BP oil spill fine dollars starting to flow toward La.

Amid negotiation with the responsible parties, state officials continue to expect “billions of dollars” in civil and criminal penalties stemming from the 2010 Macondo well blowout in the Gulf of Mexico, according to counsel for the office of the governor on coastal activities Drue Banta.

The state’s Coastal Master Plan, a 50-year outlook at $50 billion worth of flood protection and coastal restoration projects, would principally guide those funds, earmarked primarily for those purposes.

“With the Deepwater Horizon oil spill – that was such a terrible tragedy and a horrific event – we have the opportunity to direct potentially billions of dollars to jump-start projects in Louisiana’s Coastal Master Plan,” Banta said.

Banta is an advisor to Gov. Bobby Jindal regarding coastal activities on the Deepwater Horizon response, damage assessment and responsible parties’ fine negotiations.

Banta spoke to the South Central Industrial Association last week, breaking down what she describes as three funding sources for coastal projects that arose from the 2010 disaster that claimed 11 lives and dumped an estimated 4.9 million barrels of oil into the Gulf of Mexico.

The Natural Resource Damage Assessment process is a segment of the Oil Pollution Act of 1990, passed after the Exxon Valdez oil spill. The process, which could take a decade to complete, according to Banta, determines the amount of fines directly related to environmental damages.

BP has agreed to front $1 billion in NRDA money, about $100 million of which is dedicated for Louisiana. This money is targeted for coastal restoration projects rather than flood protection, and BP has input on what projects can be approved for early funding, Banta said.

“It could settle, it could go to trial,” Banta said of the NRDA process. “We’re not really sure yet, so this billion dollars is an opportunity to get started on restoration faster.”

Negotiations have been strenuous at times, and BP has at this point approved funding 10 projects worth $70 million, according to Banta.

Two of those projects within state lines – totaling nearly $30 million – are oyster reef restoration, impacting Lafourche and Terrebonne parishes among others, and marsh creation in Lake Hermitage in the Barataria Basin.

“We continue to push them to really come to the table, live up to their commitment and put some projects in the ground before this whole process is done,” Banta said.

In addition to NRDA, state and local stakeholders expect money from Clean Water Act fines and penalties. The CWA provides two, separate revenue streams: civil and criminal. The amount of the fines hinges on the amount of oil per day discharged and whether it was prompted by negligence or gross negligence, a designation that escalates the rates.

Congress last year passed the Restore Act, which directs 80 percent of civil CWA fines to Gulf Coast restoration.

That 80 percent of total CWA fines will be divided into five areas: 35 percent will be split among five Gulf states; 30 percent will go toward a comprehensive Gulf Coast ecosystem restoration fund; 30 percent will states based on an impact basis and the remaining 10 percent will be split between research and science initiatives.

Using the recent $1 billion civil settlement reached with Transocean, $800 million will be covered by the Restore Act. Seven percent of that, or $56 million, will go directly to Louisiana to be split among parishes and the state. Louisiana will also get a portion of $240 million in the comprehensive restoration fund, and state officials are optimistic they will land a hefty portion of the other $240 million that is doled out based on impacts.

“If you had the most damage, you’re supposed to be getting a big chunk of this money, so Louisiana feels like we have an opportunity to really get some of those funds in all of those three pots of money.

Breaking it down further, of that $56 million, $16.8 million will go to parishes in the state’s coastal zone.

Again, these numbers are strictly based on Transocean’s settlement, and are well less than the amount expected from total civil CWA fines, much less the grand total that will eventually be realized from the other two avenues.

Estimates of BP’s eventual civil CWA penalties, for example, range from $5 billion to $21 billion, according to the Times-Picayune.

BP and Transocean have already settled criminal Clean Water Act penalties. BP, in agreeing to one misdemeanor violation of the CWA amid 14 counts of criminal misconduct, will pay $4 billion over five years, Banta said. Transocean has agreed to pay $400 million in criminal fines.

Portions of that money – roughly $1.4 billion – will go to the National Fish and Wildlife Foundation “specifically for river diversion in Louisiana and barrier island restoration,” Banta said.

The governor’s advisor stressed that each funding source has various restrictions on what it can be used for – some for restoration, others for protection – but expressed optimism that local and state stakeholders would be able to get an early start on the Coastal Master Plan.

CORRECTION: A previous version of this article mistakenly said $500 million of the $1 billion in early NRDA money was dedicated for Louisiana. In fact, Louisiana is guaranteed $100 million and has the opportunity to receive more for the $500 million-plus worth of early restoration projects the governor has identified.