SENATE:

Moderate Dems seek compromise for spill bill

Negotiations by moderate Democrats on liability and revenue-sharing provisions in the oil-spill response bill yanked from the Senate floor yesterday may prove key to passage of the measure this fall.

Senate Majority Leader Harry Reid (D-Nev.) yesterday called off dueling test votes planned for today on the Democratic and Republican energy and oil-spill response bills, saying more time was needed to convince senators to support the measure. While he blamed Republicans for blocking efforts to earn the needed 60 votes, the GOP blasted back, accusing Democrats of playing politics all along in bringing up the competing measures.

Democrats would have needed the support of every senator from their party to pass the bill, but at least two lawmakers had threatened to vote against it because of the controversial provisions. But several centrist Democrats are working to hammer out some of those issues, starting with liability measures.

The Democrats' bill (S. 3663) would eliminate a liability cap for companies involved in a spill. Republicans and some moderate Democrats say such a measure would prevent small- and mid-sized energy companies from operating offshore.

The Republican measure (S. 3643) includes a more spill-friendly liability formula than Democrats are promoting, but Democrats say their oil-spill response proposals do not do enough to hold BP PLC accountable for the damage caused by the spill or to reduce U.S. dependence on foreign oil.

"Democrats can't and shouldn't vote for a Republican bill that doesn't hold BP accountable for the enormous amount of damage caused by the Gulf oil spill," Reid said.

Sen. Mark Begich (D-Alaska) has said he would not vote for the Democrats' bill without changes to the liability language and inclusion of a revenue-sharing measure. He -- along with Sens. Mary Landrieu (D-La.) and Mark Pryor (D-Ark.) -- are working on so-called compromise language that would address those issues.

"We are working towards it, and I think there is a way to keep the taxpayers off the hook, which is what one of our goals is, and keep the industry robust and able to work ... particularly the independents, and we are making progress," Landrieu said yesterday.

Begich said, "We're getting close."

The language would likely raise the initial liability cap for companies involved in a spill from $75 million to $250 million, aides said last week. If damages exceed $250 million, then a $10 billion mutual insurance fund fed by industry would kick in. And if the economic damages associated with the spill maxed out that fund, payment responsibility would return to the company responsible for the spill with no limit on liability (E&ENews PM, July 29).

The fund would be fed by all companies operating offshore, paying into it based on how much oil and gas they produced and through fees associated with the amount of the bonus bids paid for each offshore lease.

Reid has so far not indicated a willingness to include the compromise language in his energy bill.

But Sen. Robert Menendez (D-N.J.), a vocal opponent of offshore drilling and author of the unlimited liability language in Reid's bill, said he agrees with the senators' key principle.

"They agree with me on unlimited liability; they agree with me on the question that the taxpayer should never be held responsible," Menendez said. "Their only question -- which I think is easily worked out so that's why we were all on the same page -- is how the industry shares that responsibility."

Sen. Byron Dorgan (D-N.D.) said he thought Landrieu and Begich's proposal made sense.

"I think it makes some sense to take a look at some other approaches on liability, and I think Senator Landrieu has come up with an approach that makes some sense," Dorgan said.

Pryor said he wasn’t aware that any Republicans have been involved in the discussions about liability compromise language.

Landrieu and Begich also would like to see some form of revenue-sharing language in the bill. Begich said he would prefer the version of revenue sharing included in the Republican bill.

The GOP alternative would share royalty revenue with states and communities that agree to allow drilling off their shorelines, sending 37.5 percent of oil and gas revenues their way. It also would extend revenue sharing to Alaska and would begin royalty sharing for Gulf Coast states in 2010 instead of 2017.

Reporters Robin Bravender, Patrick Reis, Katherine Ling, Elana Schor and Josh Voorhees contributed.

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