Battle of the BP Liability Bills

>While Obama decides whether or not to use BP's oil spill as a rallying cry for climate legislation, Congress is grappling over how to hold the company accountable for economic and environmental damages. Under the Oil Pollution Act of 1990 -- passed after the 1989 Exxon-Valdez spill -- offshore drilling companies are liable for up to $75 million of damages caused by an accident. BP expects the cost of the cleanup alone, which the company is obligated to pay in full, to hover between $3 and $6 billion, and damage claims could soar well above that.

Both Democrats and Republicans in Congress are eager to ensure that BP pays for all damages, but they are split on the best way to do so. Senators Robert Menendez and David Vitter are spearheading the two main dueling efforts:

1. Menendez, a New Jersey Democrat, wants to eliminate the liability cap for all companies in the event of all future offshore spills, in addition to retroactively eliminating it for BP. He originally proposed upping the cap to $10 billion but eventually revised his bill to do away with the cap completely. The White House has weighed in favoring total cap elimination, but Senate Republicans, led by Lisa Murkowski and James Inhofe, have already denied unanimous consent on the bill three times, blocking an up-or-down vote.

In the House, Rep. Rush Holt has introduced a companion bill. That bill has not yet been revised to eliminate the cap entirely, but Holt communications director Zach Goldberg explains that the congressman is open to unlimited liability, should the Senate pass Menendez's bill. With over 70 cosponsors, Goldberg says, Holt's bill is bipartisan: "We have one Republican, at least" (Rep. Ileana Ros-Lehtinen of Florida).  

2. Vitter, a Louisiana Republican, wants to eliminate the liability cap only for BP in the specific instance of the Deepwater Horizon explosion. His bill, which he introduced with Murkowski, would codify statements BP executives made to Congress while under oath in which they specified their intent to pay all "legitimate claims" that emerge from the spill, regardless of the $75 million cap. According to an email from Joel DiGrado, Vitter's spokesman,

All Sen. Vitter is doing is accepting BP's offer to pay (this is a contract issue, not a constitutional issue). Unless BP wants to testify in a court of law that they perjured themselves before Congress when they said they were going to pay, this is likely the best immediate thing we can do to hold BP's feet to the fire.

Menendez has similarly blocked a vote on Vitter's bill.

Vitter also has a second bill that he co-authored with Sen. Jeff Sessions, which would alter the formation of the cap. That bill would hold companies liable for either their last four quarters' profit or $150 million, whichever figure is greater. DiGrado says this strategy is an attempt to avoid the kind of "one-size-fits-all cap" that Menendez initially proposed. In the House, Rep. Roy Blunt is sponsoring a companion to this latter Vitter bill.

Menendez's and Vitter's offices have each accused the other's bill of inviting legal challenges. Vitter -- backed by fellow Republicans Murkowski and Inhofe -- believes Menendez's bill will place an outsized burden on smaller and midsized drilling companies, potentially putting them out of business. Menendez, meanwhile, has said that Vitter's BP-only bill has "loopholes big enough to navigate an oil tanker through."

At this point, it is unclear how Congress will deal with liability in the end.

Due to a vague comment about how the federal government should take responsibility in the Gulf, House Minority Leader John Boehner had earlier battled Democratic claims that he supported a "BP bailout," though he had previously said BP should bear the entirety of the financial burden. Boehner went on the record this weekend with his desire to eliminate the liability cap on BP, however, which makes him a potential supporter of Vitter's approach. With Boehner's support, Vitter could likely attract a strong group of Gulf State Republicans, many of whom have been guarded in discussions about altering the liability cap.

In his first Oval Office speech tonight, Obama will address what's being done to ensure that BP pays for the Deepwater Horizon spill in full as well as how he hopes to prevent similar disasters in the future. He has already proposed a BP "escrow fund" of $20 billion that could eliminate the need to retroactively hit the company with changes to its liability cap. On Wednesday, Obama will discuss this escrow fund with BP executives. If they agree to it, the pressure would be off Congress to retroactively lift BP's liability cap. If they don't, Obama will be able to threaten them with a retroactive bill in an attempt to change their minds.

Presuming the escrow fund moves forward, changes to the offshore liability cap could be worked into a larger energy bill. Senate Majority Leader Harry Reid has called on committee chairmen to recommend oil-industry reform legislation to incorporate into a larger energy package. Since there is consensus within the Senate on the need to raise the $75 million cap for offshore drilling companies, Reid may try to work variations of Menendez's and/or Vitter's ideas into that much-anticipated reform bill.