Menendez Opening Statement on Big Oil Bailout Prevention Act in the Environment and Public Works Committee

Menendez Opening Statement on Big Oil Bailout Prevention Act in the Environment and Public Works Committee

Washington - Today, U.S. Senator Robert Menendez (D-NJ) testified before the Environment and Public Works Committee about his Big Oil Bailout Prevention legislation. He gave the following remarks:

Chairman Boxer, Ranking Member Inhofe, thank you for this opportunity to testify about my bill the Big Oil Bailout Prevention Act.

The bill would increase the cap on economic damages resulting from an oil spill from the current $75 million to $10 billion.

Companion legislation would eliminate the $1 billion per incident cap on the Oil Spill Liability Trust Fund.Together these bills will accomplish three main things.

First and foremost, the bill will make sure that people injured by an oil spill can be compensated for their losses.

Right now fishermen, hotel owners, and other people dependant on clean water and clean shorelines for their livelihood are collectively holding their breath hoping this spill does not destroy fisheries or make landfall again, destroy beaches or estuaries.

At the very least they should feel comfortable that if economic damages do hurt their businesses, they will be made whole.

The Second thing this bill does is ensure that claimants will be made whole quickly.

It is possible that other federal laws or even state law will allow some claimants to be compensated for their losses even if a $75 million cap is hit.

But we do not want another situation like that after the Exxon Valdez where it literally took two decades for some to get paid - and some were never compensated because they gave up.

Under the subsequent Oil Pollution Act, claimants can now quickly and efficiently have their claims processed up to $75 million, but by raising the cap we can ensure all victims can be compensated on time.

Finally, this legislation will ensure that polluters are the ones compensating spill victims-not federal taxpayers.

We all know that when a crisis unfolds, if responsible parties cannot be made to pay for their damages, people will look to the federal government for help.

Taxpayers should not have to pay for the misdeeds of oil companies. Period.

Madam Chairman, as the investigation into this matter goes forward we will see blame cast far and wide for this accident.
There is no doubt that mistakes will be found, that industry and regulators alike will be criticized for their arrogance in thinking a spill could not happen.

But viewed from an economic perspective, the cause of this accident is quite clear.

When you have an industry that does not have to pay the full costs of the damages they cause, they will automatically not invest enough in safety.

If they know they are only on the hook for the first $75 million in economic damages, perhaps they will not invest millions in a new valve or even a few hundred thousand for an acoustic switch.

For a business, decisions are simple. How will each decision maximize their profits? It is time for us to pass the Big Oil Bailout Prevention Act, force companies to bear the full cost of their damages, and therefore give them the economic incentive to be as safe as possible.

Some have suggested that despite the potentially astronomical damages in the Gulf, the bill sets the cap too high. Given the fact that BP has earned $5.6 billion in profits in the first three months of this year, I somehow think they will be OK.

My legislation has received wide support from both House and Senate Leadership, the White House, as well as Senator Nelson, Senator Lautenberg, Senator Whitehouse, Senator Cardin, and Senator Gillibrand among others. I hope we can pass it quickly into law.

In closing, I want to make one last point. Just because this crisis will undoubtedly result in new legislation, more safety regulations, and new safety technologies does not mean that oil drilling will become completely safe. The fact is that oil drilling is inherently dangerous and despite industry statements to the contrary, there is simply no rig too safe to spill.

As we all assess these fundamental risks we need to reevaluate whether it makes sense to subject our most treasured and valuable coastal areas to such a potential disaster.

And this goes beyond the Gulf - in New Jersey, we have a $50 billion economy on the Jersey Shore, which includes thousands of small businesses, fisheries and ecological treasures. Right now, as we gear up for beach season, coastal New Jersey is keeping an eye on the massive spill in the Gulf, hoping that it won't get caught up in the currents that could bring it up the Eastern seaboard. And with the other eye, we're looking at proposals to expand coastline drilling to the East Coast with new skepticism. This spill has taught us that there is no drilling too safe to spill and I will continue to fight to make sure there is no expansion of offshore drilling anywhere near my home state. But for areas that already have drilling, at the very least, we owe it to coastal communities to provide a real safety net if they are damaged through the fault of someone else.

Thank you.