Salazar says Dem bill to raise oil company liability could hit smaller drillers

Salazar made a similar argument before a Senate panel Tuesday. “You don't want only the BPs of the world to essentially be the ones that are involved in these efforts,” he told Sen. Robert Menendez (D-N.J.) during a hearing on the Gulf of Mexico oil spill held by the Senate Energy and Natural Resources Committee.

The Obama administration wants Congress to raise the economic damages cap in the wake of the Gulf spill. But it has not provided a target figure. Salazar called for working with lawmakers to arrive at a figure that is not “arbitrary.”

“It ought to be high enough so that we make sure that the responsible party will be able to live up to whatever consequences result from their actions,” Salazar told Menendez at the hearing.

But Menendez attacked the idea that a cap too high would harm smaller companies. “That simply means that if you are smaller, you can get away with taking the same risks but having less liability,” he said.

Menendez has even suggested there should be unlimited liability, according to Reuters, a view that Senate Majority Leader Harry Reid (D-Nev.) endorsed Tuesday. “I think $10 billion is too small,” Reid told reporters Tuesday, noting estimates of damages from the Gulf spill are in the $14 billion range.

“I’m for no cap,” Reid said.

Inhofe and Murkowski, for their part, say they believe the cap should be higher than $75 million, but that the issue needs more review.

“Certainly, we need to raise these limits. Now, where it should be raised, I don't know where the cap should be. And we're going to have to find out as this thing moves along,” Inhofe said Tuesday on the Senate floor as he blocked the plan for a $10 billion cap that Menendez is pushing with Sens. Frank Lautenberg (D-N.J.) and Bill Nelson (D-Fla.).

“I would only say this, though — if you have it too high, you are going to be singling out BP and the other four largest majors and the nationalized companies such as China and Venezuela, and shutting out the independent producers. I don't want that to happen,” Inhofe added.

BP has said that its damages payments will exceed the current $75 million cap and that it will pay all “legitimate” claims.