Oil spill penalties should go to Gulf Coast, advisors say


Congress should pass laws allowing the money to be used for economic and environmental restoration, an Obama-appointed panel says. The money would come from BP and others; it’s unclear how much.

Billions of dollars in penalties that the federal government is expected to collect from BP for its role in the Deepwater Horizon oil spill should be directed toward restoring the Gulf Coast economy and environment, an advisory group appointed by President Obama said Tuesday.

Under current law, penalties levied against BP and others for violating the Clean Water Act would go into the Oil Spill Liability Trust Fund, to be used in any future oil spills.

But Navy Secretary Ray Mabus, the former Mississippi governor appointed by Obama to lead the gulf restoration plan, urged Congress to pass new laws that would “dedicate a significant amount” of the penalties to the BP spill.

He called for putting the Deepwater Horizon penalties into a new fund to be administered by a Gulf Coast Restoration Council that includes state and federal authorities. The money would be used to renew the region’s environment and economy and address the mental health needs of its residents, Mabus said.

The restoration planning team also recommended that affected states receive a smaller percentage of the penalties to jump-start their own restoration efforts.

A consortium of major environmental groups, including the Environmental Defense Fund and the National Wildlife Federation, praised the recommendations. BP did not respond to requests for comment.

But it remains to be seen if Congress will take up the panel’s recommendations. The House has passed legislation to improve offshore drilling safety, but the Senate has yet to vote on the legislation. The House legislation does not specify how penalty money should be spent.

It is unclear whether the Senate will vote on the issue at all in the lame-duck session after the November election. If Congress or even one chamber changes hands, as many predict, it might stall the drive to tighten regulation of the oil and gas extraction industries and pursue large-scale environmental goals.

Much depends on how the Republican governors weigh in on the recommendations, said Mark Davis, director of the Tulane Institute on Water Resources Law and Policy.

Mabus said that as his team pulled together the report, he kept senators from the five gulf states and the House members representing coastal areas of those states apprised of the findings. Environmental Protection Agency Administrator Lisa P. Jackson, who participated with Mabus in a phone call with reporters, said that she would soon reach out to congressional leadership on the issue.

The penalties in the oil spill, the largest in American history, could be vast. According to the Clean Water Act, responsible parties in a spill could pay between $1,100 and $4,300 for every barrel of oil spilled. In the case of the Deepwater Horizon, which spewed 4.9 million barrels, the total could be from $5 billion to $21 billion.

The exact amount would depend upon whether BP is found grossly negligent, the environmental consortium said in its statement.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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