BP settlement money flows to governments in far-flung places

BATON ROUGE, La. -- Clusters of landlocked municipalities more than 100 miles from the Gulf Coast have secured millions of dollars in BP money through settlements designed to compensate local governments for lost tourism dollars and other economic damage from the company's 2010 oil spill, according to records obtained by The Associated Press.

This week, BP finished making approximately $687.4 million in settlement payments to 383 local government entities in the five Gulf states. Nearly $8 million of that money went to 32 government entities more than 100 miles from the coast, in places such as the Mississippi Delta and suburbs of central Alabama, the records show.

BP's well blowout off Louisiana's coast triggered a deadly explosion that killed 11 rig workers and spewed millions of gallons of oil into the Gulf of Mexico, staining beaches, killing wildlife and scaring away tourists.

The company agreed last month to pay up to $1 billion to resolve economic claims by local governments, but the settlement payouts have fallen well short of that maximum amount. The records obtained by the AP provide the most comprehensive accounting of where the money went and what types of government entities received shares.

Jackson, Mississippi, approximately 175 miles from the coast, received $1.3 million. Birmingham, Alabama, more than 200 miles from the coast, received $1 million.

Among the smaller cities receiving money is Rule-ville, a Mississippi Delta city that landed $40,748. Rule-ville, which is nearly 300 miles from the coast and has about 3,000 residents, said it lost revenue from sales taxes and other sources due to a drop in tourist travel after the spill. The city, perhaps best known as the hometown of civil-rights activist Fannie Lou Hamer, is in an area that is a popular destination for blues music fans.

"Everybody in Mississippi suffered to varying degrees," said Danny Griffith, Ruleville's city attorney.

Irondale Mayor Tommy Joe Alexander -- whose city in the Birmingham suburbs received a $57,225 settlement award -- said a seafood shortage after BP's spill led to a decrease in sales tax generated by local restaurants.

"We're very fortunate that we did get something," he said. "There was an impact on the whole state."

BP's settlements with local governments are part of its broader $18.7 billion agreement with the five Gulf Coast states and the federal government. Larger portions of settlement money are dedicated to coastal restoration work.

BP already has paid billions of dollars in compensation to Gulf Coast businesses and residents who claim the spill cost them money.

July 15 was the deadline for local governments to decide whether to accept the settlement offer, which could not be renegotiated. BP, which couldn't veto individual payments, accepted the package of settlements July 27.

A modest "windfall" for several communities far from the coast must have been an afterthought for BP given the broader deal's high stakes, according to Ed Sherman, a Tulane University Law School professor emeritus and expert in complex litigation.

"It's not a great deal of money when you consider the total amount of the settlement," Sherman said.

Only a handful of local governments have announced they rejected a settlement offer. They are free to continue pursuing their claims but may have to wait for a trial date if BP is unwilling to negotiate a separate deal.

Many local governments that sued BP over the spill enlisted help from private attorneys who handled their claims on a contingency basis, typically in exchange for at least 20 percent of the settlement amount.