It's Spill Bill Time

| Tue Jul. 27, 2010 5:00 PM EDT

It was spill bill day in Washington, as both House and Senate Democrats rolled out a suite of measures in response to the Gulf disaster.

The House bill, unveiled this morning, seeks to create better oversight of offshore oil and gas development, ensure that companies that cause spills are held accountable, and force drillers to pay royalties on the resources they extract. That bill combines the work of three committees—Transportation, Energy and Commerce, and Natural Resources—into one bill. Their package:

  • Eliminates the $75 million liability cap for offshore oil spills.
  • Amends the Death on High Seas Act to eliminate the cap on liability for workers who die at sea.
  • Repeals the Limitation of Shipowner's Liability Act of 1851, which Deepwater Horizon owner Transocean tried to use to curb its liability for the incident.
  • Holds oil company CEOs accountable for safety failures on rigs and drilling operations.
  • Sets tougher standards for inspection of blowout preventers and other equipment intended to shut off wells in the event of an emergency, and require independent certification by a third party.
  • Requires more layers of redundancy on safety equipment to close wells in case of an accident.
  • Sets new standards for the cementing and casing of wells.
  • Raises penalties for safety violations.
  • Requires all companies drilling in the outer continental shelf to pay royalties on oil and gas, a measure that sponsors say would bring in $53 billion dollars in lost revenue over 25 years.
  • Ends the practice of granting categorical exclusions to detailed environmental analysis for offshore operations.
  • Adds protections for whistleblowers who call attention to safety violations in oil and gas operations.
  • Bars companies with poor safety record from obtaining new leases.

"This is a game changer in the way we manage America's offshore energy resources," said Nick Rahall (D-W.Va.), chairman of the Natural Resources Committee. "This will ensure that oil and gas development on federal waters is done in a safe, fiscal, and environmentally sound manner."

The measure that would bar oil companies with a history of safety violations from bidding on new leases is among the most aggressive; the measure, sponsored by Rep. George Miller (D-Calif.), would essentially block BP from new drilling in the US for the foreseeable future. Any company that racks up more than $10 million in fines for air or water violations within seven years, has at least five times the industry average on worker safety violations, or more than 10 fatalities at an individual facility would be barred from bidding. This, of course, is very bad news for BP. "Their record on safety is egregious," said Miller. "We need to assure American people we're only allowing responsible bidders."

The Senate bill, rolled out this afternoon, includes several of the same provisions. It, too, would eliminate the liability cap on incidents, and would amend the Death on the High Seas Act and the Limitation of Shipowners Liabitlity Act. The bill also increases the amount of money oil companies have to pay into the Oil Spill Liability Trust Fund (currently set at 8 cents per barrel), and raises the amount that the government can use for a single incident from $1 billion to $5 billion. It also mandates that companies spend more on oil spill response technologies, puts into law proposed reforms at the Department of Interior department charged with overseeing offshore oil and gas development.

The Senate bill also has a grab-bag of energy incentive programs, including roughly $6 billion in rebates and incentives for natural gas vehicles, $400 million for electric vehicle programs, and $5 billion for the HomeStar program to create a rebate program to retrofit houses. There's also $5 billion for the Land and Water Conservation Fund.

Responding to questions about why the Senate bill is not as aggressive on the energy front as some might have hoped, Majority Leader Harry Reid's spokesman blamed Republicans while acknowledging that the Democrats aren't all on board for certain measures. "The fact is he had to make some tough decisions working with the caucus," said spokesman Jim Manley. "In light of the Republican stalling tactics, this bill has the best chance possible of getting out of the Senate."

The bills will probably be voted on next week. The American Petroleum Institute, the main trade group of the oil industry, is already on the attack, accusing congressional Democrats of "malpractice" in instating the reforms while investigation into the Deepwater disaster continues. "We're going into surgery without a diagnosis," said API President Jack Gerard.

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