Frequently Asked Questions (FAQs)
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Q: What is the BP criminal plea agreement?
A: On November 15, 2012, the U.S. Department of Justice and BP announced an agreement to resolve all criminal charges against BP resulting from the Deepwater Horizon oil disaster. In the agreement, BP agreed to plead guilty to 14 counts of criminal action and agreed to pay $4.0 billion. The bulk of this money will go to the Oil Spill Liability Trust Fund ($1.15 billion) to pay for cleanup of future oil spills and to the National Fish and Wildlife Foundation ($2.394 billion) for natural resources restoration in the Gulf. BP will also be on probation for five years and will be required to make a number of improvements to its operations, including adopting a specific oil spill response training program, revising its Oil Spill Response Plan and developing deepwater safety technologies.
This agreement only addresses criminal charges, not civil claims, and is only applicable to BP—it does not address any other corporations or individuals implicated in the disaster. In addition, the agreement must be approved by the court. For more details about this agreement, see ELI’s fact sheet on the criminal plea agreement.
Q: What is the current status of the RESTORE Act?
A: Congress passed a version of the RESTORE the Gulf Coast States Act as part of the surface transportation bill on June 29, 2012. President Obama signed the Act into law on July 6, 2012. The RESTORE Act will direct 80% of any Clean Water Act civil penalties associated with the Deepwater Horizon oil spill to Gulf Coast restoration and recovery. The final RESTORE Act is similar to previous RESTORE Act bills introduced in the U.S. Senate and House of Representatives, but the Act differs from prior bills in a few important respects. For instance, previous versions of RESTORE included funding for a National Oceans Endowment and a Fisheries Endowment, which the final Act does not contain. The RESTORE Act creates a Gulf Coast Ecosystem Restoration Council, which must propose a comprehensive plan for how to spend its portion of RESTORE Act funds by January 2013. For additional information, see ELI’s resources on the Clean Water Act and RESTORE..
Q: What is the difference between “principal” and “interest” expenditures under the RESTORE Act?
A: The RESTORE Act creates a Gulf Coast Restoration Trust Fund. Eighty percent of any Clean Water Act civil and administrative penalties associated with the Deepwater Horizon oil spill will be deposited into the Trust Fund. The sum of money that is deposited into the Trust Fund, called the “principal,” will be invested to earn additional income, which is called “interest.” (This process is similar to how money grows while sitting in a savings bank account.) Both the principal funds and any interest income earned will be available to fund Gulf restoration and recovery. According to the RESTORE Act, each fiscal year, an amount equal to the interest income earned in the previous year will be spent in the following way:
25% of the interest income shall go to the Restoration Science and Monitoring Program;
25% of the interest income shall go to the Centers of Excellence Grant Program; and
50% of the interest income shall go to a federal and state Ecosystem Restoration Council to carry-out natural resource protection and restoration projects.
Past drafts of the RESTORE Act legislation sought to dedicate interest income to a national Oceans Endowment or a Fisheries Endowment, but those endowments are not present in the final version of the RESTORE Act, which became law on July 6, 2012. The RESTORE Act also details how the principal funds will be divided between the five Gulf states and the three programs mentioned above. For more information on how the principal will be allocated, see ELI’s summary of the RESTORE Act.
Q: How much RESTORE Act money will be spent each year?
A: The RESTORE Act does not detail how much money will be spent from the Gulf Coast Restoration Trust Fund each year; the Act only describes how the money that is spent in any given year must be divided between the five Gulf states, the interstate Ecosystem Restoration Council, and the Act’s two scientific research programs. According to the RESTORE Act, the U.S. Department of the Treasury is responsible for promulgating procedures that will establish how money will be deposited into and expended from the Trust Fund. The Department of Treasury’s procedures ultimately may clarify specifics like how much may be spent from the Trust Fund in any year, the frequency of deposits into the Trust Fund, the frequency of interest income payment, or a project funding schedule. Before finalizing its procedures, the Department of Treasury must provide public notice, solicit comments from members of the public about its draft procedures, and respond to the public’s comments. The Treasury’s final procedures are due by January 2013.
Q: What is involved in a settlement process?
