Congress’ Legislative Response the BP Deepwater Horizon Oil Spill

Owen Poindexter | June 28, 2010

June 28, 2010 - As oil continues to spill into the Gulf of Mexico following BP's Deepwater Horizon disaster, legislators in both parties have been quick to respond. Examining campaign contributions reveals that those receiving the most from big oil predictably are championing bills that go the lightest on the industry. 

A number of bills have been introduced, some specifically targeting this crisis, and others with an eye toward preventing future problems. A question brought up by the set of them is how much of a price BP in particular and big oil in general will pay for this spill, both now and in the future. Another is how members of Congress will balance responding to the major public outcry over the spill, and deference to big oil, a major campaign donor for many of them. The answer will play out in the coming months, and will be a great test of big oil’s lobbying power.

In the House of Representatives, seven bills addressing the question of who is financially liable for the spill have been offered. The Democrats brought five, all from representatives who have received relatively little money from oil companies in the last election cycle, whereas the two Republicans sponsoring bills have taken in significant oil money in the last two years. In the interest of damage control, the industry will be placing its bets on either of the Republican measures.

Bill Cassidy, Republican of Louisiana, received $61,100 from oil companies over the last two years, the 38th most of the House’s 435 members. He sponsored a bill that would require revenue from the oil excise tax only be used towards the Deepwater and future spill cleanup. Depending on legal outcomes use of the funds derived from the excise tax to clean the spill could result in lower out-of-pocket expenses for BP if their financial obligation is determined by remaining cleanup costs. Cassidy sponsored a separate bill that would end the moratorium on deep water drilling.

The other Republican bill is sponsored by Roy Blunt (R-MO), who places third among the GOP and fourth overall in oil money received with $165,850 (the top Republican is Joe Barton who famously apologized to BP for the Obama administration giving it a “shakedown”). His bill addresses the liability limit on oil spills imposed by the Oil Pollution Act of 1990, which caps an oil company’s liability for a spill at $75 million. Blunt’s bill would raise the limit to the higher of $150 million or the sum of the offending company's after-tax profits on its previous four reporting quarters. BP's net income from April 1, 2009 to March 31, 2010 was $20 billion.

On face value, this may look like a surprising bill for an oil advocate to introduce, but compared to the Democrats bills, it is very much a compromise. New Jersey Democrat Rush Holt sponsored a companion bill to one in the Senate, which would raise the liability limit to $10 billion plus the cost of cleanup. Far more than Blunt’s $150 million or 1 year of profits, but perhaps the most lenient of the Democrats’ bills. To date, Holt's bill has attracted 82 co-sponsors (one Republican and 81 Democrats), a sign that it has a good chance of moving forward. Raul Grijalva’s (D-AZ) bill would remove the liability limit entirely. A resolution brought forward by Mary Jo Kilroy (D-OH) expresses the sentiment that BP should reimburse the federal government for all costs associated with the spill. Steve Kagen’s (D-WI) Oil Spill Responsibility Act would require BP to pay reparations to people affected by the spill, and a bill by Chellie Pingree (D-ME) would place a 12.5% royalty on oil removed (or spilled) from the Outer Continental Shelf (which includes the Gulf of Mexico), and apply it retroactively before the spill. Of these five Democrats, Kagen received the most oil money, $6,400, 231st among House members, and less than 1% of his fundraising total for this cycle.

While oil money flows to both sides of the aisle, the GOP has drawn about 70% of it this election cycle. Many Democrats rely on big oil as a major source of campaign funding, but the ones sponsoring these bills are not among them. All of these bills were introduced in the last two months, and none have moved to a floor vote. Which one, if any, will show how much influence big oil has over this Congress.

Contributions shown above are for the last two years of available data, May 6, 2008 - May 5, 2010, including contributions to presidential campaigns.