President Obama has sent Congress legislation that would raise a producer’s liability for economic damages from an oil spill, administration officials said last Wednesday. The measure calls for the higher cap to take effect retroactively to include damages from the recent well -blowout 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 NGI, May 10), 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. Pieces of the proposal are likely to hitch rides on different legislative vehicles, including a planned war supplemental funding bill (HR 4899) and legislation (HR 4213) to extend tax cuts and social safety-net programs, CQ Today reported.

The administration’s bill would call for a 1 cent/bbl hike in the excise 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.

The White House also has requested $118 million in emergency spending to deal with the blowout of the subsea oil well owned by BP, which led to the explosion aboard the Deepwater Horizon. “We hope to get this [bill] passed as soon as possible…in the next few weeks,” he said.

House Speaker Nancy Pelosi (D-CA) wants to move quickly on legislation that would significantly raise a producer’s liability for economic damages from offshore oil spills, said spokesman Drew Hammill.

“The Holt bill, yes, the Speaker hopes it will move to the floor quickly. She supports the legislation,” he said, referring to a House bill introduced by Rep. Rush Holt (D-NJ) and several lawmakers representing coastal states. The House bill is similar to legislation introduced by Sens. Robert Mendez (D-NJ), Frank Lautenberg (D-NJ) and Bill Nelson (D-FL).

“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,” and in such a way that BP 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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