President Obama is sending to Congress legislation that would raise a producer’s liability for economic damages from an oil spill, administration officials said Wednesday. The measure calls for the higher cap to take effect retroactively to include damages from the blowout of the BP-leased rig and the subsequent massive oil slick in the Gulf of Mexico.

While legislation introduced in the Senate and the House have proposed increasing the liability cap to $10 billion from $75 million under the existing law (see Daily GPI, May 12), administration officials said they did not have a specific amount in mind.

“We’re going to work with Congress on that…[We] don’t have a ballpark for you,” said White House spokesman Nick Shapiro.

The administration’s bill would call for a 1 cent/bbl hike in the tax for producers to fund the existing Oil Spill Liability Trust Fund, which is used to pay for offshore clean-up or damages when the responsible party is unknown or refuses. The increase would be to 9 cents from 8 cents immediately, and then to 10 cents in 2017, according to Jeff Liebman, acting deputy director of the Office of Management and Budget.

“We hope to get this [bill] passed as soon as possible…in the next few weeks,” he said.

“BP, as you know, has said that they intend to cover all the costs. We have told them — we have been in meetings with them — that we take that to mean all [costs]. In the meantime, though, we are updating this statute as a matter of policy, as well as making sure that their commitment, the commitment by the company, that they will be held to it,” said Carol Browner, assistant to the president for energy and climate change.

She said the administration does not believe it will encounter any problems by making the cap increase retroactive. “No, we do not believe so because what we are doing is updating the statute and it covers all companies.”

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