The second part of a trial resumed in the Federal District Court here in New Orleans this month to decide just how much BP will pay for polluting the Gulf of Mexico and Louisiana during the Deepwater Horizon spill back in 2010.
This is important for Louisiana because the state is depending on what it hopes will be billions of dollars from this settlement to help pay for its Coastal Master Plan — a $50 billion plan it says can help keep southeast Louisiana from slipping below the Gulf of Mexico by the end of the century.
We spoke with David Muth, Director of the Mississippi River Delta Restoration Project for the National Wildlife Federation. Muth explained the intricacies of the RESTORE Act, and started by giving a quick capsule summary of what the bottom line might be now for Louisiana after the trial is over.
David Muth: It’s enormously complicated and very difficult to predict. This phase of the trial is one in which the judge will hear testimony on what the total volume of oil that went into the Gulf is. That’s a key metric, because that determines what the ultimate fines will be under the Clean Water Act.
The official government estimate, that was arrived at after much delay, and after independent experts examined the evidence, was 4.9 million barrels. British Petroleum is now arguing that the true number is much lower than that. That’s a finding of fact that the judge will have to come to, but it’s extremely important because the way the fines are calculated is essentially just a multiple of the number of barrels of oil.
Bob Marshall: So, I understand that it can be no more than $1100 per barrel if there is no finding of gross negligence. But if there is a finding of gross negligence, it could be as much as $4300 per barrel.
David Muth: Absolutely. So, there’re two swings here. One is the total number of barrels of oil, which is a finding of fact. And then what the multiplier is going to be, and as you said, it could be as low as $1100 per barrel or as high as almost four times that number.
What degree of negligence the judge determines, Judge Barbier, will have a huge effect. So, we’re looking at this really huge range of possibilities that starts in the low billions and runs well up over $ 10 billion, just as a straight calculation based on the degree of negligence and the number of barrels.
BP, incidentally, has also gone to the Fifth Circuit and appealed the very idea that they have any liability for the oil that went into the Gulf. And so that’s another thing that’s hanging out there: they’re arguing that they no responsibility for anything that happened past the blowout preventer. Should they prevail there, then this could all be a moot question. A great deal is up in the air, but Congress did pass the RESTORE Act.
Which would dedicate 80 percent of the total fines that BP pays to restoration of the Gulf of Mexico, according to a formula, split among the five Gulf states.
Bob Marshall: That’s the other thing, that I think people in Louisiana, when the RESTORE Act was passed, were jumping up and down thinking they were going to get $20 billion — whatever the final settlement is. But, in fact, it will be split among the five states.
Now, people may be saying, why is Texas or Florida or these other states getting so much money when they didn’t suffer much environmental damage? Well, that’s politics — our senators knew we couldn’t get this past Congress unless we got help from our neighbors here on the Gulf of Mexico. And of course, they wanted to bring home some of that bacon, too. There was a quid pro quo — we’ll help you, but we want to get paid for it.
And so, the bottom line on this was something is better than nothing. And as this process has moved forward, estimates now are that — depending on how much the fines are, and how much politics plays into the split-up — Louisiana could come in for as little as $900 million on the low end, and as high as about $3.5 billion on the top end. And if the RESTORE Act hadn’t been passed, this money would be going straight to the federal treasury.
So, this comes as a needed shot in the arm even if it’s, say, $1 billion. Louisiana is on this Master Plan, which, basically says they’re hoping to be able to have the money to spend about $1 billion dollars a year over the next 50 years.
As we’ve discussed in previous parts of this series, we’re in pretty good shape immediately, we’re in okay shape for maybe the next five or six years — but even Garret Graves, head of the CPRA, says: when we get out to years eight, nine and beyond, frankly, we’re up against the wall. So this will come in handy, obviously, whatever it is.
David Muth: I think it’s crucially important. Think of whatever is happening here. Remember that we’re just talking about one of the fund sources here — there’s already been criminal fines that have been agreed to, and they’ve started paying on those criminal fines through the National Fish and Wildlife Foundation, the criminal penalties, of which the State of Louisiana stands to get $1.275 billion.
Well, $1.275 billion is enough to begin building some of the really key preliminary projects that have to happen. When you think about the Master Plan, most of the restoration work in there, most of the dollars, are dedicated to moving sediment around with dredges, whether to build barrier islands, whether to build marsh, etc., etc. But the science has shown us that, in order for those projects to succeed — whether they’re barrier island projects, whether they’re marsh restoration projects — we have to be able to use fresh water and sediment from the river in order to sustain that work.
And so these billions that will be coming in in the early part of the fifty-year period have to go, much of them, to build out some of these key diversions in order for the whole plan not to fall apart. We have a long-term funding issue — nobody pretends that we don’t. Remember, that $50 billion is in 2010 dollars and we’re really talking about a bigger number, because of inflation, presumably. But we’re in sort of a bridge here, that will get us out a few years, and then we can start figuring out… well, we better start figure out before then, but we got to figure out a new way to pay for the rest.
Bob Marshall: The other thing is that this is far from over. BP has shown, obviously, that it’s going to fight tooth and nail with all of its legal options. Are we a year and a half, a year? How far away are we before we know just what they’ll be paying?
David Muth: We saw with Exxon Valdez that it could be dragged out for decades, and there’s every possibility that that’s what will happen here. We simply don’t know.
Bob Marshall: But didn’t BP say that they were “going to make it right?”
David Muth: They did indeed say that they were going to make it right, and they seemed early on to show a willingness to advance to the punch line — and they’ve clearly changed their legal tactics in the last year or so.
Bob Marshall: So, right now, to use a football analogy, the RESTORE Act “still has potential” — which means it hasn’t done it yet.
David Muth: That’s a fair assessment.
Support for The Louisiana Coast: Last Call comes from the Greater New Orleans Foundation, an organization that addresses the challenges facing people who live and work in the coastal communities of Southeast Louisiana.
The Louisiana Coast: Last Call is written and reported by Bob Marshall of The Lens, and produced by Fred Kasten.