House takes up bill to crack down on offshore drilling, remove liability cap

By Matthew Daly, AP
Friday, July 30, 2010

House takes up oil spill legislation

WASHINGTON — The House debated a bill Friday to boost safety standards for offshore drilling, remove a federal cap on economic liability for oil spills, and impose new fees on oil and gas taken from federal lands.

Democratic leaders hailed the bill as a comprehensive response to the Gulf of Mexico oil spill and said it would increase drilling safety and crack down on oil companies such as BP.

But Republicans and some-oil state Democrats opposed the measure, calling it a federal power grab that would raise energy prices and kill thousands of American jobs because of the new fees and liability provision..

Rep. Nick Rahall, D-W.Va., the bill’s main sponsor, said the bill would be a tribute to the 11 oil rig workers who were killed when the BP well exploded in April by creating strong new safety standards for offshore drilling, ending the revolving door between government regulators and industry and holding BP and other oil companies accountable for accidents.

“While we may not know the exact cause of the incident, we clearly know what contributed to it. A culture of cozy relationships that had regulators interviewing for jobs on the same rigs they were supposed to be inspecting,” said Rahall, who is chairman of the House Natural Resources Committee.

The bill would remove the current $75 million cap on economic damages to be paid by oil companies after major spills and increases to $300 million the financial responsibility offshore operators must demonstrate in most cases. And for it would create a new “conservation” fees on oil and natural gas extracted on federal lands.

Those provisions prompted sharp criticism from Republicans.

Rep. Doc Hastings of Washington, the top Republican on the House Natural Resources Committee, said removing the liability cap could devastate small and medium-sized drillers.

Hastings called the new fees on production on federal land a “$22 billion energy tax” that would cost jobs and raise energy prices. The Congressional Budget Office estimates that the $2 per barrel fee on oil and a similar fee on natural gas could bring in $22.5 billion over the next decade.

Rep. Cynthia Lummis, R-Wyo., called the legislation “nuts,” but Rep. Jay Inslee, D-Wash., said the bill was the least Congress could do to respond to such a major catastrophe.

Rahall said the legislation would end a “trust-but-don’t-verify” attitude about safety where drilling plans are rubber stamped by federal regulators, where industry often wrote its own rules.

The bill would put into law actions already taken by the Obama Administration to break Interior’s former Minerals Management Service into three parts, separating safety enforcement and regulation from economic activities such as issuing oil leases and collecting royalties.

Since the BP spill the agency has been renamed the Bureau of Ocean Energy Management, Enforcement and Regulation with a new director.

The legislation has yet to be taken up in the Senate where partisan disagreements will likely delay consideration until after the August congressional recess.

Associated Press writer Frederic J. Frommer contributed to this story.

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