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Federal Court Prohibits Use of BP Oil Spill Restoration Funds to Build Beach Hotel

Victory: $58.5 million of “natural resource restoration” fund was slated to construct a lodge and conference center in Gulf Shores, AL
Gulf Shores, Alabama sunset

Gulf Shores, Alabama sunset

Garret Farlow / Flickr CC BY 2.0
February 17, 2016
Gulf Shores, AL —

Yesterday, the United States District Court for the Southern District of Alabama prohibited Alabama and federal officials from allocating $58.5 million dollars of BP drilling disaster “natural resource restoration” funds to construct a hotel along an Alabama beach.

Location of Gulf Shores, Alabama.
Gulf Shores is located to the east of Mobile, Alabama.

Holding that the Natural Resource Damage Assessment (“NRDA”) Trustees  clearly violated the National Environmental Policy Act (“NEPA”) and the Oil Pollution Act (“OPA”) by failing to consider any reasonable restoration alternatives to the hotel project, Senior Judge Charles R. Butler, Jr. prohibited the use of money from the “early restoration funds” provided by BP to partly fund a lodge and conference center in a state park at Gulf Shores, Alabama. 

The court criticized the government for “circular logic” in allocating these funds “for possible use in a project that … was little more than an idea,” and emphasized that “[t]his case demonstrates the importance of providing a clear and meaningful analysis of alternatives.”

“This decision affirms that NRDA Trustees cannot merely give lip service to compliance with environmental law,” said Cynthia Sarthou, Executive Director of Gulf Restoration Network (“GRN”), which filed the case to challenge the use of natural resources restoration money to construct the hotel. “We are hopeful that today’s ruling will ensure that all future BP-related funding flows to the best possible restoration projects.”

“We didn’t lose any hotels or convention centers in the oil spill,” said Robert Wiygul, an attorney with Waltzer Wiygul & Garside who represented the GRN. “We lost marshes and wildlife and habitat.  Let’s hope that now this money will go to fixing something that actually got broken by the oil spill.“

“Money designated for use in restoring damaged natural resources should be used for that purpose—not for building a hotel,” said Steve Roady of Earthjustice, who served as co-counsel for GRN.  “The court has provided an important affirmation that NEPA establishes strong protections against such unwise government action.”

Read the decision.

Background:

BP’s Deepwater Horizon offshore drilling rig exploded and sank in the Gulf of Mexico in April of 2010, spilling millions of barrels of oil into the ocean and onto fringing marshes and beaches. The immense damages from that disaster are still being calculated. They include the loss of more than 4 billion oysters, 50,000 birds, and trillions of fish larvae, and the oiling of 600 miles of beach, dune, and barrier island habitat. In addition, certain species of whales and dolphins were harmed so badly that populations are likely to take decades to recover—if they recover at all.

In April 2011, BP agreed with a group of state and federal agencies (Natural Resource Damage Assessment Trustees, or “NRDA Trustees”) to make available $1 billion dollars in a separate fund for early restoration of damaged natural resources. After considering various petitions from Gulf states for allocations from that fund, the NRDA Trustees agreed to allow Alabama to devote $85.5 million toward construction of the “Gulf State Park Enhancement Project.” Of the total amount, $58.5 million of this money would be set aside as partial funding for construction of a proposed lodge and conference center adjacent to the beach in Gulf Shores, Alabama.

In its ruling yesterday, the court noted that “the Gulf State Park lodge and conference center was little more than a concept” at the time the NRDA Trustees approved funding. The court also noted that the environmental analysis conducted by the NRDA Trustees pursuant to NEPA and OPA “did not explore any potential alternative projects.” It held that this complete failure to examine possible alternatives to the construction of the lodge and conference center was a clear violation of law.

Accordingly, the court entered judgment against the government, declaring that “[t]he Federal Trustees have violated NEPA and OPA by failing to conduct a proper alternatives analysis with respect to the Gulf State Park lodge and conference center.” It enjoined both the Federal Trustees and the Alabama Trustee from “expending any of the $58.5 million in early restoration funds for use in the development and construction of the Gulf State Park lodge and conference center until such time as the Trustees comply with the alternatives analysis requirements of OPA and NEPA.”