Depending on the outcome of ongoing litigation, Texas soon may find itself the recipient of a sizable windfall. But the state shouldn’t fall victim to the temptation to treat this as free money.
Earlier this month, a federal court in Louisiana wrapped up final testimony in what has been nearly two years of litigation surrounding the 2010 Deepwater Horizon oil spill. The court, which previously found BP to have been grossly negligent in the spill, must now decide how much to fine the company for its actions under the Clean Water Act. The penalties are certain to be in the billions, and could be as much as $14 billion.
Thanks to provisions of the RESTORE Act, passed by Congress in 2012, some of that money will be coming to Texas. Under RESTORE, proceeds from the fines paid by BP are distributed to the Gulf Coast states and other organizations according to a complicated formula. Each state is then supposed to use its portion of the funds to deal with the environmental and economic damage caused by the spill.
Exactly how much money is coming to Texas is not known, but along with other similar mechanisms, the total amount will be in the hundreds of millions if not billions of dollars. Some money already has started to flow. Last November, the National Fish and Wildlife Foundation, which operates a related distribution program, announced $13.2 million in grants for affected regions in Texas.
By the time the funds are distributed, more than a half-decade will have passed since the spill. But the process for spending RESTORE Act funds still needs to be heavily scrutinized to ensure the money isn’t wasted and the state doesn’t incur ongoing financial responsibilities once the pot runs dry. To ensure Texas makes the most of its share of RESTORE Act funds, there need to be clear guidelines about what is and is not an appropriate use of the money.
In 2009, Sen. Tom Coburn attempted to amend the federal stimulus bill by including language forbidding the use of stimulus funds on casinos, convention centers, museums, aquariums, golf courses, stadiums, theaters or art centers. State use of Gulf spill funds have not always passed this “Coburn Test.” Mississippi committed $15 million from the initial oil spill settlement toward the construction of a baseball stadium in Biloxi, while Alabama spent $58 million of its money on a “lodge and meeting facility” in Gulf State Park. Texas can do better.
Texas should also be proactive, investing in ways to mitigate future as well as past coastal damage. Coastal wetlands, for example, not only spur recreational tourism, but also serve an important flood protection function. A 2011 study from the Duke University Center on Globalization, Governance and Competitiveness found that, by mitigating the damage potential of storms and waves, wetlands provide the equivalent of $23 billion of storm protection annually.
The important thing is that Texas makes these decisions in the most transparent and thoughtful manner possible. State officials tasked with implementing the RESTORE Act have so far done a good job, but we need to make sure this commitment and focus remains through the entire process.
Compared to the overall budget, RESTORE Act funding may not seem like much. But whether the money is spent wisely or poorly could have an impact far greater than the official funding tally. As Sen. Everett Dirksen was fond of saying: “A billion here, a billion there, pretty soon you’re talking about real money.”