Deepwater Horizon Oil Spill: Gulf Coast Restoration Efforts

Updated July 17, 2017

Deepwater Horizon Oil Spill: Gulf Coast Restoration Efforts

The explosion of the Deepwater Horizon offshore drilling

rig on April 20, 2010, which took place 41 miles southeast

of the Louisiana coast, resulted in an unprecedented

discharge of oil into U.S. waters. An estimated 4.1 million

barrels of oil discharged into the Gulf of Mexico over 84

days. The spill resulted in the oiling of more than 1,100

miles of shoreline and caused damage to fish and wildlife

species in Florida, Alabama, Mississippi, Louisiana, and

Texas. As a result of the spill, private parties have agreed to

pay more than $16 billion for recovery efforts and related

restoration projects.

Oil Spill Restoration Funding

In the wake of the oil spill, several settlement agreements

between the federal government and parties responsible for

the oil spill (e.g., BP, Transocean) provided funding to

mitigate and recover from damages associated with the

Deepwater Horizon spill. These efforts have been in

addition to preexisting, ongoing federal, state, local, and

nongovernmental efforts to restore the Gulf of Mexico

ecosystem.

The distribution and use of funds under three of these

settlements in particular are expected to have a major effect

on restoration work in the Gulf: (1) civil penalties paid by

responsible parties under the Clean Water Act (CWA) to

support efforts outlined under the Resources and

Ecosystems, Sustainability, Tourist Opportunities, and

Revived Economies (RESTORE) Act of 2012 (Subtitle F of

P.L. 112-141); (2) criminal penalties under the CWA paid

by responsible parties to the nonprofit National Fish and

Wildlife Foundation (NFWF) and other entities; and (3)

natural resource damages paid to a fund (administered by

the federal government), assessed under the Natural

Resource Damage Assessment (NRDA) process, governed

by the Oil Pollution Act of 1990 (P.L. 101-380).

Although funding available for some of these efforts was

provided as early as 2012-2013, the majority of the funding

designated to settle outstanding claims against BP (in

particular CWA civil penalties and OPA natural resource

damages) was finalized by the Department of Justice in an

$18.7 billion settlement on April 4, 2016. As a result of this

and previous settlements, more than $16 billion is expected

to eventually be provided for ecosystem restoration and

related projects in Gulf states under the RESTORE Act,

NFWF, and NRDA processes (remaining funds are

designated for other uses).

RESTORE Act

The RESTORE Act established the Gulf Coast Restoration

Trust Fund and the Gulf Coast Ecosystem Restoration

Council, among other things. Under the legislation, 80% of

administrative and civil CWA penalties paid by responsible

parties in connection with the 2010 Deepwater Horizon oil

spill are to be deposited in the fund and made available

without further appropriation. The act divided this funding

among the following components:

 35%—Direct Component, divided evenly among the

five Gulf Coast states for ecosystem/economic projects

and administered by the U.S. Treasury Department

(Treasury);

 30%—Comprehensive Plan Component, with projects

selected by the Gulf Coast Ecosystem Restoration

Council (which is also established in the act and

composed of six federal members and five Gulf state

representatives);

 30%—Spill Impact Component, distributed by the

council based on a proportional formula established in

regulation and to be used for specified activities (limited

to 25% infrastructure);

 2.5%—Gulf Coast Ecosystem Restoration Science

Program, administered by the National Oceanic and

Atmospheric Administration (NOAA) and focused on

science, research, and monitoring; and

 2.5%—Centers of Excellence Grants, divided evenly

among the five Gulf states and administered by

Treasury.

Approximately $0.8 billion is scheduled to be made

available in the trust fund pursuant to a 2013 settlement

with Transocean. The April 2016 settlement with BP stated

that BP would pay $5.5 billion to resolve CWA claims,

80% ($4.4 billion) of which is to be distributed to the trust

fund according to the RESTORE Act. Together with the

Transocean settlement, total funding would be $5.2 billion.

