Sen. Menendez On Efforts To Raise Oil Liability Cap

Robert Siegel talks to New Jersey Sen. Robert Menendez about his efforts to raise the liability cap on oil spills — from $75 million to $10 billion. The draft law would not only affect future spills, but past spills as well — including the BP spill in the Gulf.

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ROBERT SIEGEL, host:

Ever since Congress passed the Oil Pollution Act of 1990, there's been a cap on liability for drilling accidents: $75 million. And that means that while BP would be required to pay for the cleanup, it would not necessarily have to pay 100 cents on the dollar to all the businesses and property owners who might win lawsuits claiming that they were damaged by the spill - that amount is capped.

There's a move in Congress to raise the cap from $75 million to $10 billion. New Jersey Senator Robert Menendez, a Democrat, is one of the leaders of that effort. Welcome to the program. And, first, are you proposing, Senator Menendez, that the cap be lifted to apply to this oil spill? Or would you assume that BP operated under the old law and they enjoy the protection of the old law?

Senator ROBERT MENENDEZ (Democrat, New Jersey): Well, I am proposing that we change the law and it actually would encompass this particular incident, although not unique to BP. And we have a history of being able to do that under the Super Fund Law, which was a law that was created to cleanup toxic waste sites. That law came into effect and actually encompassed all those who had polluted sites in the country and became responsible parties. That law was litigated and it still stands today.

SIEGEL: You're saying there wouldnt be a problem in its being retroactive in its effect...

Senator MENENDEZ: I certainly dont believe so. The fact that we've raised the cap, I think, would still sustain itself as it relates to this incident.

SIEGEL: Raising a cap from $75 million to $10 billion is more than just a quantitative adjustment. Can you explain what is fundamentally different about the thinking that went into the cap back in 1990 and your thinking today?

Senator MENENDEZ: Well, obviously the nature of deepwater drilling has changed. I mean, we are going greater and greater into the ocean floor. The risks are greater and greater. And so, you know, we also look at the reality that the consequences of the damages to commercial fishermen, coastal communities and tourism, and a whole host of other entities, are obviously in dollar terms much more significant than originally when the law was passed.

And lastly, when BP made $5.6 billion in the first three months of this year in profits, I think those companies can sustain a larger liability cap. And it also is a way of disciplining companies to think about what they do, so that we dont have a spill in the first place.

SIEGEL: Senator Menendez, I'd just like you to respond to what the Senate Republican leader, Mitch McConnell, said yesterday about this when he was asked about it on "Meet the Press." He said: The danger, of course - Im quoting now, "is if you raise the cap too high there will be no competition in the Gulf, and you will leave all the business to big guys, like BP."

Senator MENENDEZ: Well, you know, at some point there are a lot of smaller companies than BP, but they're not mom and pop companies as we would think of a mom and pop store on Main Street. Several of these independent operators are, you know, $40 billion in net worth. And lastly, the question begs the issue as a public policy, just because we want smaller operators to be able to operate, if they create the same risk would we simply say that the liability should now become that of the public and of all of the Gulf State residents, and of the federal government, because they're smaller?

I think you have to think about what is not just the upside, but you have to think of the downside. And you can't privatize profit but then collectivize risk.

SIEGEL: Are you prepared to go well, to carry this one step farther? Which is to say those who drill should be on the hook for the huge potential damages they might inflict, and we should all be prepared to pay more for gasoline at the pump because inevitably theyll pass that cost onto us?

Senator MENENDEZ: First of all, it presumes that we have spills. And hopefully, you know, my goal, number one, is I oppose offshore drilling, certainly in areas of the country like along my home state of New Jersey. And we need to be moving more progressively toward renewable energy sources like wind, solar, biomass and other energy sources that can change our energy paradigm and not have us go after the addiction of oil and the consequences that flow from it.

SIEGEL: Well, Senator Menendez, thank you very much for talking with us today.

Senator MENENDEZ: Thank you.

SIEGEL: Thats New Jersey Democratic Senator Robert Menendez, one of the sponsors in the Senate of raising the cap on liability for oil drilling accidents from $75 million to $10 billion.

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