Capitol Hill lawmakers reached a new pitch of activity in reaction to the Gulf oil spill, floating a number of new restrictions and rules and acting to remove the cap on oil company liability.
Rep. John Sarbanes, a Maryland Democrat, even took a page from the legislation sponsored by his father, former Sen. Paul Sarbanes, in the wake of the Enron collapse, suggesting that oil company chief executives should personally certify oil spill plans.
The Sarbanes-Oxley Act requires CEOs to certify that measures have been taken to ensure the accuracy of their accounting.
The oil spill plans submitted by the companies as part of their permitting requirements have come under severe criticism because they were off-the-shelf standardized plans that were inadequate and often had little relevance to the actual conditions of drilling in the Gulf.
In actions this week, two Senate committees approved bills to tighten regulation of offshore drilling, increase requirements for preparedness to handle oil spills, and raise or remove liability limits, currently set at only $75 million. Among the proposed requirements would be greater redundancies in safety equipment and testing of “fail-safe” devices.
Lawmakers also crafted bills to implement the decision by the Obama administration to split in two the former Minerals Management Service in the Interior Department to separate the functions of collecting royalties and regulating for safety and the environment.
While there was considerable momentum to adopt measures that would help prevent the kind of spill resulting from the Deepwater Horizon accident in April, lawmakers on both sides of the aisle cautioned against stifling the offshore oil industry totally.
Louisiana Democrat Sen. Mary Landrieu said that “striking a balance” is important because the state, one of the biggest victims of the spill, still depends economically on the industry.
Oklahoma Republican Sen. James Inhofe warned that totally removing the liability cap would make it virtually impossible for smaller companies to engage in offshore drilling. Louisiana Republican Sen. David Vitter, who has opposed the administration’s temporary moratorium on drilling, said uncapping the liability would be like a “permanent moratorium.”
The separate legislative actions are likely to be merged into a comprehensive bill that will deal with the fallout from the spill.
By. Darrell Delamaide for OilPrice.com