James Inhofe Opening statement
The Big Oil Bailout Prevention Liability Act of 2010
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Thank you, Madam Chairman, for scheduling today’s hearing to examine the complex issues surrounding the strict liability limits in the Oil Pollution Act of 1990.
On May 27, President Obama held a press conference to explain his role in addressing the BP spill. He said his Administration is “relying on every resource and every idea, every expert and every bit of technology, to work to stop it. We will take ideas from anywhere, but we are going to stop it.”
When I heard this, I thought, “That’s great, Mr. President, you’re focused on exactly what you should be focused on.” Of course, we in Congress need to do the same. As I’ve said during previous hearings, Congress should focus on three priorities. We need to:
- Mitigate and contain the environmental impacts;
- Provide assistance to the Gulf’s affected commercial and recreational industries; and
- Investigate the causes so we can prevent a disaster of this kind from happening again.
Staying focused will help us make prudent decisions. Which is why I was discouraged when President Obama, in the same press conference, veered off course: he said the spill occasioned passage of global warming legislation. He referred approvingly to the Waxman-Markey cap-and-trade vote in the House last year.
This raises obvious questions: How would cap-and-trade, a massive energy tax on consumers, stop the spill? How would it clean up the spill? How would it help those affected by the spill? And how would it help us determine what happened so we can prevent it from happening again?
Well, it wouldn’t. So I respectfully call on President Obama-and my colleagues here in the Senate-to concentrate on fixing this problem. Let’s avoid getting sidetracked by cap-and-trade or other issues that will needlessly complicate efforts to address real problems.
And I would add this: let’s avoid overreaching. Now this incident is serious-people died, people’s economic livelihoods are at stake, and the environment is being harmed. But I am concerned that the President’s moratorium on deepwater drilling could harm the economy in the Gulf. The Louisiana Department of Economic Development estimates that the President’s active drilling suspension alone will result in a loss of 3,000 to 6,000 Louisiana jobs in the next few weeks and over 10,000 Louisiana jobs in the next few months.More than 20,000 jobs are at risk over the next 12 to 18 months.
So, today’s hearing on S. 3305 is a welcome step, Madam Chairman. Two weeks ago, I had to object twice to unanimous consent agreements to debate S. 3305 on the floor. We hadn’t had a hearing on it-that’s one of the reasons I objected. This bill involves complex issues that must be understood before we act. If we get this wrong, we could set back this nation’s energy future for decades.
Now why do I say that? Well, it’s what the experts are telling us. A recent letter from Alliant Insurance, which insures offshore oil and gas operations, sums it up well:
“If the liability cap is increased to the levels we understand are under consideration ... in our view only major oil companies and NOC’s (National Oil Companies) will be financially strong enough to continue current exploration and development efforts.”
This letter was in reference to S. 3305’s $10 billion liability cap on economic damages. The insurers believe smaller U.S. independent producers won’t be able to drill with that limit. And bear in mind that “National Oil Companies” means those that are state-owned, such as the Chinese Offshore Oil Corporation. Do we really want China drilling in place of America’s independent producers?
Alliant is not alone in holding this view. Consider this statement from INDECS insurance consultancy: “If we have understood the proposals correctly, then it would appear to us that the proposed bill will not act as ‘Big Oil Bailout Prevention Liability Act of 2010’, rather making it impossible for anyone other than ‘Big Oil’ to operate.” I ask that this letter be submitted for the record. Lockton Companies insurance brokerage has said much the same thing: “Without insurance, many of the active exploration and production companies would be unable to operate in the Gulf of Mexico. This decision will affect thousands of people, their families and their local economies.” I ask that this letter be submitted for the record.
Madam Chairman, our response to this tragedy should be measured, and it should be based on facts. How we respond could have far-reaching consequences for the Gulf and the nation. There’s simply too much at stake to get this wrong.