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BP Settlement Brings Help for General Fund


By Brandon Moseley  
Alabama Political Reporter

On Thursday, July 2, Alabama Attorney General Luther Strange (R)and Governor Robert Bentley (R) announced that BP has agreed to pay the State of Alabama $1 billion in economic damages and approximately $1 billion in natural resource damages and Federal penalty monies to resolve the State’s claims arising from the 2010 Gulf oil spill.

Attorney General Strange said in a statement, “As part of an $18.5 billion global settlement announced today, BP has agreed to pay the State of Alabama $1 billion in economic damages from the April 2010 Gulf oil spill.  This is a major victory for the people of Alabama who will benefit for years to come.”

Governor Bentley said, “The BP/ Deepwater Horizon oil spill was the worst environmental disaster in United States history, and the impact to the Alabama Gulf Coast was detrimental.”

Gov. Bentley continued. “We have reached an agreement in principle with BP to compensate the State for all of the environmental and economic damages suffered as a result of the oil spill. With the agreement announced today, we are taking a significant step forward in our State and will become a stronger, safer and more resilient state as a result of this terrible disaster.” 

AG Strange said, “Five years ago when I took over the State’s case against BP, I promised to make the State of Alabama whole and to do so without spending a penny on outside counsel.  Today, I am pleased to announce that both goals have been accomplished.  This is a remarkable achievement for our State and a tremendous legacy for the future.”

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The $1 billion economic settlement funds will be deposited in the State’s General Fund over the next 18 years, which is an estimated $55.6 million a year. However, the precise allocation of the payments to the General Fund have yet to be determined at a future date.

The State is also supposed to be receiving approximately $1 billion in settlement monies for natural resource damages and Federal penalties over the course of the next 15 years.  What exactly that is earmarked for and what that can or cannot be spent on is unclear at this moment, as well as to when those payments begin.  Finally the State is to receive $300 million in Federal penalties also earmarked for gulf coast restoration projects. 

AG Strange praised his team, led by Special Deputy Attorney General Corey Maze. 

In January 2011, General Strange was appointed by the court to serve as Coordinating Counsel for the Gulf States in this historic litigation.  In March, Strange announced that Alabama had been chosen to be the first State to receive a jury trial against BP for economic damages.  That trial was slated to begin in the spring of 2016.

On April 20, 2010 the deepwater oil rig, “Deepwater Horizon” exploded about 100 miles off of Alabama’s coast, killing 11 people and causing oil to flow into the Gulf of Mexico.  Over almost three months, 3.19 million barrels of oil flowed into the Gulf.  Alabama and the other Gulf States experienced significant environmental and economic damages as that oil washed ashore destroying fisheries and wrecking gulf tourist economies at the peak of their busiest season.

The total value of the Agreement in Principle is approximately $18.5 Billion for all of the affected Gulf states economic losses, the natural resource damages and BP’s Clean Water Act penalties.

AG Strange said, “From the first day that Governor Bentley and I took office, we’ve worked together to secure justice for Alabama in the wake of the tragic BP oil spill.  That teamwork has led us to today’s record settlement and a positive legacy for the future.”

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Department of Conservation and Natural Resources Commissioner Gunter Guy said, “It is important to commend BP, our Federal partners and the other Gulf Coast states for their efforts to get this agreement accomplished.  We look forward to working with Alabama’s coastal communities to identify, develop and implement appropriate projects to restore our resources and the services they provide.”

The agreement announced today is only related to the State of Alabama’s claims against BP and it does not affect the claims of other people or companies.

Presumably the $55.6 million in new General Fund revenues will be used to close the existing $198 million shortfall in the General Fund Budget.  That still leaves a paper deficit of $142.4 million for the 2016 fiscal year that must be plugged by revenue increases, moving money over from the Education Trust Fund (ETF), or by budget cuts. 

Another estimated $20 to $30 million of that whole has already been addressed by allowing agencies to raise fees on government services.  Presumably some of that $1.3 billion for gulf coast restoration can be spent on improving the dunes around Gulf State Park so it is possible that Governor Bentley can build his Gulf Coast Conference Center now without the proposed $50 million bond issue that he asked for at the end of the last session, but was denied in the Alabama Senate. 

A Special Session is still tentatively scheduled for August 17 to address the General Fund budget.

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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