Sen. Inhofe Blocks Vote On Eliminating Spill Liablity Cap

By Siobhan Hughes, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Sen. Jim Inhofe (R., Okla.) blocked an effort by a handful of Democrats Tuesday to establish an unlimited cap on damage claims that BP PLC (BP, BP.LN) and other companies would have to pay for spills, such as the one in the Gulf of Mexico.

The Republican said that eliminating a cap on damage claims “could very well shut out” even the biggest oil companies from drilling in U.S. coastal waters. He said that the cap, currently set at $75 million, “should be much higher” but that “plenty of time remains” to decide on an appropriate threshold.

As oil leaks from a broken BP pipe 5,000 feet beneath the Gulf of Mexico, lawmakers have come under increasing pressure over how high to raise the cap on damages. Earlier Tuesday, Sen. Lisa Murkowski (R., Alaska), who ran into criticism after being the first Republican to block a Democratic plan to raise the cap to $10 billion, said that “maybe it needs to be unlimited.”

Also Tuesday, U.S. Associate Attorney General Thomas Perrelli told a Senate panel that the cap should be removed entirely in some instances, arguing that the government needs to “ensure that there is no arbitrary cap on corporate responsibility for a similar major oil spill.”

He said that “for activities such as deepwater drilling, where there is a risk of a similar major oil spill, we think that there should not be that cap.”