Landrieu pushes oil spill liability compromise

Sen. Mary Landrieu (D-La.) is urging Senate leaders to back a compromise that raises oil companies’ liability for offshore spills but scales back a Democratic leadership proposal that would allow unlimited payments for damages from the individual company responsible.

She hopes to settle a fight over liability caps between Democrats and Republicans that is contributing to the likely death of oil-spill response legislation before the August recess.
 
“I would say negotiations are ongoing,” a Landrieu aide said.

Landrieu’s proposal echoes Senate Majority Leader Harry Reid’s (D-Nev.) bill by retroactively lifting the current $75 million liability cap on the company, which is aimed at shielding taxpayers from having to cover BP’s responsibilities in paying for the Gulf of Mexico spill.
 
But from there Landrieu breaks with the Democratic liability provision authored by Sen. Robert Menendez (D-N.J.) that allows unlimited liability for future spills — a proposal that Landrieu and other oil industry allies say would freeze small and mid-sized drillers out of the offshore market.
 
Under Landrieu’s plan, damages of between $250 million and $10 billion would be covered by a mutual insurance fund to which all oil-and-gas producers would contribute. Anything above or below those dollar amounts would be covered by the company responsible for the spill. 

A company’s contribution into the mutual insurance fund would be based on their level of oil-and-gas production in federal waters and the amount the company spends on bonus bids paid for a production lease.
 
The idea would be to protect smaller independent companies from being pushed out of offshore drilling because they are unable to pay for their insurance. A Landrieu aide notes that many of the big companies are self-insured, so they would not be as affected by the complete lifting of the liability cap.
 
Menendez and some other Democrats had initially pushed for an individual company’s liability limit to be increased to $10 billion before deciding to lift the cap entirely. Menendez had not suggested the idea of having all oil-and-gas producers share in the cost of a spill.
 
Landrieu is in a politically tricky spot in the debate as she represents oil producers and a state hit hard economically and environmentally from the Gulf spill.

Aides say she has discussed the liability proposal with Menendez, who is one of the Senate’s leading critics of offshore drilling.
 
“I am open to figuring out a process in which the taxpayers never are held responsible for any dollars out of their pockets … as well as making sure that those who are damaged have the access to get fully compensated,” Menendez said Wednesday. “If I can be shown a liability scheme that meets those standards, I’m willing to consider it.”
 
Landrieu aides have also talked about it with Reid’s top energy aide.
 
She has spoken in general terms about it with Sens. Mark Begich (D-Alaska) and Mark Pryor (D-Ark.), a Landrieu aide said.
 
A deal, however, does not appear imminent.
 
Hardening political stances among Democratic and Republican leaders threaten to turn the upcoming debate into perhaps only one messaging vote heading into the summer break.

Republicans last week unveiled an alternative proposal that would allow the president to set liability limits based on 13 criteria, including a company’s safety record and the risk associated with a project. Democrats have targeted the GOP idea for not being retroactive to cover BP’s role in the Gulf spill.
 
“We think these negotiations and this process will continue for some time,” a Landrieu aide said.

But the talks are nonetheless a sign that even if the bill stalls in coming days, a deal could be reached when senators return in September.
 
Landrieu has also been pushing for language that quickens the diversion of some offshore oil-and-gas revenues to coastal-producing states.
 
In addition, she is seeking clarity on how funds generated from a per-barrel penalty BP will face for the Gulf spill will be used, and whether at least some will be set aside specifically for Gulf states.