A: Some of the legal processes described in other parts of the website may be resolved through a settlement agreement rather than a full trial. Any settlement must be submitted to the trial court for review; if the court approves the parties’ agreement, it will issue a consent decree noting so. The structure and content of a settlement agreement may vary. NRDA settlements must follow the requirements set out in NOAA’s regulations, which specify that the trustees may reach a settlement if the agreement “is adequate in the judgment of the trustees to satisfy the goal of OPA and is fair, reasonable, and in the public interest, with particular consideration of the adequacy of the settlement to restore, replace, rehabilitate, or acquire the equivalent of the injured natural resources and services.” It also limits the use of settlement funds to implementation of a publicly reviewed restoration plan. For the economic damages and medical benefits settlement agreements currently being considered by BP, the PSC, and Judge Barbier, a fairness hearing has been set for November 8, 2012.
Q: What is the “multidistrict litigation” or “MDL”?
A: The multidistrict litigation (MDL) for the Deepwater Horizon incident, MDL No. 2179, is a consolidation of hundreds of lawsuits related to the explosion and oil spill. While the lawsuits within the MDL raise different types of legal claims, such as personal injury, contract, tort, and environmental claims, the different claims will require a court to answer related factual questions. For this reason, the U.S. Judicial Panel on Multidistrict Litigation determined that it would be efficient to create an MDL. The Panel assigned Judge Carl J. Barbier of the U.S. District Court for the Eastern District of Louisiana to oversee the Deepwater Horizon MDL. Cases filed in any federal court that are related to the oil spill ordinarily will be transferred into the MDL. Judge Barbier appointed fifteen law firms and two liaison counsel to a Plaintiffs’ Steering Committee (PSC), which is tasked with enhancing coordination between the numerous individual and business plaintiffs in the MDL. The MDL trial was originally set to begin on February 27, 2012, but was postponed pending finalization of the settlements on economic damages and medical benefits between BP and the Plaintiffs’ Steering Committee. The new anticipated trial date is January 14, 2013.
Q: What are the economic damages claims?
A: The Oil Pollution Act requires that individuals, businesses, and governments be compensated for economic injuries and losses suffered as a result of an oil spill. Depending on the claim, the claimant, and what the claimant has already received, claims can be filed through an established claims process, with the responsible party, through the Oil Spill Liability Trust Fund, and/or by filing a lawsuit. The Gulf Coast Claims Facility (GCCF), run by Kenneth Feinberg, was established to handle Deepwater Horizon damages claims from individuals and businesses. On March 2, 2012, BP and the Plaintiffs’ Steering Committee reached a consensus on the key terms of agreements to settle the majority of the economic loss and medical claims. On March 8, 2012, the GCCF was officially terminated and a transitional court-supervised claims process was established. If the court approves the settlement, a new court-supervised process for handling economic claims will be created.
On May 2, 2012, the court granted preliminary approval of two settlement agreements that cover the majority of economic loss, property damages, and medical claims. The settlements will not affect state and local government claims, or the Department of Justice’s Clean Water Act and Oil Pollution Act claims. The court held a final fairness hearing on November 8, 2012, and granted final approval of the economic loss claims and medical claims on December 21, 2012 and January 11, 2013, respectively.
Q: Where does the Oil Spill Liability Trust Fund fit in?
A: The Oil Spill Liability Trust Fund is an account created by Congress to hold certain payments, contributions, taxes, and penalties paid by oil and gas companies. It is administered by the U.S. Coast Guard’s National Pollution Funds Center. The Fund has two components: the Emergency Fund, which pays for things like oil spill removal activities, and the Principal Fund, which pays for things like certain uncompensated oil spill damages and the administration of OPA. There is no cap on how much money the fund can hold, but there are limits on how much money can be spent from the Fund on any one incident. The Fund is defined in the Internal Revenue Code.
Q: What is GoMRI?
A: BP pledged $500 million over 10 years ($50 million per year, ending May 31, 2020) to support independent scientific research on oil spill impacts, mitigation, detection, characterization, and remediation, focusing on the Gulf of Mexico. The Gulf of Mexico Research Initiative (GoMRI) is administered by the Gulf of Mexico Alliance. The requests for proposal and research themes are developed by a Research Board, which also reviews and selects the projects to be funded. The Research Board consists of 20 members, 10 of whom were appointed by BP and 10 of whom were appointed by the Gulf of Mexico Alliance.