Gulf of Mexico oil spill partial settlement would give Louisiana $13.5 million

02-20-2012 // Mark Schleifstein

This is an excerpt from

The hazardous waste fund pays for investigation, containment, control and cleanup of both hazardous and non-hazardous waste sites, for state matches of federal Superfund cleanup costs, and for the cleanup of abandoned underground storage tank sites. There are about 160 abandoned or inactive waste sites in the state, a DEQ spokesman said.

The coastal forest program, established in 2010, has been financed with about $16 million from a federal program that uses money from federal offshore oil and gas proceeds.

"From day one, our priority has been to make sure that our coast is fully restored from the oil spill and that our people get back on their feet as quickly as possible," Louisiana Gov. Bobby Jindal said in a news release. "That is why we have already negotiated agreements pertaining to seafood safety, seafood marketing, tourism, $1 billion in early restoration and other agreements.

"Now, returning $13.5 million in fines to the State of Louisiana is another step forward in our long road to recovery from one of the nation's worst environmental disasters," Jindal said.

"We are pleased with this recovery from MOEX, but expect much larger recoveries from the remaining defendants," said Attorney General Caldwell.

Caldwell said Louisiana still has claims outstanding against MOEX under the federal Oil Pollution Act, maritime and state law, including punitive damages. Those claims will be pressed during the upcoming trial.

The settlement also doesn't resolve state law claims for fish and wildlife civil penalties filed by coastal parishes, which are pending on appeal. BP contends it and other defendants should only be liable for federal law violations, as the spill occurred in federal waters.

The proposed MOEX settlement, which is subject to a 30-day public comment period, calls for the company to pay $70 million in civil penalties to resolve alleged violations of the Clean Water Act resulting from the spill, and to spend $20 million for land acquisition projects in several Gulf Coast states that will preserve and protect habitat.

The Clean Water Act penalties would be the largest ever collected under the law, according to the EPA.

The settlement sets aside $5 million of fine money for Alabama, but no money for supplemental environmental projects. But to receive the fine money, Alabama must sign a release that includes a covenant not to sue, essentially dropping its claims against the company, which is unlikely.

"Alabama is not part of the settlement announced Friday because the state does not believe the amount of money the Department of Justice negotiated was sufficient to address the damages done in relation to MOEX's responsibility to this state," said Jeremy King, spokesman for Alabama Gov. Robert Bentley. "Alabama has preserved its claims against MOEX, and the state will pursue those claims. State leaders are making every effort to ensure that Alabama is treated fairly and that those who are responsible for the Deepwater Horizon disaster are held accountable."

To receive the $5 million in fine money, MOEX Offshore, the U.S. subsidiary of Japan's Mitsui Oil Exploration Co., owned 10 percent of BP's Macondo well. MOEX and Anadarko, which owned 25 percent of the well, were investors in the BP-run project and had input on financial questions, but had little daily control over rig operations.

Last May, MOEX entered into a separate settlement with BP, agreeing to pay $1.1 billion that BP used to cover damage claims. Anadarko entered into a similar settlement with BP last October, for $4 billion.

Justice officials said terms of today's settlement don't affect the potential liability of, or recoveries from, other parties involved in the spill. MOEX and associated companies also don't consider the settlement to be an admission of liability for civil penalties or other claims arising out of the accident, according to the agreement.

"The Department of Justice has not wavered in its commitment to hold all responsible parties fully accountable for what stands as the largest oil spill in U.S. history," said Attorney General Eric Holder. "This landmark settlement is an important step -- but only a first step -- toward achieving accountability and protecting the future of the Gulf ecosystem by funding critical habitat preservation projects."

The settlement calls for $45 million of the penalty money to go to the federal government, where it will be used to replenish the Oil Spill Liability Trust Fund to pay for response actions, cleanup and damages caused by future spills.

It's unclear whether legislation approved this week by the U.S. House of Representatives, but not yet voted on by the Senate, to set aside 80 percent of any fines associated with the oil spill for coastal projects would apply to this settlement.

The remaining money will be divided among the states, with Louisiana getting $6.75 million, $5 million each going to Alabama, Florida and Mississippi, and $3.25 million to Texas.

The $20 million for supplemental environmental projects includes $6.75 million for Louisiana, $5 million each for Mississippi and Florida, and $3.25 million for Texas. No money is set aside for Alabama because it did not participate in the settlement.

The Clean Water Act allows violators to propose supplemental environmental projects that can reduce the amount of fines they would otherwise pay.

The supplemental projects will be aimed at preserving and protecting properties of ecological significance in each state, with the land to be either transferred to or acquired by state governments, as in the case of Louisiana, or non-profit groups, land trusts, or other appropriate entities.

John Kostyack, National Wildlife Federation vice president for wildlife conservation, said environmental groups are concerned about federal fine money not being spent to restore Gulf habitat. But they're also worried that the public will not have a chance to comment on state plans for their share of the fine money and for the separate environmental projects.

"We would really insist on transparency to assure that all of the money is used to restore the Gulf of Mexico," Kostyack said.

The proposed settlement, lodged in U.S. District Court in New Orleans, is subject to a comment period that will run for 30 day after a notice is printed in the Federal Register, and final court approval.

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