MOBILE, Ala. (WALA) - In a rarely seen bipartisan move, Congress passed the RESTORE Act to distribute damages to be paid by British Petroleum as a result of the Deepwater Horizon oil spill.
Estimates of how much the company will pay are varied but, ultimately, it will be decided either by admission of negligence by the parties involved or the how negligent a federal judge decides the companies involved were.
The RESTORE Act promises that 80 percent of the money paid by BP in response to the spill would be dedicated to the states affected by it the most: Florida, Alabama and Louisiana.
But how much would it be?
That's determined by fines designated in the Clean Water Act of 1972 (CWA) and the Oil Pollution Act of 1990 (OPA).
The OPA caps the liability of BO by saying "holders of leases or permits for offshore facilities, except deepwater ports, are liable for up to $75 million per spill, plus removal costs."
In 2010, the Obama administration, as well as lawmakers from affected states, tried to get that cap raised but efforts stalled in the senate.
The cap remained.
Regardless, BP said it would not seek protection under it. The company said they would acknowledge all economic claims even past the $75 million mark. They OPA also mandates that BP pay all costs to remove the oil.
The CWA imposes a fee on BP based on the amount of oil spilled into the Gulf.
From the CWA:
"Any person who is the owner, operator, or person in charge of any vessel, onshore facility, or offshore facility from which oil or a hazardous substance is discharged… shall be subject to a civil penalty in an amount up to $25,000 per day of violation or an amount up to $1,000 per barrel of oil or unit of reportable quantity of hazardous substances discharged."
Under the law, a barrel is 42 gallons of oil.
According to BP's worst case estimate, 2.52 million gallons of oil spilled into oil every day (experts' worst case estimate is 4.2 million gallons per day and the Department of Energy's estimate is 1.47 million gallons per day.)
Using BP's estimate, over the period of the leak from the pipe, 182,575,307 gallons total spilled.
That makes 4,347,031 barrels of oil spilled and, based on the rate of $1,000 per barrel, that brings the total amount of penalties to $4.35 billion. But that is assuming that a judge decides that there isn't gross negligence or willful disobedience involved.
If that is the case the penalty increases to up to $4,300 per barrel which would make the total closer to $18.69 billion.
So what does that mean for the Gulf Coast?
The RESTORE Act will take 80 percent of the money that BP pays from those penalties into a trust fund for areas affected by the spills.
Where the money goes
|How much? ($)|
Estimated payment from BP
State and local task forces
Federal task forces in state
Research and monitoring efforts
Under the lower estimated amount, governments in states affected by the spill would receive about $2.8 billion for their own restoration and improvement projects.
Under the higher one, assuming that a BP and the other companies involved in the spill are accused of gross negligence or willful disobedience and a judge finds them guilty of it, the states would split $9.75 billion.
The other 20 percent of the money would be paid into the Oil Spill Liability Trust fund, a federal fund usually paid into by taxes on oil.
Either way it goes, the RESTORE Act promises to pump billions of dollars into the economies of states along the Gulf Coast.
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