Where will BP money go?

By John Maginnis

The stakes may be monumental in the BP trial underway, but the legal bout lacks the essential elements of a courtroom drama. Guilt has been determined in the oil giant’s criminal plea agreement with the U.S. Justice Department, which also establishes that BP was negligent. The big question for the trial to settle is how negligent, for a ruling of gross negligence and willful misconduct could quadruple the fines for each barrel of oil that flowed into the Gulf, pushing the award to five coastal states, primarily Louisiana, to over $20 billion. According to the Wall Street Journal, Justice and the states are prepared to offer to settle for $16 billion.

Whether by verdict or settlement, from there the real drama begins, a political one, with state leaders wrangling over how to spend a sizable chunk of the fine money, as much as $1 billion, that will come with strings loosely attached.

Deciding where those funds go will test the political will behind the rhetoric of state leaders’ commitment to restoring the eroding, sinking coast. It’s easy to be four-square behind the coastal cause when there is little to spend on it. That could change when the money is at hand.

The good news is that by congressional passage of the Restore Act, 80 percent of fine money is deposited into the Gulf Coast Restoration Trust Fund, of which 60 percent will go to coastal projects, vetted and approved by the federally created Gulf Coast Ecosystem Restoration Council. Another 5 percent goes to research, technology and grants.

That leaves 35 percent divided equally among the five affected states. Louisiana’s share will be split between 30 percent for coastal parishes and 70 percent for the state, a tally that could range from $500 million to $1 billion. That figure could go higher still from a separate claim by the state for lost sales and income taxes in the wake of the spill.

The federal law does spell out 10 broad subject areas the fine money can be used for, including workforce development, job creation, seafood marketing, tourism promotion and planning, all within 25 miles of the coast. But state dollars already going to those purposes could be backed out and spent elsewhere.

Louisiana legislators declined to approve a constitutional amendment in the last session to let voters decide to dedicate all of the fine money for coastal protection and restoration projects. Instead, they passed a law to do the same thing, which the Legislature could only change by a two-thirds vote. But since it is a simple statute, it would only take a majority vote to delete the two-thirds requirement.

Gov. Bobby Jindal has shown that getting a majority of legislators to do what he wants requires no heavy lifting, especially when he throws a few crumbs their way. And there is no end to other purposes for the money, especially in view of a chancily-balanced budget and diminishing funds to finance construction projects.

While the coast will get the lion’s share of BP money, legislators away from the coast can assert that all parts of the state suffered economically from the spill, particularly when lost tax revenues are counted. A microcosm of that argument was heard last week when a legislative committee signed off on a federal grant for mental health services in south Louisiana parishes affected by Hurricane Isaac. Despite the terms of the grant, Sen. Francis Thompson, D-Delhi, pressed the administration to find ways to move money around in order to help his rural northeast Louisiana district too. He did not succeed. His friend Senate President John Alario, almost with a straight face, suggested that Thompson move his parishes closer to the coast.

What’s not so funny is a recent National Oceanic and Atmospheric Administration report that concludes that southeast Louisiana is sinking faster than earlier assumed and that, in conjunction with seas rising ever faster, a number of coastal restoration projects could be rendered obsolete before they are completed.

This means the state’s 50 year-$50 billion plan to restore the coast, much of it to be funded with BP fines and future offshore revenue sharing, could cost much more, take much longer and cover only a portion of the projects included.

That inconvenient truth will instill greater urgency in the strongest coastal supporters but also possibly a sense of despair among the broader body politic. Which emotion prevails across the state will guide decisions of what to do with the BP money that eventually comes our way.