By Darren Goode - 07/29/10 07:15 PM EDT
House Democratic leaders are facing resistance from conservative and centrist members in the party over several provisions in oil spill response legislation that’s headed for a vote Friday, including the removal of liability caps on offshore oil and gas producers.
A group of about 30 oil-patch Democrats share the concerns of their Senate counterparts that removing the liability cap for future spills would price smaller independent companies out of the offshore drilling business. “That’s a big one,” said Rep. Gene Green (D-Texas), an ally of the industry.
Some lawmakers have proposed fixing the problem by creating a spill fund that all oil companies would pay into, akin to the shared cost plan the nuclear industry uses to address potential accidents. Another idea, Green said, has been to double or triple the existing $75 million liability cap for producers, but make it unlimited if a company is found to be grossly negligent.
But it appears at the moment that the language may not change.
“Actually we’re sticking with it pretty solidly on our side,” House Natural Resources Committee Chairman Nick Rahall (D-W.Va.) said.
Rep. Rick Boucher (D-Va.), another centrist, said he is also opposing the bill at the moment over language that “imposes fees and taxes on natural gas production, which includes production in my district.” He said the provisions should not be in an oil spill response bill. “All that is completely unrelated to the spill in the Gulf of Mexico.”
Reps. Harry Teague (D-N.M.) and Jason Altmire (D-Pa.) also share Green’s concern with language that they say would effectively regulate the construction of oil and natural gas wells for storm water runoff under the Clean Water Act the same way that large-scale construction projects are regulated.
The language is “fundamentally flawed,” Teague and Altmire wrote their House colleagues Thursday. It might “place entire projects and substantial capital at risk,” they wrote.
They cite a report from the Energy Department stating the language “could result in the lost production of as much as 10 percent of current U.S. oil production and as much as 10 percent of current U.S. natural gas production — and the jobs, domestic investment, and state and federal revenues that go with it,” they wrote.
Green is essentially leading the oil-patch Democrats, much like he did during last year’s House debate over a sweeping climate change and energy bill that narrowly passed.
In the end, Green voted for the climate measure last June, which squeaked by 219-212 despite opposition from 44 Democrats. That seven-vote margin came after eight Republicans supported it. Republicans might be just as unified on the oil spill measure, if not more so.
Rep. Chris Van Hollen (D-Md.), assistant to Pelosi and fourth on the House Democratic leadership ladder, told The Hill that Democrats should be able to squeeze out a majority again. “I think we are getting there,” Van Hollen said. “I am confident we will get there. This always involves a discussion.”
Green was unsure whether all the critical oil-patch Democrats would vote against the measure if the liability cap language remains unchanged. “I don’t have a final number, but I would hope to show the leadership that there’s enough concern that we ought to rework it,” Green said.
He noted that Sen. Mary Landrieu (D-La.) and others are looking for a compromise on the language removing the cap, which is also included in a Senate oil spill response bill. “Why would the House want to pass unlimited liability when it’s probably not going to get through the Senate?” Green asked. “That’s all part of the mix today.”
Landrieu is floating a plan that would retroactively lift the liability cap to ensure that BP fully pays for the Gulf spill, but does not lift it entirely for future spills.
Instead, damages between $250 million and $10 billion would be covered by a mutual insurance fund into which all oil-and-gas producers would contribute. Under her plan, costs 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, according to Landrieu’s plan.
Rep. Charlie Melancon (D-La.) – who is in a tightening race against Landrieu’s fellow senator, Republican David Vitter – is in favor of the House's unlimited liability language for the Gulf and future spills.
But he is still undecided on the overall package. "I want to know exactly what the bill is composed of, and then I will make the decision," he said Thursday.
--Ben Geman contributed