FACTBOX - How would Gulf Coast states use BP spill funds?

Sat Jul 14, 2012 7:58pm IST

Workers remove oil soaked grass from a marshland, one year after the BP Oil Spill, in Bay Jimmy near Myrtle Grove, Louisiana in this April 20, 2011 file photo. REUTERS/Lee Celano/Files

Workers remove oil soaked grass from a marshland, one year after the BP Oil Spill, in Bay Jimmy near Myrtle Grove, Louisiana in this April 20, 2011 file photo.

Credit: Reuters/Lee Celano/Files

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(Reuters) - On July 6 President Barack Obama signed the RESTORE Act, legislation that spells out how five Gulf Coast states would share fines assessed against BP Plc for the 2010 Deepwater Horizon oil spill.

The federal Clean Water Act lets the U.S. government seek fines up to $1,100 per barrel of oil spilled. Assuming that 4.9 million barrels were spilled, a fine could reach $5.4 billion. But if gross negligence or willful misconduct is found, the fine would rise to $4,300 a barrel. The resulting bill would be $21 billion.

Gulf Coast lawmakers and governors sought to ensure the money was spent to help the region, so they negotiated the RESTORE Act, whose name is an acronym for Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States.

The law could spur states like Louisiana to push the federal government to obtain the largest possible deal at the negotiating table rather than accept a settlement anytime soon.

Once a settlement is reached, or a judge rules on the issue, the law directs 80 percent of the money be put into a trust fund established by the Treasury Department. Here's how that fund will be managed:

POT ONE: EQUAL STATE SHARES

+ 35 percent of the money will be divided equally between the five states: Louisiana, Alabama, Mississippi, Florida and Texas.

+ The money can be spent on environmental projects, job creation and training, flood protection, tourism promotion and infrastructure such as ports.

* For Florida: 75 percent will go to the eight hardest-hit counties.

* For Louisiana: 70 percent will go to the state, 30 percent to coastal parishes with land use plans, based on a formula that takes damage, population and size into account.

POT TWO: GULF COUNCIL

* 30 percent of the money will be managed by the Gulf Coast Ecosystem Restoration Council.

* The council will be made up of the five Gulf states' governors and six federal officials from the Interior, Commerce, Agriculture departments, the Army, the Environmental Protection Agency and the Coast Guard.

* Money will be spent on big ecosystem projects with broad impact.

* The council will have 180 days to submit its initial plan, with a more comprehensive version a year later.

* Will incorporate information from the President's Gulf Coast Restoration Task Force, which reported in December 2011.

POT THREE: DIVIDED BY DAMAGE

* 30 percent of the money will be allocated to states based on a formula that approximates how badly each was damaged by the oil spill.

* Formula based on average oiled shoreline, proximity to the spill, and average population in coastal counties, with a minimum of 5 percent.

* Louisiana, which had the most miles of oiled shorelines, is expected to get the largest share of this pot, while Texas is expected to receive the smallest share.

* States can spend the money on environmental projects, job creation and training, flood protection and tourism promotion.

* There is a "soft cap" of 25 percent on infrastructure funding from this pot, although governors can overrule this by showing the investment is needed for recovery.

REMAINING FIVE PERCENT

* Split between a fish stocks monitoring program and research centers.

(Reporting by Roberta Rampton; Editing by Alden Bentley)

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