House Votes to Lift Oil Spill Liability Cap

Legislation that passed the House of Representatives on Friday would, among other things, eliminate the current $75 million cap on liabilities related to oil spills. The Consolidated Land, Energy, and Aquatic Resources Act of 2010, passed in response to the Gulf of Mexico oil spill, overhauls the nation's offshore drilling regulations, increasing regulatory oversight and safety measures. But the most prominent provision would require oil companies to pay the full cost involved with any spills, and does not cap liabilities. The final vote was 209-193. The Senate has a similar bill pending.

Advocates for the bill say that removal of the liability cap will save taxpayers money that the federal government would otherwise have to pay to clean up after disasters such as BP's (BP) Deepwater Horizon leak. Opponents say that it could prevent smaller American companies from drilling offshore at all due to concerns about the cost of an accident. According to The Wall Street Journal, "Independent oil and gas producers fear being put out of business. Insurers have indicated they will not offer offshore-drilling insurance without a cap on damage claims. The result would be to leave offshore drilling to state-owned and giant corporate oil companies, which can self-insure against damages."

The CLEAR Act's future in the Senate is uncertain. Democratic representatives from oil-producing states in the House crossed party lines to vote against the bill, and there is some question of whether Democrats can pull together the 60 votes needed to advance the legislation in the Senate. Congress is scheduled to begin its August recess next weekend.