House approves bill to crack down on offshore drilling, remove liability cap in oil spills

The House approved a bill Friday to boost safety standards for offshore drilling, remove a federal cap on economic liability for oil spills and impose new fees on oil and gas production.

Democratic leaders hailed the bill as a comprehensive response to the Gulf of Mexico oil spill and said it would increase drilling safety and crack down on oil companies such as BP. Companies with significant workplace safety or environmental violations over the preceding seven years would be banned from new offshore drilling permits.

Republicans and some-oil state Democrats opposed the measure, calling it a federal power grab that would raise energy prices and kill thousands of American jobs because of the new fees and liability provision.

Rep. Nick Rahall, D-W.Va., the bill's main sponsor, said the legislation would be a tribute to the 11 oil rig workers who were killed when the BP well exploded in April by creating strong new safety standards for offshore drilling, ending the revolving door between government regulators and industry and holding BP and other oil companies accountable for accidents.

"While we may not know the exact cause of the incident, we clearly know what contributed to it. A culture of cozy relationships that had regulators interviewing for jobs on the same rigs they were supposed to be inspecting," said Rahall, who is chairman of the House Natural Resources Committee.

The legislation, which passed 209-193, has yet to be taken up in the Senate, where partisan disagreements will likely delay final consideration of a joint House-Senate bill until after the August congressional recess.

The House bill includes a provision sponsored by Rep. Charlie Melancon, D-La., that would modify a six-month moratorium on deepwater drilling, so that some drilling permits could be approved on a rig-by-rig basis if the Interior Department determines a rig meets new safety requirements. The drilling moratorium imposed by Interior Secretary Ken Salazar would remain in effect, and Salazar would retain power over whether to approve a permit.

The bill also would remove the current $75 million cap on economic damages to be paid by oil companies after major spills and increases to $300 million the financial responsibility offshore operators must demonstrate in most cases. And it would create new "conservation" fees on oil and natural gas extracted from land or water controlled by the federal government.

Those provisions prompted sharp criticism from Republicans.

"In typical Democrat fashion, this bill overtaxes, over-regulates, and costs American jobs," said Rep. John Mica, R-Fla.

Rep. Doc Hastings of Washington state, the top Republican on the House Natural Resources Committee, said removing the liability cap could devastate small and medium-sized drillers.

Hastings called the new fees on oil and gas production a "$22 billion energy tax" that would cost jobs and raise energy prices. The Congressional Budget Office estimates that the $2 per barrel fee on oil and a similar fee on natural gas could bring in $22.5 billion over the next decade.

Earlier Friday, the House approved a separate bill to extend whistleblower protections to oil and gas workers who report hazardous conditions or other problems. The whistleblower bill will be added to the oil spill legislation when it is sent to the Senate.

"A whistleblower may be the only thing standing between a safe workplace and a catastrophe," said Rep. George Miller, D-Calif., the bill's sponsor. "No worker should ever have to choose between his life and his livelihood."

Rep. Jay Inslee, D-Wash., said the bill setting new drilling standards and removing the liability cap was the least Congress could do to respond to such a major catastrophe.

Rahall said the legislation would end a "trust-but-don't-verify" attitude about safety where drilling plans were rubber stamped by federal regulators and industry often wrote its own rules.

The bill would put into law actions already taken by the Obama administration to break Interior's former Minerals Management Service into three parts, separating safety enforcement and regulation from economic activities such as issuing oil leases and collecting royalties.

Since the BP spill the agency has been renamed the Bureau of Ocean Energy Management, Enforcement and Regulation, and a new director, Michael Bromwich, has been appointed.

Associated Press writer Frederic J. Frommer contributed to this story.