Sweeping overhaul of offshore oil drilling laws, liability hikes passes House committee

A top-to-bottom regulatory overhaul of the offshore oil drilling industry and spill response that eliminates the $75 million cap on spill-related damages, expands other liabilities and strengthens the U.S. Coast Guard's oversight role passed a House committee yesterday, as Congress crafts its legislative response to the catastrophic explosion of BP PLC's Deepwater Horizon rig.

The legislation (H.R. 5629), sponsored by Transportation and Infrastructure Chairman Jim Oberstar (D-Minn.), would also hike insurance requirements for drillers by a factor of 10 -- from $150 million today to $1.5 billion or more. The T&I Committee approved it by voice vote.

The bill also calls for better review of drilling safety plans and requires oil drilling-related vessels to register in the United States -- unlike the Deepwater Horizon, which was registered in the Marshall Islands, a "flag of convenience" that assured it more lax safety inspections.

Oberstar's bill also addresses environmental concerns surrounding the cleanup by requiring U.S. EPA to more thoroughly study oil dispersants and, ultimately, revise its list of pre-approved formulas based on rigorous testing of toxicity and effectiveness.

"The Gulf is damaged for decades to come," Oberstar said at the T&I markup. "It's in our authority to make sure this doesn't happen again."


Republicans signed on but expressed some reservations about the broad expansion of liability. "We do that cautiously," said the committee's top Republican, Florida Rep. John Mica, who said that going too far could drive away the offshore oil industry, which employs thousands of workers in the Gulf region, from U.S. shorelines entirely and force the nation to import more of its crude.

"We don't want to force jobs overseas," Mica said.

Mica cited news reports that oil production was leaving the Gulf of Mexico for foreign waters as a result of President Obama's current six-month moratorium on Gulf drilling -- a concern Oberstar rejected.

"The oil is there. They'll come back when we have the protections and the preparations in place," Oberstar said. "They'll be back. They'll be drilling. They'll be finding oil, and they'll be making a ton of money."

Keying on that worry, Rep. Pete Olson (R-Texas) later put forth an amendment calling for liability caps to be set by the president spill-by-spill based on several criteria. Sen. James Inhofe (R-Okla.) proposed a similar amendment Wednesday at a Senate Environment and Public Works Committee markup.

Rep. Harry Teague (D-N.M.), who started his own oil and gas business, echoed those Republican concerns and drew a commitment from Oberstar to work on a bipartisan solution to the economic conundrum. "There is a lot of room between slogans like 'drill, baby, drill' and 'use it or lose it' for a serious debate over our nation's energy policy," Teague said. "Clearly, we must hold BP accountable and update our laws to reflect risks. However, we must not create unintended consequences."

The bill would expand the U.S. Coast Guard's role in offshore drilling regulation, requiring the guard to beef up its marine safety work force with 300 additional personnel, more training, more than $75 million in additional funding over the next five years and mandates to broaden inspections and address potential worst-case scenarios during reviews.

Rep. Nick Rahall (D-W.Va.), who will take up similar legislation aimed at shoring up drilling regulations and oversight from his perch as chairman of the Natural Resources Committee, said removing the damage liability cap was "long overdue and clearly warranted." But Rahall differed with the bill's broad expansion of the Coast Guard's oversight of offshore drilling, saying the responsibility was better left to the Interior Department and the Minerals Management Service, whose policies his committee would focus on tightening.

"In my opinion, this bill asks the Coast Guard to do things that are entirely inappropriate in light of its expertise and its mission," Rahall said.

Other liability expansions included an amendment to the Oil Pollution Act of 1990 to add human health impacts to the list of valid claims -- a response to reports that residents and workers in and around the Gulf spill have suffered from a variety of respiratory and other health issues.

The bill also aims to repeal an 1851 law that limits the liability of a ship owner to the value of the vessel and freight. Citing the more than 150-year-old law, Transocean Ltd., BP's partner of the owner of the Deepwater Horizon rig, had sought to limit its liability to $27 million, according to the committee.

Another section would allow families of those killed at sea -- such as the 11 workers killed in the rig explosion -- to seek not only monetary damages but also claims of pre-death pain and suffering and loss of companionship, similar to a bill the House approved on the floor yesterday (see related story).

Lawmakers on both sides agreed there was more work to be done before the bill goes to the House floor, with members on both sides proposing then withdrawing amendments on the agreement that the issues would be addressed later. One amendment from Rep. Joseph Cao (R-La.) called for building a standardized fleet of spill response vessels in partnership with universities. Rep. Jerry Nadler (D-N.Y.) called for halting all dispersant use until EPA's study of their toxicity and effectiveness was complete.

One amendment voted into the bill came from Rep. Michael Arcuri (D-N.Y.). It strips an exemption that gave oil and gas drillers a pass on having to obtain permits for stormwater discharge during well construction. Earthworks and other environmental groups cheered the move in a news release calling it "one step in the right direction towards reforming our oil and gas industry."

Water bills

The T&I Committee also approved Rep. Frank LoBiondo's (R-N.J.) measure (H.R. 5301) to extend a moratorium on EPA's permitting of the "incidental discharges" of charter fishing boats and small commercial vessels, such as bilge water, "gray" water and deck runoff.

A recently completed EPA study found that such discharges were "not benign" but the agency needs more time to decide how to regulate the matter. The bill, largely a measure of legislative housekeeping, passed easily, since failure to extend the moratorium would have rendered thousands of boats in violation of the Clean Water Act this summer. Oberstar said he expected to bring the bill to the floor soon after the July 4 recess.

The panel also approved Del. Eleanor Holmes Norton's (D-D.C.) bill (H.R. 5545) to deauthorize navigation in the northern portion of the Washington Channel. The measure is intended to encourage dock construction and development along the Southwest Waterfront, Norton said.

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