Oil Bill Trips Over Liability Cap, Natural Gas

Not even 24 hours after Sen. Majority Leader Harry Reid introduced an already stripped-down oil spill/energy bill yesterday, it has already encountered a string of obstacles. Led by Minority Leader Mitch McConnell, Senate Republicans attacked the bill's removal of a liability cap for companies following spills at their offshore facilities. The Republicans want to give regulators the power to determine caps in individual cases; they worry that the prospect of unlimited damage claims could put smaller drilling companies out of business. Democratic Sens. Mary Landrieu and Mark Begich are also opposed to removing the cap, which could doom Harry Reid's hopes to gain 60 votes to prevent a filibuster.

Republicans also want to strike President Obama's six-month moratorium on deepwater drilling and have raised a fuss about last-minute language inserted into the bill that would impose new transparency requirements on a controversial method of extracting natural gas. Hydraulic fracturing, known in the environmental community as "fracking," involves injecting a mixture of sand, water, and chemicals underground in order to crack the rock and release gas. Environmentalists worry that fracking contaminates nearby water supplies and have lobbied Congress to regulate the bill under the Safe Drinking Water Act. Reid's oil bill does not go this far, but it does require companies who rely on fracking to disclose the chemicals they are using.

Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, said that his primary reaction to the language, which was hastily added late last night, is that it's "poorly thought out." Natural gas producers often don't know exactly which chemicals they're pumping underground, he explained, since they purchase the chemicals from producers who have proprietary rights to them. These producers provide safety sheets so that the natural gas companies can manage the risk of the chemicals, but Fuller said that disclosing the specific chemicals would be legally impossible at this point.

"The issue seems to be a desire to provide some information to the public, to people living near well sites," Fuller said. "But there needs to be a way to put it out in context -- to explain how you're managing it, what you're doing to protect the environment."

Because Reid is expected to block amendments to the bill, it is unlikely that Republicans would be able to negotiate a compromise on the liability cap, the moratorium, or fracking. If Reid can't pick up any Republican votes and loses the pro-cap Democrats, his bill will be the latest pre-recess casualty.