Centrist Senate Dems may offer compromise on oil spill liability

Oil-state and centrist Democrats may unveil a compromise Tuesday designed to set a path forward on legislation responding to the Gulf of Mexico spill this year.

Sen. Mark Begich (D-Alaska) said Monday that it would address setting aside revenue from oil and gas production in federal waters for states with production off their coasts. It also seeks to end a stalemate over how much to increase the current $75 million liability limit oil companies face for offshore spills, and could alter the Obama administration’s temporary ban on deepwater drilling.

“We’ve crafted something I think might get us there,” Begich told reporters.

He dismissed the notion that an agreement could not be reached in the few days before senators leave for a five-week summer break Friday. “It’s only Monday,” he said. “We might lay the groundwork enough now.” He declined to offer details.

Begich met Monday with Sen. Mark Pryor (D-Ark.) and others and staff worked over the weekend as well, he said.

But time has probably run out, at least for now.

“I don’t think we’re making much progress, unfortunately, so I don’t think the bill’s going to go anywhere,” Sen Mary Landrieu (D-La.) said of a separate oil spill and energy strategy Senate Democratic leaders have proposed. “But maybe when we come back, cooler heads will prevail.”

Landrieu said she is working with Begich and “the few reasonable people in my caucus on this issue. They’re not many of them.” This includes “business-minded” Democrats like Sens. Ben Nelson (D-Neb.) and Evan Bayh (D-Ind.), she said.

Landrieu declined to target her ire at Senate Majority Leader Harry Reid (D-Nev.), who is promoting the Democratic bill that she opposes. “Senator Reid can’t be an expert on every single solitary bill,” she said. “The man is working as hard as he possibly can. I mean this is all staff level, you know, hogwash.”

Senate Democratic leaders have proposed a strategy to address the Gulf spill and future spills that does away with liability limits for producers. Landrieu, Begich and others say this would keep small and midsized producers from being able to afford insurance needed to drill offshore in the Gulf and elsewhere. Unlike a Republican alternative, the Democratic strategy does not try to scale back the administration's temporary offshore drilling ban or quicken revenue sharing for coastal-producing states.

To address the liability cap, Landrieu has proposed setting up a mutual insurance fund to enable oil and gas producers to share the cost of future spills, while retroactively removing the liability cap BP faces for the Gulf spill. Companies would contribute to the fund based on their level of offshore production and the amount they pay to obtain production leases. The idea would be that larger companies would contribute more.

Reid on Monday said he and Senate Minority Leader Mitch McConnell (R-Ky.) were trying to reach an agreement allowing for votes on the Democratic plan and the Republican alternative this week. Both would be subject to a 60-vote threshold and are expected to fail in their current forms. Reid spokesman Jim Manley said the plan is still to try to hold those votes Wednesday.

Reid is dealing with an unrelated problem with legislation extending federal Medicaid payments to states that he also hopes to take up this week. That could prevent votes on the spill packages from occuring until Thursday, and the bills may be shelved entirely for the summer. Debate and a vote on Elena Kagan's nomination to the Supreme Court will also occur this week.

Begich is undaunted. He touted his strategy as one “so easy that I can draft it on a sheet of paper like that,” emphasizing the point by taking a piece of paper out of a legal-sized folder he was carrying onto the Senate floor.