(Corrects paragraph 17 to read "Thad Cochran and Roger Wicker
of Mississippi" instead of Missouri)
* Senators cite reports of types of fines in spill
* Senators worried local, state governments will have less
* Urge Obama to reject approach
By Roberta Rampton
WASHINGTON, Oct 5 Senators from the U.S. Gulf
Coast urged President Barack Obama on Friday to ensure that any
legal settlement for the 2010 Gulf of Mexico oil spill does not
undermine a recently passed law that would funnel billions of
dollars worth of fines to their states.
The U.S. Justice Department and BP Plc have discussed
a potential settlement for damages caused both to Gulf waters
and the coastline, which could be worth billions of dollars to
states still trying to recover from the worst offshore oil spill
in U.S. history.
While the details of those discussions have been kept under
wraps, Democratic and Republican senators from the region said
they have "grave concerns about developments of the settlement
terms" that have been cited by local media outlets.
Senators pointed to recent press reports that the Justice
Department and BP are discussing settlement terms that would
maximize penalties to be paid under Natural Resource Damage
assessments, and minimize those paid under the Clean Water Act.
The RESTORE Act, signed by President Barack Obama on July 6,
directs that 80 percent of Clean Water Act penalties paid by BP
be placed in a new trust fund for restoration efforts in the
five coastal states damaged by the worst U.S. offshore oil
spill: Louisiana, Alabama, Mississippi, Florida and Texas.
(FACTBOX at )
In a bipartisan letter - a rare sight ahead of the Nov. 6
presidential elections - eight senators told Obama they are
worried the Justice Department is considering allowing the bulk
of fines to be assessed under the Oil Pollution Act for damages
assessed to the coastline, with a minority of fines assessed for
damages under the Clean Water Act.
Fines arising from Clean Water Act violations could reach
$21 billion, if BP is found to be grossly negligent of causing
the April 20, 2010, explosion aboard the Deepwater Horizon
drilling rig that killed 11 rig workers and unleashed 4.9
million barrels of oil that soiled the shorelines of four Gulf
Coast states. BP has adamantly denied any accusations of gross
negligence, and declined to comment on the senators' letter.
Without the bill, federal Clean Water Act fines would have
gone straight to the U.S. Treasury. Anywhere from $4 billion to
$16.8 billion could flow into states' coffers under the bill's
The Mobile (Alabama) Press-Register first reported the
proposed deal earlier this week, citing unnamed officials who
had been briefed by the Justice Department.
The potential settlement could be attractive to BP, because
fines under the Oil Pollution Act are treated more favorably by
the U.S. tax code than are Clean Water Act fines, congressional
"Not only would the federal government have final say as to
what qualified as environmental damage but BP, who is
responsible for this, would also get a tax deduction that could
write off millions," Representative Jo Bonner, an Alabama
Republican, told Reuters. "The audacity of giving BP a tax
A Justice Department spokesman had no comment on either
negotiations nor the criticisms from elected officials.
Senators told Obama the trade-off would mean less money
allocated through a formula lawmakers negotiated in the RESTORE
Act, legislation which puts decisions on how the money is spent
in the hands of states and local governments.
"Circumventing the will of Congress by short changing the
RESTORE Act is wholly unacceptable to us. We urge you to reject
such an approach," said the letter, signed late on Friday by
Mary Landrieu, a Louisiana Democrat, and Richard Shelby, a
Republican from Alabama, who co-authored the legislation.
Shelby is concerned that Alabama's two coastal counties
could lose out on planned recovery projects if the settlement
was skewed toward Oil Pollution Act damage assessments, aides
"We urge you to negotiate a robust settlement that does not
achieve a higher amount under one of these statutes at the
expense of the other," said the letter, also signed by Florida
senators Marco Rubio, a Republican, and Bill Nelson, a Democrat.
Republicans Jeff Sessions of Alabama, Thad Cochran and Roger
Wicker of Mississippi, and John Cornyn of Texas also signed the
Louisiana, which bore the brunt of environmental damage from
the spill, expects to be compensated for damages regardless of
the legal means, said Garret Graves, senior environmental
advisor to Louisiana Gov. Bobby Jindal.
"Every statistic that's out there in regard to the impact of
the spill clearly points to a disproportionate impact on the
state of Louisiana, and Louisiana's focus will be ensuring that
we fulfill our legal obligation to address all of these impacts
to the Gulf," Graves said.
(Additional reporting by David Ingram in Washington, Verna
Gates in Birmingham, Alabama, Kathy Finn in New Orleans and
Emily Le Coz in Tupelo, Mississippi; Editing by Chris Baltimore
and Gary Hill)