Obama Supports Proposal to Return BP Money to Gulf States, Browner Says

President Barack Obama supports a proposal that a large portion of any federal penalties paid by BP Plc over the Gulf of Mexico oil spill be returned to the states, White House energy adviser Carol Browner said today.

Under current law, any penalties paid by the oil company would go to the general treasury, Browner said on NBC’s “Meet the Press.” Some Gulf-area politicians have suggested that 80 percent of the money be returned to the states affected by the worst oil spill in U.S. history.

The government estimates 4.9 million barrels of oil were released into the Gulf following the April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 workers. The London-based company, which hasn’t agreed to that figure, could pay penalties based on the amount of oil that escaped from the Macondo well.

“There will be a large financial penalty,” Browner said. Returning that money to the states “makes a lot of sense.”

In addition, BP has agreed to a $20 billion fund to compensate victims of the spill for their economic losses, and BP will have to reimburse governments for natural resource damages.

“BP will be held absolutely accountable,” Browner said.

A U.S. government report said about 74 percent of the oil that leaked from the damaged well is no longer in the water. BP was able to capture about 800,000 barrels of crude before it entered the Gulf, while some of the oil was burned, skimmed and dispersed.

Natural Breakdown

“Some continues to break down naturally,” Browner said. “The good thing is we’re not seeing huge amounts of oil on our beaches and in our marshes. This was a massive response.”

Still, she said, much needs to be done to open fisheries, ensure estuaries are safe and educate the public, she said.

“We want to make sure these communities are restored and made whole and the environment is made whole,” she said. “There’s still a lot of work to do.”

National Incident Commander Thad Allen said BP did a “fairly good” job dealing with plugging the Macondo well, while not adequately addressing the needs of people involved in the incident.

Dealing with individuals was “a real struggle” for London-based BP, Allen said today on CNN’s “State of the Union.” That’s “where they need to improve.”

BP plugged its Macondo well last week with 5,000 feet (1,524 meters) of cement and resumed drilling a relief well to permanently seal off the source of the oil spill.

The reservoir, about 40 miles (64 kilometers) off Louisiana, may have held 50 million to 100 million barrels of oil, BP Chief Executive Officer Tony Hayward said in a May 6 interview with the Houston Chronicle.

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

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