Research, Ecological Restoration Get Unprecedented Windfall From BP Oil Spill Criminal Settlement

Cash flow. A record settlement of criminal charges related to the 2010 Deepwater Horizon oil spill is providing funding for ecological restoration and scientific research.

U.S. Coast Guard

One of the largest oil spills in history continues to generate record sums of money for scientific research and environmental restoration.

The U.S. Department of Justice (DOJ) yesterday announced that oil giant BP has agreed to pay $4 billion in criminal fines and penalties related to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. More than one-half of the total, $2.4 billion, will go to an independent foundation to jump-start ecological restoration projects along the Gulf Coast. Another $350 million will go to the U.S. National Academy of Sciences (NAS) to create a 30-year regional research effort focused on reducing the risk of future spills and improving environmental monitoring.

The payouts, which would be made over 5 years and must still be approved by a federal judge, are the largest chunks of dedicated cash that either group has ever received.

"It is a very exciting opportunity," says Barbara Schaal, vice president of NAS and a plant geneticist at Washington University in St. Louis. "We feel we can use these funds to help fill in some really significant gaps in the science being done in the Gulf." NAS is part of the U.S. National Academies, which advises the government on technical issues and conducts studies on a wide array of topics that are funded by government and private organizations. In 2011, the National Academies reported revenue of about $325 million and a staff of 1100.

The restoration funds will go to the National Fish and Wildlife Foundation (NFWF), a windfall that will dramatically expand the little-known foundation's reach. "We will rely heavily on our established, science-based strategy for identifying and selecting appropriate projects to receive funding," says Jeff Trandahl, CEO of the Washington, D.C.-based organization. The foundation spent $130 million last year on about 570 conservation projects nationwide, including about $23 million along the Gulf Coast since 2010 to address damage from the spill.

Both organizations were caught by surprise by the timing of yesterday's announcement, spokespeople say, although discussions apparently had been under way with DOJ attorneys for months.

This summer, government attorneys approached NAS with a proposal to endow a long-term, three-pronged effort that would focus on research and development, education and training, and environmental monitoring in the Gulf Coast region. NAS officials had some concerns about the proposal, however, Schaal says.

The first issue was independence. "We wanted to make it absolutely clear that these funds would be used in a way that is totally consistent with the way that the National Academy operates, which means complete independence from [BP] and the government," she says.

A second worry was whether the new program would dwarf NAS's other projects. "We didn't want it to become the major thing that we do," Schaal says. "The conclusion was that the magnitude of the program fits right in the middle of what we do. It is not the largest contract, not the smallest." The academy's Transportation Research Board, for instance, also "has a sizable chunk of money," she notes. And although $350 million "sounds like a lot, when [spent] over 30 years, it is a good program but it's not monstrous."

Finally, "scientific merit was a very, very important issue for us," Schaal says. "We wanted to make sure that we were addressing issues where we could in fact make a real contribution."

The academy is working on how the new program will be organized, who will run it, and how it will fit in with numerous other research efforts that have sprung up in the wake of the Deepwater Horizon spill. BP, for example, has already promised $500 million over 10 years to the Gulf of Mexico Research Initiative, which has already begun funding a variety of university-based research consortia. And BP is facing civil fines for oil pollution that are expected to funnel another $5 billion to $20 billion to restoration and research projects along the Gulf. "There certainly is discussion of ways to make sure there isn't overlap," Schaal says. "It would be really sad to have three groups doing the same thing and then not have a major area being covered."

But she's confident that there will be plenty for NAS to do. "If you look at the whole portfolio of research that is being done in the Gulf, that all swirls around oil production and transportation, we feel there are some gaps," she says. One is better understanding the human health and safety implications of the industry. Another is improving environmental monitoring, particularly finding ways "to understand more about the Gulf ocean system" in an "appropriate and modern way." Schaal says that NAS could provide advice on how to design and incorporate "the best science" into monitoring projects.

At NFWF, which has received funding from criminal fines and penalties before, the $2.394 billion from BP will fund the biggest program it has managed since Congress created the foundation in 1984 to build alliances between government, nonprofit, and industry groups interested in restoration and conservation science. BP's plea agreement calls for the money to be divided among restoration projects in the five Gulf Coast states affected by the spill. Approximately one-half will be used to "remedy harm" in Alabama, Florida, Mississippi, and Texas. The other half will go to projects in Louisiana, the state most affected by the spill, including efforts to rebuild coastal barrier islands and reengineer the lower Mississippi River.

That plan pleases many restoration advocates along the Gulf Coast. They have already identified "bulldozer ready" projects costing billions of dollars but haven't had a ready source of money to pay for them. "Nice to see this in motion … this is walking the talk" included in several major restoration plans developed since the spill, says wetland scientist Robert Twilley, head of the Louisiana Sea Grant College Program at Louisiana State University, Baton Rouge. Some of those projects could get under way as soon as the plea deal is finalized by a judge.

In the meantime, the legal saga isn't over. By taking responsibility for the deaths of 11 workers, withholding information from Congress, and violating clean water and bird protection laws, BP ensured that the company will not face further federal criminal charges. In a separate action, the company also agreed to pay some $500 million to the U.S. Securities and Exchange Commission to settle finance-related violations. "[W]e have accepted responsibility," BP Group Chief Executive Bob Dudley said in a statement. "All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region."

BP still faces extensive civil fines for oil pollution that could total $20 billion or more, as well as an array of private lawsuits. In addition, the government has charged three BP employees with a variety of criminal offenses, including manslaughter and lying to law enforcement officials. "I want to be absolutely clear that today's resolution does not mark the end of our efforts," U.S. Attorney General Eric Holder said yesterday at a press conference in New Orleans, Louisiana. "We'll continue to follow all credible leads and pursue any charges that are warranted."