Reid to use spill to fashion new energy and climate bill

(Photo of Harry Reid from Flickr and talkradionews.)

The Great Gulf Oil Spill of 2010 should make it easier to pass climate legislation to get us off fossil fuels, now that we’ve seen the damage deepwater drilling can do. Right?

Not necessarily. Pundits have been saying the Kerry-Lieberman bill will lose the possibility of any GOP support if it backs away from more offshore drilling, and it will lose Dem support if it encourages it. The lines have hardened.

So how can Dem leadership improve its chances of passing a climate and clean energy bill before the November elections, when Republicans are sure to pick up more seats?

Majority Leader Harry Reid (D-Nev.) has had an “aha moment.” He’s going to turn this into a Spill Bill, with emphasis on holding oil companies accountable and reducing their tax breaks. With public concern about the spill running high, detractors would have more trouble voting against such a bill, he reasons.

Last week Reid sent a memo to eight committee chairmen with a role in climate and energy, asking them to put forth ideas about how to make oil drilling safer, make the companies pay for damage they cause and reduce some of the tax breaks they gained over the past decade.

Reid wants to bring a bill to the floor in July. Whether it will be a combination of oil spill and Kerry-Lieberman or oil spill and energy-only (no cap, no trade, no carbon limit) is still to be determined.

President Obama voiced his support for a comprehensive bill of the Kerry-Lieberman variety last week, but he may have to settle for less.

Reid will meet with the relevant committee chairs next Thursday to talk about how to proceed.

However they shape it, a climate/clean energy bill is going to be hard to pass before November.

My guess is they’ll end up with a Spill Bill that also encourages clean energy (perhaps with a renewable electricity standard) and other incentives to produce and use clean energy – and probably nuclear power. That may be the only way to get 60 votes, and even that will be hard.

Big Oil still has many supporters. Witness calls from Louisiana Gov. Bobby Jindal (R) and former Alaska Gov. Sarah Palin (R) to drill off their coasts, because their economies depend on it.

Stay tuned.

(Sources: Mother Jones, Politico, E&E News PM, Climate Progress)

White House asks Congress for help for oil spill victims

(Photo of White House from Flickr and photographer dcJohn)

The White House on Friday asked Congress to pass a number of measures to speed up help for those hurt by the Gulf oil spill. The $118 million package included:

• Lifting the $75M cap on BP’s liability (didn’t say by how much).
• Increasing the oil tax 1 cent per barrel to better fund the Oil Spill Liability Trust Fund.
• Raising the trust fund cap per incident to $1.5B from $1B.
• Allocating $15M to guarantee compensation for fishermen.
• Providing $2M to inspect seafood.
• Expediting unemployment compensation and expanding it to cover self-employed fishermen.
• Expanding food stamps.
• Granting $5M in economic development.
• Authorizing the Agriculture Dept. to distribute free food to those in need.
* Giving the Interior Dept. $29M to begin more inspections, enforcement and study of potential problems.
* Allowing more time for environmental reviews before granting exploration permits.

These measures would be part of a one-time supplementary appropriation bill that funds the wars in Iraq and Afghanistan.

Congressional action
The Senate Appropriations Committee quickly OK’d $68 million of the request, with the possibility of more to come following review by appropriate committees. The panel approved the $29 million for Interior to do additional inspections of oil rigs and $2 million for seafood inspection, among others.

An amendment from Sen. Frank Lautenberg (D-N.J.) to raise the liability to $10 billion was delayed until the bill reaches the Senate floor. Three Gulf Coast Senators presented an alternative for the liable company to pay up to $150,000 or the past year’s profits, whichever is more, instead of such a high cap. But Democrats have rejected that as being insufficient, saying all companies may not have as big a profit as BP did the last 12 months.

Other legislation
A flurry of other bills dealing with the spill are in the hopper.

Alaska’s two Senators are calling for an increase of 1 cent per barrel for the trust fund, rather than lifting the liability cap for each company.

Sen. Mary Landrieu (D-La.) wants technical assistance grants to help businesses harmed by the spill.

Rep. Anh “Joseph” Cao (R-La.) wants more revenue sharing with states from oil and gas leases in the Gulf.

Sens. Sheldon Whitehouse (D-R.I.), Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) want to establish an independent nonpartisan commission to investigate the spill.

Whitehouse, Menendez and Sen. Patrick Leahy (D-Vt.) are calling for removal of a cap on punitive damages.

(Sources: E&E Daily, Greenwire)

Will BP pay for all the oil spill cleanup plus damages?

(Image from Flickr and Mike Licht, NotionsCapital.)

Who will pay for the damage caused by the Great Gulf Oil Spill of 2010?

Everyone is saying BP. As majority lease owner of the Deepwater Horizon oil well that is gushing a mile down on the ocean floor, BP owns most of the responsibility. BP executives have repeatedly said the company will pay for the cleanup and “legitimate claims” for economic and other damages.

