Senate Committee Votes to End Oil Spill Liability Cap Retroactively

A U.S. Senate committee Wednesday voted to eliminate limits on liability that oil companies would face for damages stemming from offshore spills like the one in the Gulf of Mexico. The change, if approved and made law, would apply retroactively to BP Plc, whose still unchecked April 20 spill has devastated communities and the environment along the Gulf coast.

Currently, companies enjoy a $75 million cap for compensating local communities for economic losses and for cleaning up environmental damages.

BP has said it will cover all costs of its oil spill in deep waters of the Gulf of Mexico, which are expected to run into the billions of dollars. It has agreed to establish a $20 billion fund, but claims are expected to easily eclipse that sum.

The oil spill prompted Democrats to move quickly to eliminate the liability limits. Initially, they were pushing for a $10 billion cap, but were convinced by the Gulf of Mexico spill that a more ambitious approach was necessary. Senate Republicans blocked earlier efforts to pass this legislation in the full Senate using a fast-track procedure.

“Shielding companies from responsibility for damages sends the wrong signal,” said Senate Environment and Public Works Committee Chairman Barbara Boxer. “Taxpayers should not be responsible” for covering the costs of offshore oil company disasters, the California Democrat said at the start of her panel’s work session on the bill.

The full Senate has not yet debated the legislation, which could be included in a broader energy and environmental debate next month on the Senate floor.

(Reporting by Richard Cowan; Editing by Lisa Shumaker)