Gulf Deepwater Drilling Resumes Without Changes To Spill Liability

Gulf Deepwater Drilling Resumes Without Changes To Spill Liability

WASHINGTON -- As deepwater drilling returns from a months-long hiatus in the Gulf of Mexico, the protections that Congress drew up to help victims of oil spills remains stuck in legislative limbo with no clear or likely path to passage.

The Obama administration announced on Monday that it would allow 13 companies to resume deepwater drilling, which it had suspended in May during the massive BP oil spill that followed the Deepwater Horizon's April 20 explosion.

Administration officials categorized the move, which would affect a total of 16 Gulf-area wells, as a logical step for a drilling industry suffering under the ban. All the wells had been operational before the Deepwater Horizon explosion. Moreover, the affected companies would have to comply with new safety rules, though not new environmental reviews.

"Safety is our top priority and the administration has already taken unprecedented steps to increase oversight and safety of offshore drilling," White House spokesman Clark Stevens said. "Any offshore drilling taking place in the United States must meet the rigorous new safety standards put in place since the BP Deepwater Horizon oil spill."

But while the oil and drilling industry was getting back to business, consumer advocates, legal experts and Hill lawmakers were airing concerns that Congress had essentially abandoned its efforts to improve protections and compensation for spill victims.

The major piece of legislation that Democrats drew up in response to the BP crisis has yet to pass the Senate, meaning that if another spill were to occur in the Gulf, the total compensation for economic damages would remain at a paltry $75 million.

"When you consider the risk that offshore drilling poses to our coastal economies and environment, the current cap on oil-company liability is just a spit in the ocean that does nothing to hold them accountable," said Sen. Frank Lautenberg (D-N.J.) one of the chief advocates of eliminating a cap on economic-damage liability for oil companies.

"Life is good for oil companies, and it's not just because families are yet again paying at lot more at the pump," added fellow New Jersey Democratic Sen. Robert Menendez, another proponent of the cap lift. "So far, these companies have escaped the most devastating oil spill in history with a fully-intact liability cap to protect their profits and no legislative response."

The failed effort to lift oil companies' economic liability illustrates how the Senate saucer can cool even the most seemingly uncontroversial legislation. In the weeks after the BP spill occurred, Menendez announced that he would introduce a bill to ratchet up the $75-million liability cap, established by the Oil Pollution Act of 1990, to $10 billion. The crisis in the Gulf seemed certain to be costly, and keeping payout levels so low seemed impractical if not morally dubious. Eventually, Menendez would scrap the $10 billion figure in favor of removing the cap altogether.

But along the way, things grew complicated. Several unanimous-consent requests to get the bill through the Senate were blocked by Republicans who argued that such a cap would deter smaller companies from drilling. Democrats with close ties to the oil industry, including Sens. Mary Landrieu (D-La.) and Mark Begich (D-Alaska), eventually joined the chorus of objectors. And even after the White House threw its support behind the proposal in early June and it passed through the Environment and Public Works Committee, the juice wasn't there to overcome a filibuster.

Senate Majority Leader Harry Reid (D-Nev.) paired the measure with larger energy reforms, only to strip it out and create a standalone spill bill. In early August, his office announced that it would not hold a floor vote on the legislation until after the summer recess. But when lawmakers came back in September, the issue was all but forgotten. It remains, today, off the political radar.

"We're still working out the agenda for this Congress," said a Democratic Senate leadership aide. "There a lot of very important bills to be addressed. We just don't have specifics yet on what will or won't be on the schedule."

For victims of the current spill, the practical effect of the Senate's failure to pass Menendez's bill will likely be limited. The White House was able to negotiate a $20-billion escrow account with BP, from which it can cover economic damages caused by the summer's fiasco. But for those who have spent years or decades litigating such matters, the dispiriting consensus has been reached that Congress failed to draw something concrete or positive out of this summer's catastrophe.

"It is a huge problem for future oil spills. Both the Valdez spill and this spill show you that when an oil spill happens, the damages far exceed $75 million," said Brian O'Neill, an attorney with the firm Faegre & Benson, who has worked extensively on securing compensation for victims of the 1989 Exxon Valdez spill in Alaska. "The passage of the [Oil Pollution Act of 1990] with that provision in it was one of the great frauds of all time. So to open up the additional platforms in the Gulf, it is sort of like buying the car and not getting any insurance. It is just stupid."

Stupid it may be. But failure to restructure penalties for oil companies was not for lack of want. The vast majority of Democrats supported raising if not eliminating liability caps. The Obama administration, despite allowing a resumption of drilling in the Gulf, claims to back such a move, as well.

"We continue to support the removal of caps on liability for oil companies engaged in offshore drilling, as part of a larger effort to hold the industry accountable for these risks and their consequences," said Stevens, the White House spokesman.

The bill could be easily blocked, however, under the heavy weight of oil industry complaints and the committed obstruction of sympathetic Senators. Eventually, enough time elapsed for the political world to move on to other matters and for deepwater drilling to resume.

"You've got an industry that collectively demonstrated that it was fundamentally unprepared to meet the challenges of deep water offshore drilling," said Tyson Slocum, the research director for Public Citizen's Energy Program. "To allow new deepwater drilling to occur without a signing of adequate financial responsibility for their risks places unnecessary burdens on the American taxpayer."

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