La. officials differ on offer to BP

The BP oil disaster trial is well under way, and talks of a potential settlement have not died.

But Louisiana officials and the state’s U.S. senators remain at odds over how the billions of dollars in any settlement should be funneled.

Sen. Mary Landrieu, D-La., wants the focus on BP’s Clean Water Act penalties funneled through the RESTORE Act legislation that was signed into law last year.

The Jindal administration and Sen. David Vitter, R-La., contend Louisiana benefits more if the bulk of the funds go through the restoration process — the Natural Resource Damage Assessment process, called NRDA.

NRDA, essentially, is about BP fixing what it broke in the environment, while the Clean Water Act represents the civil penalties on top of the restoration costs. The NRDA dollars are tax deductible, and thus preferred by BP, while the fines are not.

The Louisiana dissension continues as The Wall Street Journal and The New York Times have reported the federal government has a $16 billion settlement on the table — $6 billion through the Clean Water Act and $10 billion through NRDA — that BP has not accepted.

BP’s Clean Water Act penalties alone in trial could range from $5 billion to nearly $18 billion depending on how “grossly negligent” BP is found. Conservation organizations like the Environmental Defense Fund, for instance, have argued BP should be responsible for about a $40 billion settlement — $20 billion each through the RESTORE Act and NRDA.

Landrieu and Sen. Richard Shelby, R-Ala., put out a joint statement Thursday in response to reports about the settlement offer out of concern that such an offer would only funnel $6 billion into Clean Water Act fines.

“The Clean Water Act fine, as it will be distributed by the RESTORE Act, is transparent and immediate, and is the most efficient way to get funds to the Gulf now so we can get to work on restoration projects,” Landrieu and Shelby stated. “The RESTORE Act was supported by a strong bipartisan congressional coalition and more than 100 environmental and business groups.

“While the trial outcome and settlement negotiations are not in our hands, it is worth restating at this critical juncture that Congress has overwhelmingly indicated its support for a just and robust Clean Water Act penalty,” they continued.

The RESTORE Act directs 80 percent of the Clean Water Act fines to the five Gulf of Mexico states affected by the disaster. The Landrieu and Shelby contention is the dollars are expedited more through the Clean Water Act. For instance, an oil spill off of Delaware in 2006 resulted in a settlement in which the NRDA dollars did not come until four years after the settlement.

But Garret Graves, chairman of the Coastal Protection and Restoration Authority of Louisiana, said it is “uninformed” to argue that one process is quicker than the other and that each situation is unique. The NRDA dollars go 100 percent to the Gulf Coast while only 80 percent of the Clean Water Act dollars do, Graves said.

“The Clean Water Act dollars are much less efficient dollars,” Graves said.

“Our top priority is making sure the damage BP did and is doing throughout our Gulf and our Gulf Coast is fully addressed,” Graves said. “Once that’s done, we’ll focus on (Clean Water Act) punitive penalties.”

The trial itself that began Monday and Graves called it a “bloodbath” for BP. “Just that they’re in the courtroom is like doubling down on a bad hand,” he said.

The 2010 Deepwater Horizon explosion killed 11 men, and resulted in a three-month discharge of 4.9 million barrels of oil into the Gulf of Mexico off the coast of Louisiana.

The federal government blames the oil leak largely on BP’s cost-cutting and time-saving decisions. BP is contending the 4.9 million barrels estimate is overinflated by at least 20 percent.

Transocean, a Swiss-based drilling company that owned the Deepwater Horizon rig, had its $1.4 billion criminal and civil penalties settlement finalized last week for its share in the oil disaster.

Halliburton, another partner in the Deepwater Horizon drilling project, has not reached any settlement deals.

Last month, the settlement was completed for BP’s more than $4 billion in criminal penalties, but the larger fines are expected in the ongoing civil case.