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House Passes First Major Gulf Oil Spill Legislation: Would Lift Liability Cap, Allow Punitive Damages

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WASHINGTON-- (BY LARRY MARGASAK, AP) The House on Thursday passed the first major bill related to the Gulf of Mexico oil rig explosion, voting to allow families of those killed and injured workers to be compensated far more generously than current law allows.

While families of the 11 killed and the 17 injured would benefit under the legislation, the bill also would apply to all companies operating on the high seas.

The House passed the bill on a voice vote, with no recorded vote. The bill now goes to the Senate.

The legislation has strong political overtones.

Familiar foes representing industry and trial lawyers squared off once again over limiting legal liability. While industry groups complained that firms unrelated to the oil spill would suffer, Democrats portrayed the controversy as a fight between supporters of BP victims and backers of the oil industry and large companies.

President Barack Obama emphasized his party's theme Wednesday at a town hall in Racine, Wis., reminding the crowd that a leading Republican, Rep. Joe Barton of Texas, apologized to the blown-out well's principal owner, British-based BP PLC, because the oil company was pressured by the president to establish a $20 billion victims' compensation fund.

A cruise ship trade group, on the other hand, urged Florida lawmakers to oppose the bill and pointedly reminded them of the industry's spending and employment in the state.

In the House on Thursday, with family members of the victims looking on, Democrats argued that current laws inadequately compensate victims and their families.

"The unfairness of these laws is grossly apparent and makes no sense," said Rep. John Conyers, D-Mich, chairman of the House Judiciary Committee. "The laws are ancient. They're out of date."

Some Republicans argued that the bill was too broad, though they did not act to block its passage.

"This bill changes maritime law for everyone, not just those involved in the oil spill," said Rep. Lamar Smith of Texas, the top Republican on the Judiciary Committee. "Clearly, we should have explored the consequences of that."

The only agreement on all sides is that companies directly responsible for the Gulf spill should not be allowed to limit damages under outdated laws.

The bill would change two laws from 1920 and a third from 1851, all applying to deaths and legal liability on the high seas. Key provisions would:

_Permit recovery of non-economic damages, including pain and suffering, loss of care, comfort and companionship – not just lost income and funeral expenses.

_Repeal an 1851 limitation on liability, which caps company damages to the post-accident value of a vessel (including an oil rig) and its cargo. Transocean, which owns the Deepwater Horizon platform now at the bottom of the Gulf, has sought to limit its liability to $27 million under this law.

_Prevent parties responsible for oil spills from using bankruptcy to leave victims without adequate legal recourse.

The U.S. Chamber of Commerce wrote lawmakers that the bill should not expose industries unrelated to the spill to new damage claims or additional liability. Thousands of claims, including maritime lawsuits related to asbestos, would come under the new legislation, the Chamber said.

Ray DeLorenzi of the trial lawyers' American Association for Justice, said, "When the Chamber and cruise lines aren't foreign flagging their vessels to skirt U.S. regulations and taxes or exploiting cheap overseas labor, apparently they lobby against Gulf Coasters that simply want to hold BP and other corporations accountable."

Terry Dale, president and chief executive officer of the Cruise Lines International Association, wrote Florida lawmakers that his industry opposed the bill because it "makes sweeping changes in maritime law that affect all sectors of the maritime industry."

He wrote that his industry spent $5.8 billion in the state in 2009 and employed more than 115,000 Florida workers.

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Associated Press writer Stephen Ohlemacher contributed to this report.

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