Components of the RESTORE Act are being implemented

separately. For the Direct Component and Centers of

Excellence Grants, Treasury has finalized regulations and is

awarding funds on a rolling basis. For the Comprehensive

Plan Component, the Initial Comprehensive Plan was

published in August 2013 and updated in 2016. Ten

proposals for initial funding priorities were selected for

funding in April 2016 (other projects are expected to be

selected as funding from the BP settlement becomes

available). The 2016 Comprehensive Plan Update also

includes a 10-year funding strategy, as required under the

RESTORE Act. A regulation allowing for the release of 5%

of Spill Impact Component funds for planning purposes

was approved in December 2015, and the final spill impact

formula was approved in December 2015. Finally, the

NOAA Science Program has established long-term research

priorities and began awarding funding in December 2014.

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Deepwater Horizon Oil Spill: Gulf Coast Restoration Efforts

NFWF Restoration

Pursuant to criminal settlements with BP and Transocean,

NFWF is to receive and distribute $2.54 billion in a newly

created fund, the Gulf Environmental Benefit Fund, over

the 2013-2018 time period. More than half the funding is

expected to be distributed to the fund in 2017 and 2018. Of

the amounts going to NFWF, Louisiana is expected to

receive approximately $1.27 billion and the other states are

expected to receive the remaining funds. The funds are to

be used for barrier island and river diversion projects in

Louisiana and to remedy harm to natural resources in other

affected states. NFWF reports that it is working with state

natural resource agencies, the Fish and Wildlife Service,

and NOAA, among others, to coordinate restoration

activities. As of July 2017, NFWF reported that it had

funded 101 projects costing approximately $0.880 billion.

NRDA Process and Early Restoration

Enacted after the Exxon Valdez oil spill of 1989, the Oil

Pollution Act allows state, federal, and tribal governments

to act as “trustees” to recover damages to natural resources

in the public trust from the parties responsible for an oil

spill. Under OPA, responsible parties are liable for damages

to natural resources, including the following:

 the cost of restoring, rehabilitating, replacing, or

acquiring the equivalent of the damaged natural

resources;

 the diminution in value of those natural resources

pending restoration; and

 the reasonable cost of assessing those damages.

The trustees’ work occurs in three steps: a pre-assessment

phase, the restoration planning phase, and the restoration

implementation phase. The Deepwater Horizon NRDA

process is in the restoration implementation phase, which

includes development of project-specific restoration and

implementation plans.

On April 21, 2011, the trustees for the Deepwater Horizon

oil spill announced an agreement with BP to provide $1

billion toward early restoration projects in the Gulf of

Mexico to address injuries to natural resources caused by

the spill. As of July 2017, the trustees reported approval of

65 early restoration projects, with a combined cost of

$0.866 billion. Further, in early 2016, NOAA released a

final damage assessment and restoration plan, which

outlines plans to fund a total of $8.8 billion in natural

resource damages that were approved under the 2016

settlement with BP (this amount includes the

aforementioned amount for early restoration projects).

Timeline of Spill/Restoration Activities

April 20-July 15, 2010: Deepwater Horizon spill.

September 2010: Initial Oil Spill Commission Report (also

known as the Mabus Report) published.

October 2010: Gulf Coast Restoration Task Force

established.

December 2011: Gulf Coast Restoration Task Force

strategy published.

April 2012: Phase I NRDA early restoration

projects announced.

July 2012: RESTORE Act becomes law.

December 2012: Phase II NRDA early restoration

projects announced.

January 2013: Criminal settlement/NFWF funds finalized.

August 2013: RESTORE Act Initial Comprehensive

Plan published.

November 2013: First NFWF projects announced.

August 2014: Initial Comprehensive Plan projects solicited.

October 2014: RESTORE Act Direct Component Rule;

Phase III NRDA early restoration projects approved.

December 2014: NOAA Science Program funds available.

January 2015: Spill Impact Component planning

grants available.

September 2015: Phase IV NRDA early restoration

projects announced.

December 2015: Final spill impact formula approved.

February 2016: Final NRDA Damage Assessment and

Restoration Plan published.

April 2016: $18.732 billion settlement with BP finalized;

first 10 Comprehensive Plan projects announced.

December 2016: Updated Comprehensive Plan approved.

Charles V. Stern, Specialist in Natural Resources Policy

Pervaze A. Sheikh, Specialist in Natural Resources Policy

Harold F. Upton, Analyst in Natural Resources Policy

Jonathan L. Ramseur, Specialist in Environmental Policy

IF10255

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Deepwater Horizon Oil Spill: Gulf Coast Restoration Efforts

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