But that’s not the whole story. Anadarko and Matsui, who own 35% of the lease, will have to pick up their share of the spill cleanup.

A 1990 law, enacted after the Exxon Valdez spill in Alaska, said the companies with the oil leases would have to pay for the cleanup, plus up to $75 million for economic and natural resources damage. BP has acknowledged that this spill, really a gusher, will cost a lot more than that.

Raising the liability cap
Some senators are trying to raise the cap from $75 million. There are several proposals. Sen. Bob Menendez (D-N.J.) tried to fast-track an increase to $10 billion. But it was blocked by Sen. Lisa Murkowski (R-Alaska). Others, from the Gulf Coast, say it should be one year’s profit or $150,000 million, whichever is less – to protect the little guy (guy meaning oil company.) BP is expected to see a profit of $23B this year.

The 1990 law also set up an Oil Spill Trust Fund to help pay for major spills. With a tax of 8 cents a barrel the fund is now at $1.6B, but by law just $1B of that can be spent on any one event.

Others involved in the accident, who will probably have to pay something, are Transocean, owner of the rig; Halliburton, who cemented the well, and Cameron International, maker of the faulty blowout preventer.

Then there's insurance
But they won’t have to pay all of it themselves. Each has insurance, and that insurance has re-insurance. The loss to insurance companies for this incident is estimated at between $1.5B and $3.5B by Swiss Re, whose own losses in the accident are estimated at about $200 million. The higher $3.5B figure could be reached if the oil goes ashore, which triggers another section in the policy.

Total insurance losses to date are about $700 million. The rig itself was insured at Lloyds of London for $560 million, which has already been paid, according to The Guardian in England, where BP is headquartered.

BP said at mid-week it had paid about $1.5 million in claims to fisherman and had not yet questioned the legitimacy of any claims. It also paid $25M in grants to each of the four affected states.

But government and vulnerable businesses, like tourism and fishing, are worried payment may be slow and not in full.

They also are concerned because BP asked out-of-work fishermen to sign waivers not to sue before hiring them to help with the cleanup.

In the Valdez case, some claims weren’t paid for two decades and the Supreme Court reduced punitive damages from $2.5B to $500M at the end of long drawn-out court fight. NOAA estimates there is still 21,000 gallons of oil on the Alaska shoreline.

(Sources: E&E Daily, Greenwire, E&E TV, LA Times, New York Times, The Guardian, The Hill, National Post,
PlanetArk. )

Did Lieberman really say, “Accidents will happen” about oil spill? Lines harden on climate bill over offshore drilling

(Photo of Deepwater Horizon explosion that lead to massive oil leak from Flickr and SkyTruth)

Sen. Joe Lieberman (I-Conn.) was explaining Tuesday why expanded offshore drilling would not be taken out of the climate bill, despite some Dem Senators’ calls for its removal in light of the horrendous ongoing spill fouling the Gulf of Mexico.

Sen. Lieberman (I-Conn.) told reporters, “This terrible accident is very rare in drilling. Accidents will happen. You learn from them and you try to make sure they don’t happen again.”

So, let’s see. Of the three sponsors of the Senate climate bill, who have worked long and hard to craft something palatable to all parties, the Republican, Lindsey Graham (S.C.) dropped out about a week ago in a snit because immigration reform might come up before climate. Now Lieberman is insisting on keeping offshore oil in the bill despite the Gulf disaster.

And many likely supporters of the bill (all of whom are Dems because they’re the only ones supporting it) are now saying “no” to the offshore drilling section.

Sens. Bill Nelson (D-Fla.), Robert Menendez (D-N.J.) and Frank Lautenberg (D-N.J.) spoke out a news conference, backed up by the heads of some major environmental groups.

Nelson said if he had to filibuster to stop the bill, he would.

And a group of Dems, in a meeting Tuesday with chief sponsor John Kerry (D-Mass.) found themselves sharply split on the issue, according to Majority Whip Dick Durbin (D-Ill.), who was there.

Doesn’t look too good. The Kerry-noGraham-Lieberman alliance and their efforts to pass a climate bill seem to be falling apart. The only thing that could have been worse is if they’d had that press conference with heads of big oil companies in support last week as planned.

Sen. Jay Rockefeller (D-W.Va.) said, “Personally I will have a very hard time ever voting for offshore drilling again.” Of course, he was already having some trouble voting for a bill that targeted coal.

Nonetheless, Majority Leader Harry Reid (D-Nev.) was upbeat Tuesday, saying that perhaps the bill would get a boost from the oil spill. Calling the Gulf spill “just staggering,” he said maybe it could get Senators interested in doing something about energy.

I dunno. Doesn’t look to good to me.

(Sources: E&E Daily, E&E News PM, Associated Press, CllimateWire, the Hill)