Senate Panels Approve Offshore Oil Drilling Bills: Liability Cap Would Be Removed, Regulation Increased


WASHINGTON — Congress began advancing legislation Wednesday that imposes new safeguards on offshore oil drilling in hopes of preventing a repeat of the devastating spill that has brought environmental and economic havoc to the Gulf coast.

Two Senate committees separately approved bills that would strengthen the government’s regulation of offshore drilling, require oil companies to be better prepared to cope with a spill, and lift federal spill-related economic liability limits.

The bills now advance to the full Senate, where they are likely to be merged into broader legislation.

Meanwhile, several committees in the House discussed legislation in response to the BP oil spill, with committee votes expected in the coming weeks.

While a call to impose greater safeguards in offshore drilling has shown widespread, bipartisan support, some lawmakers – Democrats and Republicans – raised concern that the actions by Congress might stifle offshore oil and gas development. Others say the bills don’t go far enough and should be strengthened.

Congress should “address some of the obvious violations that have occurred” but the key is “striking a balance,” said Sen. Mary Landrieu, D-La., whose state is bearing the brunt of the BP oil spill, but also views offshore oil development an economic necessity.

Landrieu said she voted “reluctantly” for a bill that emerged Wednesday from the Energy and Natural Resources Committee, fearing it might harm oil development.

Sen. Robert Menendez, D-N.J., an opponent to offshore drilling, said he also had reluctance because he believes it’s too weak and expects it to be strengthened.

The bill, approved by the panel in a bipartisan voice vote, would increase the civil and criminal penalties for an oil spill, require greater redundancy in drilling safety equipment, impose more stringent requirements for deep water drilling permits, and calls for more federal inspector while imposing a fee on industry to pay for them.

The committee also voted to set into law a decision already made by the Obama administration to separate the Interior Department agency responsible for offshore oil drilling into separate entities – one responsible for royalty collection, and another for safety and environmental regulation of offshore drilling.

Separately, the Senate Environment and Public Works Committee voted Wednesday to remove the current $75 million federal cap on economic liability from an oil spill and to require stronger spill response plans before approval of offshore oil or gas drilling applications.

While the bill advanced by voice vote, it was not without disagreement.

Republican Sens. James Inhofe of Oklahoma and David Vitter of Louisiana, said the more stringent spill response requirements and removal altogether of the economic liability cap would cause all but the largest oil companies to abandon offshore oil drilling.

“It’s going to be a permanent moratorium” on drilling, said Vitter, referring to the tougher requirements and open-ended liability.

Lawmakers in the House also were taking up oil spill legislation, with votes planned in the coming weeks.

An Energy and Commerce subcommittee began debating a bill requiring greater drilling safeguards, including new standards and testing to ensure that a “fail-safe” device that is supposed to prevent a well blowout actually works. The device failed to stop the gushing oil at the BP well.

The House Natural Resources Committee is considering legislation that would reorganize the federal offshore regulatory program and tighten standards and for rig inspections and federal oversight.

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

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