Obama urged to seek spill penalties to pay for Gulf coast restoration, help states after spill

Obama endorses using fines for Gulf rehabilitation

NEW ORLEANS — President Barack Obama endorsed a plan Tuesday to rehabilitate the Gulf of Mexico with some of the billions of dollars in water pollution fines expected from the companies responsible for the worst offshore oil spill in U.S. history.

Navy Secretary Ray Mabus, the government’s point person on Gulf coast restoration, also said some of the money could be used to repair sections of the Gulf ravaged by events other than the spill.

Mabus says it would be up to Congress to determine how much of fines to set aside for the overall restoration. Obama said he will ask Congress to dedicate the money.

“The Mabus report offers a commonsense proposal for a path forward, relying on the ideas and coordination of efforts at the local, state, tribal, and federal levels, as well as of nonprofits and the private sector,” the president said.

Dedicating fines levied against BP and other companies involved in the Deepwater Horizon accident to restoration and directly to Gulf states, which the Mabus plan calls for, will require a change in law. Currently, Clean Water Act fines go into a trust fund to pay for oil spill cleanups.

An April 20 rig explosion in the Gulf killed 11 workers and led to 206 million gallons of oil spewing from BP PLC’s undersea well.

Penalties can be levied against BP, which owned the well and was leasing the rig that exploded, under a variety of environmental protection laws, including fines of up to $1,100 under the Clean Water Act for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel.

That means that based on the 4.9 million barrels released from the Macondo well, BP could face civil fines under the Clean Water Act alone of between $5.4 billion and $21.1 billion.

At a news conference in New Orleans to unveil the plan, Mabus said he envisions some of the money from the fines being spent on repairing wetlands damaged over the years by the construction of canals to serve coastal oilfields. With the equipment and manpower already in the Gulf repairing damage from the oil spill, Mabus said it would be cheaper and more efficient to also repair the coastline from other damage it has suffered over the years.

Mabus is proposing that a panel be set up to administer any money set aside from the fines for coastal restoration. He said there should be a federal and state chair on the panel.

In Washington, Richard Stewart, who led the government’s prosecution of Exxon for the Exxon Valdez incident, told the national oil spill commission Tuesday that criminal charges and stiff civil penalties will likely drive BP to settle. Stewart now teaches law at New York University.

A Justice Department official said that no settlement talks are taking place between the Obama administration and BP over fines for the spill, contradicting a congressman’s suggestion earlier that such talks were taking place. The Justice Department official spoke on condition of anonymity because criminal and civil investigations of BP are continuing.

Rep. Steve Scalise, R-La., who attended the news conference at the Port of New Orleans with Mabus, had told The Associated Press that BP and the Obama administration were discussing a possible settlement over fines related to the spill that would avoid a costly legal fight. He said his staff got information about the talks while working on oil spill-related legislation he is proposing.

Scalise and Sen. Mary Landrieu, D-La., support legislation that would require that at least 80 percent of the civil and criminal penalties charged to BP under the Clean Water Act be returned to the Gulf Coast for long-term economic and environmental recovery. The bill is still pending.

Even before Mabus announced his plan for the restoration fund, state and local officials were saying how it should be spent and managed.

“My view is that it should be specific to the injury and the subject that we are dealing with,” Landrieu said during testimony before the oil spill commission Obama set up to investigate the accident. She named coastal restoration, ocean education, energy infrastructure and levee protection as possible projects.

Landrieu said the money should be used not just for “restoring what we had, but building what we need,” something that she said had bipartisan support.

Mississippi Gov. Haley Barbour, a Republican, joined Landrieu before the panel Tuesday. He said that “anything that resulted from this oil spill should be the first priority” for the money.

He also was clear that he didn’t want bureaucrats in Washington deciding how it was spent.

“Washington, D.C. is not going to tell the Mississippi Gulf Coast how to rebuild the Mississippi Gulf Coast,” Barbour said. Obama has said repeatedly Gulf Coast residents should decide, and Mabus, a former Mississippi governor, has traveled throughout the region to gather information from local officials.

Obama is expected to sign an executive order soon to carry out another of the report’s recommendations, setting up a Gulf Coast Ecosystem Restoration Task Force, which would coordinate the money and help decide which project are funded until Congress sets up a council. Environmental Protection Agency administrator Lisa Jackson, a New Orleans native, will lead it.

Cappiello reported from Washington. Associated Press Writer Pete Yost in Washington contributed to this report.

(This version CORRECTS Corrects day in first paragraph to Tuesday. This story is part of AP’s general news and financial services.)