RESTORE Act Funds, Which Would Help Fix Gulf Oil Damage, Now in Jeopardy

Were celebrations about passage of the RESTORE Act in June premature?

That question, which some veteran conservationists asked when the bill was passed in June, is beginning to grow after recent news accounts suggest the direction and tenor of negotiations between oil giant BP and the U.S. Justice Department are changing.

It was in June that Congress passed the bill, which would send 80 percent of fines BP pays for violation of the Clean Water Act to the five Gulf states, rather than have the entire amount go into the general fund, as required by current law. While the purpose of the bill cheered coastal advocates, experience has taught them never to count fine totals until deals were actually done–or sentences handed down.

Two news items last week now make that caution appear wise.

The first came from England, where The Times of London reported BP is balking at the DOJ’s insistence on a $20 billion price tag for the injuries to the Gulf ecosystem and industries form fishing to tourism. The Clean Water Act assesses fines in oil spills on a per-gallon basis. The government has long maintained the total volume of the spill was 4.9 million barrels, or 204 million gallons, while BP’s experts say the figure was much lower.

Optimists in the conservation camp had hoped BP would settle for the larger figure – which would be around $20 billion–simply to get rid of the suit. But the London report reveals the company has been playing hardball, insisting instead on a liability of $15 billion, hoping to settle for $18 billion. Now a segment of BP’s board wants to hold out for the lower figure.

The second disheartening piece of news came from multiple media reports last week that had the Justice Department open to suggestions by BP that a portion of its fine be paid under the separate Natural Resources Damage Assessment process–which assigns penalties for damage to all public resources, rather than a fine for violation of the Clean Water Act. The benefit for the oil company is that NRDA payments are tax deductible.

So the company might be offering to pay a larger overall fine, if it can funnel the figure through NRDA. That set alarm bells off across the conservation and political communities in the south–which are already planning how to spend 80 percent of what they hoped would be a $20 billion CWA check.

That fear produced a rare moment of bipartisanship as the senatorial delegations from all five southern states fired off a letter to President Obama asking him to hold firm on his RESTORE Act support.

No state is more alarmed than Louisiana. Not only did 80 percent of BP’s oil come ashore on its coast, which contains the most valuable estuaries in the Gulf, but it’s hoping the CWA fines can jump-start funding for its project to stop coastal land loss–a life-and-death struggle for the southeastern part of the state.