US Energy Adviser Browner Backs No Cap For Oil-Spill Liabilities

By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The White House's top energy and climate adviser said companies drilling for oil offshore should be able to pay for any damages caused by spills, even if removing a cap on damage claims means small companies can't operate offshore. "Maybe this is a sector where you really need large companies who can bring to bear the expertise and who have the wherewithal to cover the expense if something goes wrong," Carol Browner, special adviser to President Barack Obama on energy and climate change, said in "The Big Interview," a WSJ.com video interview that will be posted online at 10 a.m. EDT Friday. Eliminating a $75 million cap on liability for oil spills "will mean that you only have large companies in this sector," she said. On other topics, Browner said the Obama administration will accept almost anything in the form of an energy bill this year "just to get started." She said the administration is mindful of the effects of a deep-water-drilling moratorium and wants "to get people back to work" but also needs to understand what caused the BP PLC (BP, BP.LN) oil spill in the Gulf of Mexico. She cited widespread frustration over the spill and said that while BP has more damages to pay, the company and can afford the costs. The administration has imposed a moratorium on deep-water drilling while a presidential commission conducts a six-month investigation of the BP disaster. Oil companies have been pushing the Interior Department to lift the moratorium, saying that new safety regulations could allow drilling to resume. Browner said lifting the moratorium will depend on the development of better spill-response plans and an understanding of the cause of the Deepwater Horizon explosion. "We want to get the answers as quickly as possible," she said. "We're keenly aware of the impact of the moratorium." Discarding the cap for oil spills is a potent issue on Capitol Hill as oil continues to leak from the Gulf well. Small companies have warned that discarding liability limits would shut out all but the biggest companies from offshore drilling, partly because obtaining insurance would become impossible without liability limits. BP already has paid out more than $132 million in damage claims and has promised to honor all legitimate claims despite the statutory liability cap. Under pressure from the White House, the company also has promised to put $20 billion into a fund to compensate for economic losses. "There are still other damages to come--for example, natural-resource damages that BP will ultimately have to pay," Browner said. Oil is expected to continue leaking until at least mid-August, when the first of two relief wells is supposed to shut off the well. "There will be oil. Even with all of the containment systems in place, there's probably some that will leak," she said. "That's why these relief wells are so important." Still, Browner said BP is a healthy company with a lot of assets. She added that "we don't want to see BP go out of business, because we've got lots of claims that need to be paid." Senate Democratic leaders are planning to use a broader energy package as a vehicle to discard the liability cap. The energy package has stalled in the face of opposition from coal and manufacturing states to mandatory reductions in greenhouse-gas emissions. Last year, the Obama administration called for economy-wide emissions reductions, but the White House has become increasingly willing to consider a scaled-back approach, suggesting action on an energy bill may be possible this year. "There's a real interest in getting started, and sometimes you can't get everything that you want but you can get something that you need," Browner said. "Something that gets us started is something we will take seriously," Browner said. She suggested that Obama wasn't ready to give up on setting a cap on carbon-dioxide emissions. "He continues to believe that a cap on carbon is very, very important." Browner said she didn't know why some Gulf Coast governors haven't activated as many National Guard troops as authorized by the federal government to handle tasks like dealing with tar balls washing up on shorelines. Some 17,500 troops have been authorized, but only about 1,600 have been called up, she said. "The governors have not chosen to take advantage of it. I will be honest with you--it is a mystery to us," Browner said. -By Siobhan Hughes, Dow Jones Newswires; (202) 862-6654; siobhan.hughes@dowjones.com (END) Dow Jones Newswires July 02, 2010 09:18 ET (13:18 GMT)