Louisiana, Alabama compete for BP dollars

By John Maginnis

Here near the peak of both football and election seasons, it seems strange for a Louisiana senator to side with one from Alabama in a dispute in which Gov. Bobby Jindal’s administration is agreeing with President Barack Obama’s. The odd bedfellows are hard to keep up with as negotiations with BP move toward a settlement of the federal case brought against it for the massive oil spill in the Gulf in 2010.

With the trial set for Jan. 14, The Wall Street Journal reports that negotiators for BP and the U.S. Justice Department are a mere $6 billion apart on settling all criminal and civil claims by the federal government and five coastal states.

But the way the deal is structured could make a big difference in how much Louisiana gets compared to its sister states and how the money can be spent. Two federal statutes govern what BP must pay in damages and fines. Indications are that federal negotiators and the Jindal administration favor giving more weight to the Natural Resources Damages Assessment (NRDA) process spelled out in the Oil Pollution Act. Sen. Mary Landrieu and Sen. Richard Shelby, R-Ala., along with most other coastal senators, want equal emphasis given to the Clean Water Act fines included in the RESTORE Act, which the two co-sponsored.

While Texas, Mississippi and Florida have claims, the most aggrieved states are Louisiana, with the most environmental damage, and Alabama, with its economic losses. Much more so than their gridiron rivalry or bidding for a steel mill, the real competition between the two states is at the negotiating table, with BP’s bankroll the prize.

Coastal Restoration and Protection Authority chairman Garret Graves, Jindal’s point man on negotiations, calls a NRDA-weighted deal best for Louisiana. He states in a release from his office: “If our fishermen, marinas, restaurants and coastal communities are going to recover, BP must be held fully accountable for these impacts through the natural resource damage process, where 100 percent of the money is invested in addressing the impacts to the Gulf.” He notes that RESTORE commits only 80 percent of Clean Water Act fine money to Gulf states.

Chiming in with Jindal and the Justice Department is Sen. David Vitter. By his calculation, which is unconfirmed, Louisiana stands to receive more than 60 cents on the dollar from NRDA, compared to 30 cents of each dollar from RESTORE.

But Landrieu argues that the states would get RESTORE money quicker and with less federal control than from NRDA, which, she says, would bar spending on flood protection and send no money to parishes. She points out that only $60 million of the first $1 billion that BP paid under NRDA earlier this year has been released to the state.

She also objects to BP being able to get tax deductions for its NRDA payments, which is not allowed under RESTORE. “I don’t know why the lawyers in the Obama administration would be trying to increase the tax write-off to BP, who is a polluter,” she said.

The governor and senators do agree that whichever law the money comes from, it needs to go to the same place, to the coast. The Jindal administration has produced a 50-year, $50 billion plan for coastal restoration, which would be so much dreaming except that it identifies sources for at least half of the funding. The BP award is expected to provide a large down payment, while off-shore oil and gas revenue sharing, secured by Landrieu’s legislation in 2006, begins flowing in 2017.

For a state that has borne more than its share of disasters, finally one comes along with a deep-pocketed responsible party. Officials here agree that Louisiana will fare better than Alabama under either NRDA or RESTORE. But when the chips are counted in billions, neither wants to leave any on the table.

Also agreed upon is that settlement talks could yet fall apart, leading to a lengthy trial. BP might already have missed a bet, though, by not settling earlier. With thousands of pounds of more oiled material, traced to the BP spill, having been brought to the surface by Hurricane Isaac–suggesting a lot more is down there–the price of poker has gone up.


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