2ND UPDATE: US House Leaders Propose Lifting Liability Limits On Oil Cos

(Updates to include additional details on bill proposals.) By Tennille Tracy and Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--U.S. House Democrats unveiled a bill Monday that would eliminate the cap on damage claims that BP PLC (BP, BP.LN) and other oil companies would have to pay for spills such as the one in the Gulf of Mexico, setting the stage for a vote Friday on the first chamber-wide response to the worst offshore oil spill in U.S. history. Under the bill, introduced by Rep. Nick Rahall, a West Virginia Democrat who chairs the U.S. House Committee on Natural Resources, offshore companies will be responsible for 100% of damages and cleanup costs caused by spills for which they are responsible. The bill also prohibits the federal government from granting new drilling permits to companies that have violated safety or environmental laws within the last seven years, or suffered more than 10 fatalities at one of its production or development facilities. There were 11 people who died when the Deepwater Horizon rig exploded in April. Similar language was introduced by Rep. George Miller (D., Calif.) earlier this year as a way to prohibit BP from obtaining new drilling permits in the Outer Continental Shelf. The bill also imposes new safety standards for offshore drilling, increasing inspections and creating stiffer penalties for violations. It also requires third-party certifications for critical equipment and demonstrations of companies' ability to respond to future blowouts or major spills. The measure also overhauls the organization of the former Minerals Management Service, which has since been renamed the Bureau of Ocean Energy Management, Regulation and Enforcement. The U.S. House is expected to vote on the bill Friday after weeks of work on legislation that would address the Gulf of Mexico spill. In the U.S. Senate, Majority Leader Harry Reid (D., Nev) is expected to introduce an energy bill that will also include measures to address the oil spill. -By Tennille Tracy, Dow Jones Newswires; 202-862-6619; tennille.tracy@dowjones.com (END) Dow Jones Newswires July 26, 2010 21:25 ET (01:25 GMT)