Obama sends legislation to Congress in response to oil spill

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 13 -- US President Barack Obama sent legislation to Congress on May 12 in response to the Gulf of Mexico crude oil spill. The White House said the package is designed to continue a strong federal response, speed assistance to those affected by the spill, and strengthen and update the federal spill liability system.

“While we are asking for additional funds in some cases, the federal government will not relent in pursuing full compensation from the responsible parties for the expenses it has incurred and for the damage caused by the spill,” it said. “We will do everything in our power to protect our natural resources, rebuild what has been damaged, and help the gulf region to persevere as it has done so many times before.”

Specifically, the legislation would let the US Coast Guard obtain one or more advances—up to $100 million each—from the federal oil spill liability trust fund’s principal fund to underwrite the federal response to the spill resulting from the Apr. 20 explosion and subsequent sinking of the Deepwater Horizon semisubmersible rig.

It also would provide another $5 million of funding to the National Oceanic and Atmospheric Administration and $2 million to the US Environmental Protection Agency for various studies to improve the federal response to the spill.

The bill also would provide $29 million for the US Department of the Interior to conduct additional inspections, enforcement actions, studies, and other activities beyond those recoverable from BP PLC, which owned the well that the Deepwater Horizon was drilling, and the oil spill liability trust fund. It also would extend the period under which the US Minerals Management Service reviews lessees’ proposed offshore oil and gas exploration plans from 30 to 90 days, as US Interior Secretary Ken Salazar indicated he would request on May 11.

Liability changes
It also would raise the oil spill fund’s statutory exclusion for a single incident to $1.5 billion from $1 billion, and the cap on natural resource damage assessments and claims from $500 million to $750 million. The proposal also would raise the caps on liability for responsible parties. “The administration looks forward to working with Congress to develop levels for the various caps that provide for substantial, and proportional, increases,” the White House said.

The proposed legislation would enable the president to trigger and mobilize new forms of assistance, such as unemployment and nutrition aid, in partnership with states if the claims process established by the 1990 Oil Pollution Act is not sufficient to meet affected individuals’ needs. It also would let the government recover the costs of providing such services from the parties deemed responsible for a spill.

It would increase the tax that oil producers pay to finance the oil spill liability trust fund from 8¢/bbl to 9¢/bbl immediately and schedule an increase to 10¢/bbl in 2017 to ensure the fund’s long-term viability.

The bill also would create a new federal unemployment program for people left jobless because of a major spill who otherwise would not be eligible for unemployment assistance. It would make those who otherwise would not be eligible for federal nutritional assistance able to receive it, and authorize the US Department of Agriculture to provide food directly to states to distribute to those in need. It also would temporarily expand workforce investment training programs in affected areas at the state and local levels.

The package includes $5 million for the US Economic Development Administration’s economic adjustment assistance program to award to state, local, and nonprofit entities in an affected region for strategic planning and technical assistance. It also seeks $15 million from Congress so that fishermen can be compensated for their lost earnings following a spill when the US Secretary of Commerce declares a fishing disaster.

Lawmakers respond
Congressional leaders applauded the move. “Bipartisan cooperation has been difficult to secure in the past, but Senate Democrats hope that our shared duty to support struggling workers and industries and to ensure that BP bears the full cost of its negligence will convince our Republican colleagues to work with us and not obstruct swift passage of this critical assistance,” said Majority Leader Harry M. Reid (D-Nev.).

Meanwhile, US Sen. Lisa Murkowski (R-Alas.), the Energy and Natural Resources Committee’s ranking minority member, said, “I’m pleased to see swift action to increase the federal response to the oil spill threatening the Gulf Coast. While I’m still reviewing the full proposal, many of the measures strike me as sensible and timely.” She singled out the move to beef-up the Oil Spill Liability Trust Fund, increase available funding for the US Coast Guard and enhance research and study of the use of chemical dispersants as smart, targeted responses to the situation.

Murkowski noted that the administration’s call to increase the oil spill liability fund’s fee from 8¢/bbl to 9¢/bbl matches a provision in S 3309, a bill that she and Alaska’s other US senator, Democrat Mark Begich, introduced on May 6. The 12.5% increase would raise as much as $612 million/year, she said.

US Sen. Frank R. Lautenberg (D-NJ), who cosponsored a bill with Sens. Robert Menendez (D-NJ) and Bill Nelson (D-Fla.) to raise the liability limit for an offshore spill, was pleased that Obama included such a provision in his package. “It’s clear to me that polluters, and not taxpayers, should be on the hook for cleaning up these messes,” Lautenberg said. “Making polluters pay is a principle I've stood by throughout my career, and oil spills should not be an exception.”

Members of Louisiana’s congressional delegation also applauded the administration’s bill. “The extension of unemployment insurance and the funds for our fishermen, shrimpers and oystermen are important to helping the Gulf Coast businesses weather the impact of this disaster,” said US Sen. Mary L. Landrieu (D). “We must continue to keep our focus on limiting bureaucratic red tape and making sure this help goes directly to the individuals and businesses that need assistance.”

US Rep. Charlie Melancon (D) said, “At a minimum, we need to provide assistance to workers who are unable to work because oil intrusions have cut them off from their livelihoods. We should continue to streamline low-interest SBA loans to small businesses who are suffering losses because commercial and recreational fishing waters have been closed.”

Contact Nick Snow at nicks@pennwell.com.

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