BP makes $1 billion down payment on gulf restoration

April 21, 2011

BP will make a $1 billion down payment on the costs of restoring ecosystems damaged by last year’s 87-day oil spill in the Gulf of Mexico, the worst in U.S. history, the National Oceanic and Atmospheric Administration and the Interior Department announced Thursday.

The agreement will speed projects such as rebuilding coastal marshes, replenishing damaged beaches and restoring barrier islands and wetlands, said Monica Medina, the NOAA official who negotiated the agreement with BP.

“We don’t know the full extent of damages yet, but we sure can figure out how we can start fixing the damage,” she said.

Under the Oil Pollution Act of 1990, government agencies are broadly assessing the environmental damages in a process called Natural Resource Damage Assessment. They will eventually present BP with a restoration plan, which the company can then choose to pay for or dispute in court.

While the sprawling assessment underway has collected tens of thousands of samples, tallying ecological damages is expected to take two to three more years.

Any restoration paid for by the $1 billion fund will be considered in the final NRDA tally, Medina said. The agreement marks the first time a company has made early payments under the Oil Pollution Act, she added.

Under Thursday’s agreement, Florida, Alabama, Mississippi, Louisiana and Texas will each receive $100 million, as will NOAA and the Interior Department. The remaining $300 million will be spent on projects proposed by the states and selected by the federal agencies.

Medina said it was unclear when projects could get started. The public will be invited to comment on specific proposals, she said.

Environmental groups welcomed the funds. “BP’s crude oil is still in our marsh,” said Aaron Viles, deputy director of the Gulf Restoration Network. “We’re glad they’re making this move.”

Viles noted that the restoration funds present an irony of sorts: They might finally pay for large-scale and long-languishing plans to restore Gulf wetlands destroyed by the oil industry and other activity.

In addition to the restoration costs faced by BP and other companies involved in the spill, the firm could be hit with as much as $18 billion in fines under the Clean Water Act.

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