BP Settlement Will Speed Up Projects
With the announcement that BP has reached an agreement with the federal government over damages caused to the Gulf of Mexico by the 2010 Deepwater Horizon oil spill, observers say the time line for significant coastal restoration projects will be accelerated.
But the same sources add that funds from the settlement won’t be available for at least one full year after the agreement is formally approved in court some time during 2016.
The U.S. Justice Dept. on July 2 announced that it had reached an agreement in principle with BP Exploration and Production Inc. to settle civil claims arising from the oil spill. Attorney General Loretta Lynch said in a statement that the $18.7-billion
proposed agreement would be the largest settlement with a single entity in U.S. history. “We will work diligently during the next several months to incorporate the agreement in principle into a consent decree,” she said.
As a result of the proposed settlement, planning agencies in five Gulf states are preparing for a huge infusion of cash to pay for long-planned but as yet unfunded projects.
Jessie Ritter, policy specialist with the National Wildlife Federation’s Gulf Restoration program, says, “Until this point, things have been kind of hamstrung by the fact that states haven’t known how much money they would have for restoration until the settlement. The settlement provides really critical certainty that’s going to allow acceleration of the planning and restoration process.”
The BP settlement includes a $5.5-billion Clean Water Act penalty, 80% of which will go to restoration in five affected states under the federal RESTORE Act.
The measure was enacted in 2012 to address the environmental and economic devastation caused by the spill. An additional $7.1 billion will pay for natural-resource damage projects overseen by the US Dept. of Interior’s Natural Resource Damage Assessment trustees. BP has paid $1 billion for those projects, including several early restoration projects that are underway.
A total of $5.9 billion will settle claims by state and local governments for economic damages caused by the spill, and $600 million will go toward other claims.
Adding to the cash infusion is the $1 billion available through an earlier settlement with contract driller Transocean over the Deepwater spill. The firm owned the Deepwater rig. And, in 2017, funds from a program for Louisiana to share revenue with offshore oil and gas companies are set to begin flowing under legislation passed by Congress in 2008.
Under the new settlement, each of the five Gulf states will receive about $787 million in CWA penalties alone for coastal restoration.
Also, each of the Gulf states has developed a multi-year implementation plan, listing jobs that should be designed and built under the Transocean settlement.
In Louisiana, for example, the Coastal Protection and Restoration Authority (CPRA) has developed a proposed multi-year plan—as required by the RESTORE Act—to design and build two or three major projects, says Kyle Graham, its executive director and an NRDA trustee. Those jobs include the Houma Navigation Canal Lock Complex, Calcasieu Ship Channel salinity-control measures, and adaptive management projects.
Graham says the proposal for the Transocean funds available in Louisiana already has gone through a public comment period and is expected to gain approval by the CPRA board in August. The agency then will submit grant applications to the U.S. Dept. of Treasury. The first funds for identified projects could start flowing “as soon as within four months,” Graham says.
Under the BP settlement, Louisiana is expected to receive more than $6.8 billion in new support over 16 years. A total of $787 million will come from CWA penalties under the RESTORE Act, $5 billion for natural-resources damages and $1 billion for state economic damages.
CPRA will go through a similar planning and project prioritization process with the new funding, Graham says.
Although he acknowledges that “this is a better deal than pretty much ... any civil penalty before,” Graham notes that the RESTORE Act creates “a lot of hoops and hurdles you have to go through in order to access those dollars.”
The American Council of Engineering Companies of Louisiana’s Executive Director Dan Mobley notes that CRPA was actually established years ago to focus on coastal environmental restoration, unrelated to the oil spill. The RESTORE Act plan in Louisiana culls and prioritizes projects from an overall $50 billion, 50-year plan for coastal restoration.
“We would have been doing work on [the planned projects] regardless of whether [the oil spill] occurred or not,” Mobley says.
But says Kenneth Smith, president and CEO of T. Baker Smith, an environmental engineering firm in Louisiana: “The system is there. The only thing missing, as usual, is funding. The idea that there’s a shot of money coming in from this tragedy—hopefully, from a Louisiana standpoint, we can put it to good use. There is no question that this is going to have a very positive impact on the entire engineering community throughout the Gulf Coast region.”
Smith says the larger payments may help to pay for some larger projects that have been on hold due to lack of funds. Some larger projects under consideration include several to transport sediment via pipelines from riverbeds to restore marshes and wetlands in highly erosive areas.
The economic feasibility of that approach is being studied by the U.S. Army Corps of Engineers. T. Baker Smith did some early studies on the sediment pipeline approach, Smith says. “These are big projects that take a lot of money.”