider “a separate federal certification and bonding requirements for the drilling contractors,” particularly those who operate in deep water.

The liability cap, which currently applies to operators like BP PLC and not their contractors, is one of the central issues being debated in Congress in the wake of the spill. Lawmakers have disagreed on how much to raise the current $75 million cap or to do away with the cap entirely.

“If all you do is lift the liability limits, we will continue to have this finger pointing routine” after an incident, said Mr. Wyden, the third-highest ranked Democrat on the Senate committee that monitors energy issues.

William Reilly and former Sen. Bob Graham, co-chairs of the panel President Barack Obama appointed to look at the spill, pushed back at Mr. Wyden and suggested the liability remain on operators like BP, who would then keep contractors in line.

The panel’s 380-page report, released earlier this week, faulted oil firms for their role in the Deepwater Horizon disaster and identified systemic problems with government oversight and industry safety, giving federal agencies and Congress a long list of recommendations to address those issues.

Among the recommendations that would require an act of Congress to enact: higher fees on the industry to fund environmental reviews of drilling sites, stabilized funding for federal regulators, more funding for research and development to improve oil spill response, and an increase to the $75 million cap on liabilities for oil companies following a spill.

“We’ve done what we can do,” Mr. Reilly told the Senate committee. “Now it’s over to you.”

Write to Ryan Tracy at ryan.tracy@dowjones.com

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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