On August 13, the U.S. Treasury Department finally released rules that will allow Gulf Coast states affected by the 2010 BP Deepwater Horizon oil spill to use funds from the Resources and Ecosystem Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act, or RESTORE Act. The Act, which was passed by congress in 2012, directs fines paid by companies who violated the Clean Water Act during the 2010 BP Oil Spill to be used to help Gulf Coast communities recover economically and environmentally, and to promote tourism in the region.
To date, Transocean has already paid $1 billion to settle the Federal Government’s civil penalty claims, and BP and Anadarko face at least $4 billion in civil penalties. These fines will be determined at the end of a civil trial, which is currently underway in U.S. District Court in New Orleans. The penalty phase of the trial is scheduled for January 2015.
The Treasury plans to use 80 percent of the penalties to create the Gulf Coast Restoration Trust Fund, which will serve to help affected states research and clean up the lingering effects of the oil spill. The other 20 percent of fines collected will go into the Oil Spill Liability Trust Fund, which is designed to respond to future oil spills.
States that will receive money from the fund include Alabama, Texas, Louisiana, Florida and Mississippi. Thirty-five percent of the fund will be divided equally among the five states for ecological and economic restoration. Projects will be approved by representatives of each state designated to administer the funds. Florida’s share of the fund will be available only to 23 coastal counties.
Thirty percent of the money will be distributed to projects selected by those states and six federal agencies that comprise the Gulf Coast Ecosystem Restoration Council, which was set up to oversee RESTORE Act projects. This money will be used exclusively for ecosystem restoration. Another 30 percent of the money will be distributed to the five Gulf states, depending on how they were impacted by the oil spill.
Finally, 5 percent will go toward state-selected marine research centers and federal monitoring programs, including 2.5 percent designated for a “Centers of Excellence” research grant, for the establishment of a science center.
These rules will provide some help to those coastal communities that were devastated by the oil spill. How much the fund ultimately pays out will be dependent, in part, on the outcome of BP and Anadarko’s en banc contest of a Fifth Circuit order upholding a liability judgment against them. All the while, BP and Anadarko continue their fight with the Federal Government in the Clean Water Act (“CWA”) trial phase, which could expose BP to as much as $18 billion in CWA penalties.
The next step in the process will be up to states and municipalities, which must select projects to submit for grants. This process could take several months. For example, the Alabama Gulf Coast Recovery Council already has received 47 project applications totaling around $360 million.
In July, a number of lawmakers were most unhappy with the slow progress of rulemaking. This should have been completed within 180 days of the RESTORE Act’s signing in June 2012. Three federal departments were responsible for developing the rules for administering the fund – treasury, commerce and interior. The treasury rules become final in 60 days.
Sources: Al.com, New Orleans Times-Picayune, Pensacola News Journal, Law 360
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