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Gulf oil spill: Senators disagree over liability limits

May 16, 2010 |  2:20 pm

Senate leaders disagreed Sunday on how hard the government should press oil companies to pay for oil spills such as BP's well blowout in the Gulf of Mexico.

Sen. Charles E. Schumer of New York, the third-ranking Democrat in the Senate, endorsed lifting the $75-million congressionally mandated cap on oil company liability, but Senate Republican leader Mitch McConnell of Kentucky said caps could be an important incentive to keep the private sector exploring for energy resources.

“The danger in taking the cap too high is that you end up with only massive, very large oil producers able to meet that cap and produce in the gulf,” McConnell said on NBC's "Meet the Press."

The minority leader said distress over the leak should not lead to policies that dramatically limit offshore drilling.

“As horrible as this is, it's important to remember that we get 30% of our oil from the gulf, and if you shut that down, you'd have $14 [per gallon] gasoline,” McConnell said.

McConnell and others noted that BP had pledged to pay costs incurred by the spill, regardless of the cap.

Current law limits oil company liability in such disasters to $75 million. But Senate Democrats, led by Sens. Robert Menendez of New Jersey and Bill Nelson of Florida, propose replacing it with a $10-billion cap and a fund to pay additional costs of such disasters.

“BP says it'll pay for this mess,” Nelson said recently. “Baloney. They're not going to want to pay any more than what the law says they have to, which is why we can't let them off the hook.”

McConnell called the spill “an environmental disaster of gargantuan proportions.” But he cautioned against blaming the oil industry alone, vowing that Republicans will ask what role the Obama administration had in regulating the drilling and approving an inadequate spill response plan.

“The administration's involvement in this will be a big part of the inquiry” that Congress will launch into the spill, McConnell said.

The exchange between Schumer and McConnell on "Meet the Press" came Sunday morning as workers in the gulf made a attempt to siphon spilling oil to a recovery ship by inserting a tube into the breached pipe that has been spewing 210,000 gallons of oil a day since the Deepwater Horizon explosion on April 20 killed 11.

The Obama administration has pressed BP to clarify whether it would attempt to restrict how much the company will pay for the clean up and resulting damage. Homeland Security Secretary Janet Napolitano and Interior Secretary Ken Salazar wrote BP Chief Executive Anthony Hayward to make the company's intentions clear.

Hayward and other executives have said they are taking full responsibility for cleaning up the spill and will pay what they call “legitimate” claims.

On Friday, President Obama denounced a “cozy relationship” between oil companies and federal regulators and called for a more intensive system for reviewing drilling permits.

--Tom Hamburger, reporting from Washington
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