By Russell Berman - 06/11/10 10:00 AM EDT
Lawmakers are scrambling to ensure BP repays the government for the Gulf Coast oil spill amid concerns that taxpayers could be partly on the hook.
The payment question has become a dominant concern of Washington policymakers as the cost of response and cleanup for the spill multiplies with each passing day.
The Senate approved an initial $94 million in Gulf aid last month as part of a war funding bill, and a larger pot of $275 million is included in the version under consideration by the House.
Yet lawmakers have not decided on how to deal with the issue of repayment in the legislation. The House draft contains language stating explicitly that “all costs directly related to the Gulf Coast oil spill must be reimbursed by the responsible parties.” The Senate bill did not include that statement after an amendment offered by Sen. Frank Lautenberg (D-N.J.) containing similar language failed to come up for a vote.
A Democratic aide said the language was not legally necessary because it simply underscored that current law applied.
The Oil Spill Liability Trust Fund, created in 1986 and funded since 1990 by oil companies, is designed to save taxpayers from having to pay most of the recovery and cleanup costs. But the Obama administration is also seeking aid money not covered by the fund.
BP has pledged to pay “all legitimate claims” from individuals and businesses and to restore the Gulf Coast, and the administration has already sent its first bills to the company. But the logistics of collecting the money have raised doubts about whether the government will actually be able to recover the full cost from BP.
One senior House appropriator offered this reality check: Taxpayers might not be totally off the hook.
“They’re going to wind up paying for some of the cleanup,” said Rep. Jim Moran (D-Va.), chairman of the House Appropriations Subcommittee on the Interior and the Environment. Moran said that while the “official attitude and determination” of policymakers is that BP pay the full cost, Congress does not have the authorization to completely force its hand.
“It has to be a gentlemen’s agreement” between BP and the Obama administration, Moran said. “It’s a combination of BP’s public commitment and Obama’s determination to make them pay.”
That sentiment, however, falls short for many lawmakers who are distrustful of BP’s commitment.
“Their gentlemen’s agreement with the American people isn’t enough,” Rep. Rush Holt (D-N.J.) said. “They have to be legally liable.”
Holt is a leader of efforts in the House to change current laws that advocates believe might limit the amount of money BP will ultimately have to pay. Chief among them is a push to significantly raise or eliminate entirely a $75 million liability cap on damages for companies involved in oil spills. With an eye toward the relatives of the BP workers who died in the initial explosion, lawmakers also want to change decades-old laws governing liability for deaths at sea. Holt said he would push to make any new laws retroactive to cover the current disaster.
Sen. Byron Dorgan (D-N.D.) is proposing that BP pay $10 billion into a separate fund specifically for Gulf Coast recovery to be overseen by a special master. “It’s important to turn this from a pledge to a binding commitment,” he said in a floor speech Thursday.
The House took action on Thursday to allow the Coast Guard to withdraw additional money from the oil spill trust fund. Current law prohibits the Coast Guard from using more than $100 million without congressional approval, and the administration had sent a letter to Congress earlier this week warning that officials in the Gulf were running out of money. The Senate approved the measure on Wednesday, and Democrats were emphatic that the move did not cost the taxpayers.
“Taxpayers can be assured that BP and other responsible parties will be billed for all spill containment and cleanup costs,” House Majority Leader Steny Hoyer (D-Md.) said. “It is critical that we pass this emergency measure to ensure the uninterrupted continuation of federal response operations and that BP will foot the bill for that response.”
The trust fund’s total balance is also becoming a concern. The fund has about $1.5 billion remaining, officials have said, and the costs of cleaning up the spill are expected to reach several billion dollars. To replenish the account, the House last month passed a measure raising the per-barrel contribution by oil companies from $.08 to $.34, but that proposal faces opposition in the Senate. The Senate version would raise the tax to $.41.
And the administration has asked that Congress raise the $1 billion limit on how much fund money the government can now use for a single incident.
Yet it is the claims that would not be covered by the trust fund that may spark the biggest fight. The Obama administration on Wednesday said it would seek money from BP to cover the full salary of oil industry workers who lose their jobs as a result of the spill. The company sent signals that it opposed those payments, and its stock price tumbled on the news.
“With respect to cleanup and recovery, there should be no question that BP and its partners should have to pay these costs. There is some question of what are the boundaries of those costs,” said Robert Hartwig, president of the Insurance Information Institute, an industry trade association.
Hartwig testified on Wednesday before a House committee examining liability issues surrounding the spill.
“The government and BP need to agree on what will be reimbursed, what types of expenses,” Hartwig said.
He said it was in the taxpayers’ interest that BP remain solvent and not face a torrent of lawsuits and regulation that would doom the company.
“BP is worth far more alive than dead,” he said.