Sen. Murkowski Welcomes Hearing on Oil Spill Liability Limit

WASHINGTON, D.C. - U.S. Sen. Lisa Murkowski, R-Alaska, the ranking member of the Senate Energy and Natural Resources Committee, last week called for a hearing on raising the strict liability cap under the Oil Pollution Act. Today, Murkowski applauded Chairman Jeff Bingaman's announcement that the energy committee will hold a hearing on the liability issue on Tuesday, May 25.

"I support raising the strict liability limit on oil companies drilling offshore," Murkowski said.

The number of mischaracterizations on what liability limits are shows that the Senate needs to gain a better understanding of how these complex legal and statutory provisions interact, Murkowski said.

Current state and federal law provides for a limit on strict liability, liability without limit for cleanup, and unlimited liability for compensatory and economic damages.

"We need to give careful consideration to where and how the strict liability cap should be set to avoid any unintended consequences," Murkowski said.

Murkowski said setting the cap arbitrarily at $10 billion might sound good on TV, but it could do significant harm to the nation's energy security and the ability of American firms to compete against large nationalized oil and gas companies.

"Such a cap would only exclude all but the biggest oil companies from operating offshore," Murkowski said. "The irony is that under such a bill only BP and other foreign supermajors - most of them nationalized companies, such as Saudi Aramco, the Chinese National Oil Company, Russia's Gazprom and Venezuela's state-owned oil giant PDVSA - could produce America's offshore resources."

Secretary of the Interior Ken Salazar today called the $10 billion figure "arbitrary" and said raising the strict liability cap too high would squash competition in the Gulf of Mexico.

Murkowski is working with the administration and her Senate colleagues on both sides of the aisle to establish what amount is appropriate to fully hold responsible parties liable. Next week's hearing will provide an opportunity for Murkowski and the panel's other members to hear testimony on the pros and cons of raising the limit.

The strict liability cap under the Oil Pollution Act refers to the amount an oil company is responsible for without being found at fault for an accident. There is absolutely no limit on the compensatory or punitive damages a company can be made to pay if it is found responsible for a spill. There's also no limit on how much a company has to pay to clean up a spill.

Murkowski has co-sponsored legislation to increase the total amount of money in the Oil Spill Liability Trust Fund to $10 billion by raising taxes on the oil industry. The liability fund provides immediate resources to address an offshore spill.

Murkowski is also working on additional legislation to establish an administrative process to expedite payment of damage claims by victims of the Gulf of Mexico oil spill.

Other measures being considered by Murkowski:

• Allowing the federal Treasury to temporarily provide the Oil Spill Liability Trust Fund additional funds if claims exceed the current $1.6 billion total, to be repaid by a fee on oil companies.

• Increase the $1 billion per incident cap on claims from the Oil Spill Liability Trust Fund.

• Double the $500 million cap on natural resources damages from the Oil Spill Liability Trust Fund to $1 billion.

• Establish a bipartisan commission to investigate cause of the Deepwater Horizon tragedy and recommend on future worker safety and environmental laws to improve domestic energy security.

• Expand research and development of U.S. Coast Guard spill response capability.

• Require Senate confirmation of MMS directors.

The full Senate Energy and Natural Resources Committee will hold a third hearing on offshore oil and natural gas development in light of the Gulf of Mexico spill on Tuesday at 10 a.m. in Dirksen 366.