Gulf States Pressure Obama Over BP Funds

Senators from the U.S. Gulf Coast have urged President Barack Obama to ensure that any legal settlement for the 2010 Gulf of Mexico oil spill does not undermine a recently passed law that would funnel billions of dollars worth of fines to their states.

The U.S. Justice Department and BP Plc have discussed a potential settlement for damages that could be worth billions of dollars to states. While the details of those discussions have been kept under wraps, Democratic and Republican senators from the region said they have “grave concerns about developments of the settlement terms” cited by media outlets.

Senators pointed to press reports that the Justice Department and BP settlement terms would maximize penalties to be paid under Natural Resource Damage assessments, and minimize those under the Clean Water Act.

Senators told Obama the trade-off would mean less money allocated through a formula lawmakers negotiated in the RESTORE Act, legislation that puts decisions on how the money is spent in the hands of states and local governments.

The RESTORE Act directs that 80 percent of Clean Water Act penalties paid by BP be placed in a new trust fund for restoration efforts in the five coastal states damaged by the worst U.S. offshore oil spill: Louisiana, Alabama, Mississippi, Florida and Texas.

In a bipartisan letter, eight senators told Obama they are worried the Justice Department is considering allowing the bulk of fines to be assessed under the Oil Pollution Act for damages assessed to the coastline, with a minority of fines assessed for damages under the Clean Water Act.

Fines arising from Clean Water Act violations could reach $21 billion, if BP is found to be grossly negligent. BP has adamantly denied any accusations of gross negligence.

Without the RESTORE act, federal Clean

Water Act fines would go straight to the U.S. Treasury. Anywhere from $4 billion to $16.8 billion could flow to states under the RESTORE law’s terms.