White House Unveils New Bill for Oil Spills
WASHINGTON (Dow Jones Newswires), May 12, 2010
The White House on Wednesday unveiled legislation it is sending to Congress to allow the federal government to collect more damages from companies responsible for oil spills as a sunken rig in the Gulf of Mexico continues to spew thousands of gallons of oil along the Louisiana coast.
The legislation comes as President Barack Obama said he is deeply frustrated the leak hasn't been plugged and his administration
continues to try to show it is aggressively responding to the disaster. The bill includes raising the tax companies pay for producing oil in the U.S. by 1 cent.
On Tuesday, the administration said it is splitting the main agency that polices deep-water oil drilling amid concerns the regulator has
inherent conflicts because it collects billions of royalties from the oil companies it is charged with overseeing.
In addition to changing a cap on damages the government can collect, the legislation would provide support for fishing industries and
people who lose their jobs as a result of an oil spill--two problems facing Louisiana and other Gulf states that count shrimp among their
main exports and rely on beaches to attract tourists.
The White House isn't proposing a specific increase in the cap on damages, saying instead the administration will work with Congress.
Proposals in Congress already would raise the cap to about $10 billion from $75 million.
The legislation, if passed, would also result in an immediate 1-cent increase in the per-barrel tax on oil produced in the U.S. That would
bring the total per-barrel tax to 9 cents from the current 8 cents. The legislation would raise the tax by another cent to 10 cents per
barrel in 2017, Acting Deputy Director of the Office of Management and Budget Jeff Liebman said Wednesday.
The money collected from these taxes is used to help pay for removal and response costs incurred by the U.S. Coast Guard and Environmental Protection Agency under the Oil Spill Liability Trust Fund. The tax increase would raise the amount in the fund to $1.5 billion from $1 billion.
The bill would result in an increase of $118 million in discretionary spending by several federal agencies. The Interior Department, which oversees U.S. oil drilling, would get $29 million to increase U.S. oil inspections and to boost overall enforcement. The Food and Drug Administration would get $2 million to test and ensure seafood from the area is safe to eat.
The Obama administration has stressed that BP PLC (BP), the company that operated the deep-water oil rig that exploded last month in the Gulf, will bear the costs of the vast spill despite a cap on damages written into law several decades ago.
It is unclear what caused the rig to explode, and little clarity came from a Senate hearing Tuesday where officials from BP, Halliburton and Transocean testified. The companies pointed fingers at one another.
Another hearing on the Gulf disaster is scheduled for Wednesday in the House.
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