POLITICS
05/12/2010 11:20 am ET | Updated May 25, 2011

Obama Introduces Oil Spill Recovery Bill, Won't Pinpoint New Cap On Economic Damages

The White House is sending a comprehensive legislative proposal to Capitol Hill that is designed to help abate the economic, climate and even nutritional impact of the massive oil spill in the Gulf Coast.

On Wednesday, administration officials unveiled a bill that will provide funding for further safety inspections at oil rigs, granted unemployment assistance for those hurt or displaced by the spill, gave money for environmental studies related to the oil damage in the Gulf and even expanded nutritional assistance to those affected.

The flashiest element of the legislation, however, and the one that sparked the most questions, included a provision to raise the liability of oil companies responsible for catastrophic spills. In a fact sheet sent to reporters, the administration called for a raise in "the statutory expenditure limitation for the Oil Spill Liability Trust Fund from $1 billion to $1.5 billion." This, in short, would provide more money to handle the immediate coasts of coping with a spill disaster.

The White House's bill also would raise the cap on natural resource damage assessments and claims from $500 million to $750 million -- in essence, giving more funds for environmental clean-up.

But with respect to the current cap on economic damages, the administration was vague. Rather than raise the current cap of $75 million to a higher figure (Sen. Robert Menendez wants the cap raised to $10 billion), the White House declined to reveal a numerical preference.

"The Administration looks forward to working with the Congress to develop levels for the various caps that provide for substantial, and proportional, increases," the fact sheet reads.

Asked in a conference call unveiling the bill to elaborate on why the White House had left the economic-damages cap blank, Carol Browner, the Assistant to the President for Energy and Climate Change, replied:

"We think it is important to work with Congress on determining what that set number will be. as you know, there have been bills already introduced and we will be working with them to determine what the right number is."

For lawmakers like Menendez, the unwillingness of the White House to provide a firm figure with respect to raising the cap on economic damages caused by oil spills is likely to be worrisome. Disaster relief experts have already expressed concern that the costs of the current spill in the gulf could exceed the senator's $10 billion figure -- though Browner and others declined to project what the cost of economic damages currently was or would end up being. For the White House to invite negotiations on the number is to open the door to lowering it.

"We are going to work with Congress on that," spokesman Nick Shapiro said after another reporter asked whether the administration would endorse Menendez's figure. "We don't have a ballpark for you."

Nevertheless, administration officials stressed on Wednesday that BP and others responsible will not be able to duck any of the costs resulting from the spill. Browner said that the legislation the president was introducing will lift the cap on economic damages "retroactively."

"BP as you know has said that they intend to cover all costs," she said. "We have told them, we have been in meetings with them, that we take that to mean all. In the meantime we are updating this statute as a matter of policy to make sure that their commitment, the commitment by the company, that they will be held to it."

Added Jeff Liebman, Acting Deputy Director of the Office of Management and Budget: "Nearly all of the costs that federal agencies are going to incur as a result of this spill will get charged to the responsible party."

The White House is formally introducing the bill today with the goal of getting it passed "in the next few weeks," Liebman said. The total discretionary spending in the legislation will total an estimated $118 million dollars, he added, with the "overwhelming majority... reimbursed by BP."

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UPDATE: Menedez's office releases a statement that, while noting that the White House proposal does not include a dollar amount for an economic-damages liability cap, praises the legislative offering as a sign of progress:

"The president's proposal adds even more momentum to our efforts to hold oil spillers accountable for the economic damage they inflict," said Menendez. "I welcome the administration's willingness to work together as we ensure companies that spill are kept fully on the hook and as we improve the safety net that is the Oil Liability Trust Fund. Our coastal communities must be protected against the worst-case scenario, which is why I am working hard to make polluters responsible for all of their damages. Going forward, we need to recognize that the absolute best way to protect the small businesses, fisheries and communities along our coasts is to stop the expansion of coastline drilling and focus on a transition to a 21st Century clean energy economy. There is simply no rig that is too safe to spill."


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