Murkowski, Oil Lobby Block Effort To Make Industry Fully Pay For Spills

May 14, 2010 6:01 a.m.

Even in a Washington as dominated by corporate money as today’s, it’s not often that you see a lawmaker side with financial backers over the public interest as brazenly as Alaska’s senior senator did yesterday.

In the wake of last month’s catastrophic Gulf Coast oil spill, Sen. Lisa Murkowski blocked a bill that would have raised the maximum liability for oil companies after a spill from a paltry $75 million to $10 billion. The Republican lawmaker said the bill, introduced by Sen. Robert Menendez (D-NJ), would have unfairly hurt smaller oil companies by raising the costs of oil production. The legislation is “not where we need to be right now” she said.Murkowski’s move came just hours after Washington’s top oil lobby, the American Petroleum Institute (API) expressed vociferous opposition to raising the cap. It argued that doing so would “threaten the viability of deep-water operations, significantly reduce U.S. domestic oil production and harm U.S. energy security.” API’s membership includes large oil companies like ExxonMobil and BP America, as well as smaller ones.

An API spokeswoman told TPMmuckraker that the bill represented “a knee-jerk reaction that could have unintended consequences.” she added: “It’s important that the Senate did vote it down.”

In fact, the Senate didn’t vote on the bill. Thanks to Senate procedures, Murkowski was able to block it simply by objecting to a voice vote request on the bill.

Like numerous Alaska lawmakers, Murkowski counts the oil and gas industry as a major backer. According to online records, it has contributed over $426,000 — more than any other industry aside from electric utilities — to her campaigns over the course of her career.

It’s not clear that Murkowski’s move will end up affecting how much BP and Transocean pay. The White House told TPMmuckraker last week that if the courts find BP to have been “grossly negligent or to have engaged in willful misconduct or conduct in violation of federal regulations,” — which would seem likely — then the $75 million cap disappears. And there will likely be further efforts in the coming days to raise the cap.

Murkowski and her state’s other senator, Democrat Mark Begich, last week proposed increasing the size of a federal spill response fund by raising the tax per barrel of oil by a penny, from 8 to 9 cents. And she said yesterday that at some point in the future lawmakers should “look at the liability cap and consider raising it.” But she didn’t say when might be appropriate time to do that.

Damage from the spill – which now looks like it could be even worse than either BP or the government have publicly estimated — could reach into the billions of dollars, by some estimates.

Menendez was scathing in response to Murkowski’s move, telling reporters: “Either you want to fully protect the small businesses, individuals and communities devastated by a man-made disaster — this is not a natural disaster; this is a man-made disaster — or you want to protect multibillion-dollar oil companies from being held fully accountable. Apparently there are some in the Senate who prefer to protect the oil companies.”

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