Exclusive: Menendez Introducing Unlimited Cap On BP Damages

Sen. Robert Menendez (D-N.J.) is set to introduce on Tuesday afternoon a bill that would fully eliminate any cap on the amount of economic damages that oil companies would have to pay for spills they've caused.

The New Jersey Democrat is revising an earlier version of legislation he introduced which would have raised the cap from $75 million dollars in liability to $10 billion. Now, the cap will be effectively unlimited, an aide said.

The revised legislation, which ups the ante a bit in the oil-spill debate, will get its first floor hearing on Tuesday afternoon as Senate Democratic leadership is expected to call for unanimous consent. In all likelihood, a Republican senator will object (they have objected twice already to Menendez's $10 billion cap) forcing Democrats into another course of action. It should be noted, as well, that the Obama White House has refused so far to endorse an actual dollar figure for where they'd like a liability cap to be, though they have expressed support for raising it.

That said, the New Jersey Democrat is hoping that by making liability unlimited he can effectively remove the GOP talking point that the $10 billion cap was an arbitrary number. He's also hoping to ride the growing wave of anger at BP for its oversight of the spill in the Gulf.

UPDATE: Senator James Inhofe (R-Okl.) blocked a unanimous consent agreement on Menendez's proposal Tuesday afternoon -- citing, among other things, the prohibitive effects it would have on smaller oil companies hoping to drill in the Gulf.

Expect Democrats to continue pushing the legislation going forward, though there is some question as to whether it will be introduced as an amendment to a larger bill and whether leadership will stick with an unlimited cap.

Comments

[VictoriaP]

02:11 AM on 05/27/2010

it is illogical that an oil company would have a maximum liability. you nor i have any such protection for our own negligence...

[rbchilds]

01:43 AM on 05/27/2010

This is good legislation for future disasters, but does nothing for the current crisis as the bill will most likely be deemed ex post facto therefore nullifying any changes in liability for BP.

[flabingo]

12:32 AM on 05/27/2010

Unlimited liability is obviously right, bur where is Eric Holder? Did he leave the building? Criminal Indictments are MUCH more powerful!

[wrb]

10:20 AM on 05/26/2010

Excellent.

Liability caps are just a hidden subsidy. Oil companies and consumers don't pay the full cost of oil and thus clean alternatives appear more expensive when if the external cost of oil- pollution, climate change, ocean acidification and a military capable of securing supply lines- are counted, alternative energy is much cheaper.

Get rid of all liability caps. Then tax oil to pay for the military and its other hidden subsidies. With oil accurately priced the market will quickly force a switch to clean sources.

[Gjam]

10:11 AM on 05/26/2010

If liability puts the company at risk of failing....then they might care. Lacking this, they just do not. If you screw up your business, your profits suffer. If you screw it up real bad, you go into bankruptcy. Free markets, right? right? Where are all the free market people?, oh, you mean they don't really want free markets? get back!

[FaceReality2]

10:01 AM on 05/26/2010

Where is the Tea Bagger outrage over liability caps?

C'mon baggers, put on your funny hats, make some signs and protest this taxpayer bail out of the oil companies. Or are you waiting on orders from the RNC?

[MARYHOBE]

08:45 AM on 05/26/2010

These are the changes that are needed in light of the recent developments. And we have to keep an eye on this one and not let it be watered down in the back rooms of the legislative. Last time the oil industry and dear Senator Inhofe managed to trash the efforts of Senator Menendez. Now, let's see them do it again in front of the American people.

[graceland9]

06:33 AM on 05/26/2010

That's my man, Menendez. But I see, alas, that he was blocked in his effort by Inhofe.

Way to bail out the oil industry, Inhofe!

[mjeffn]

05:54 AM on 05/26/2010

Does a cap matter anyway? We will be paying for the cost of one way or the other regardless, as taxpayers or consumers. With a low limit the government (us as taxpayers) will be covering the cost or, with a high limit the expense to BP will passed on to consumers (us) through higher prices. Pick your poison.

[Bricki]

10:01 AM on 05/26/2010

Exactly. Increase the cap = higher insurance costs which will get passed on the consumer. Lower cap = higher government costs which get passed on to the consumer.

The only difference is that in the case of the higher cap companies will move to develop oil outside the US to avoid insurance costs which means more oil imports and fewer jobs and less energy security for the US.

The fact is that there is no free lunch. Which is probably a good thing because we need to be moving away from oil to sustainable energy sources anyway.

[digger0007]

03:28 AM on 05/26/2010

Why was there a cap in the first place?

Go to any store...the sign would say, You break it, you pay for it. Not You break it, you pay up to $75. That's ludicrous. Only oil company lobbyist can dream of something this silly.

In an unprecedented disaster of this magnitude, there can be no cap because nobody knows what the cost of the damage can be. End of discussion.

[Bricki]

10:07 AM on 05/26/2010

The reason there was a cap is to get the oil industry to support the Oil Liability Trust Fund. Every barrel of oil has a tax on it that goes into the trust fund. This trust fund is supposedly help pay for spill damage; right now it has 1.6 billion in it.

An unlimited cap does NOTHING for you if the company that does the spilling goes into bankruptcy or pulls up stakes and leaves the country. The purpose of a Trust Fund is to deal with situations where the company isn't around to pay the damages.

[digger0007]

12:59 PM on 05/26/2010

Exactly my point. The Trust Fund was a bad idea. It removes the consequences of the oil company's action from the individuals responsible. This is not the same as the FDIC with an insurance that protects the consumers when a bank goes bankrupt. This is protecting the oil companies from being liable for their own mistakes.

Repeal the trust fund. Use all of the money to clean up, and send the rest of the bill to BP. Any other company doing work that can potentially devastate the environment better knows the consequences. If they can't take the heat, stay out of the kitchen.

[SamEllison]

02:17 AM on 05/26/2010

So Inhofe wants the taxpayer to BAILOUT BP!

[hypple]

01:45 AM on 05/26/2010

"UPDATE: Senator James Inhofe (R-Okl.) blocked a unanimous consent agreement on Menendez's proposal Tuesday afternoon -- citing, among other things, the prohibitive effects it would have on smaller oil companies hoping to drill in the Gulf."
So, since the oil giants with all of their latest technology are so good at it, let's let say, "Doug the Driller, LLC" or any other smaller company have at it... get that entrepreneurial spirit going again!

[digger0007]

03:32 AM on 05/26/2010

Interesting...big companies can make mistakes and the little guys too, so remove the cost of consequences so the big guys can make multi-billion dollar mistakes while the little guys can do the same with less money. That's the American know-how, right, do more with less?

When the cost of consequences is capped, you bet they take more risks. The bigger the risk, the bigger the payback. It's simple math.

[cruiseheaven]

08:47 AM on 05/26/2010

I kind of thought that was all part of the cost of doing business - research & development; and when you screw things up - taking care of the fall out. Not sure I get why Inhofe would not support responsibility - I thought that was what he was all about.

[Tags]

01:15 AM on 05/26/2010

Republicans think infinity is an arbitrary number if it goes against their corporate lobby sugar daddies.

[Gerard Johnson]

12:50 AM on 05/26/2010

And this whole time I was supposed to believe that President Obama had little experience in his the field of politics yet BP has no idea what their doing. What a pity.

[punk]

12:27 AM on 05/26/2010

BOYCOTT!!!
http://www.facebook.com/pages/1000000-Strong-to-Boycott-BP/115963105110083