Gusher of BP Oil-spill Fund Creates “Spillionaires”

Michael Giberson

A story reported by Kim Barker, ProPublica (a version of the story ran in the Washington Post). I’m excerpting several parts of the story, but the whole story is worth a look:

The oil spill that was once expected to bring economic ruin to the Gulf Coast appears to have delivered something entirely different: a gusher of money.

Some people profiteered from the spill by charging BP outrageous rates for cleanup. Others profited from BP claims money, handed out in arbitrary ways. So many people cashed in that they earned nicknames — “spillionaires” or “BP rich.” Meanwhile, others hurt by the spill ended up getting comparatively little….

Some inequities arose from the chaos that followed the April 20 spill. But in at least one corner of Louisiana, the dramatic differences can be traced in part to local powerbrokers.

Emergency! BP fund seen as a change to help recover from Hurricane Katrina damages:

Just days into the crisis, [Craig Taffaro Jr., St. Bernard’s parish president] did what many parish presidents did: He invoked a Louisiana law that allowed him to declare a 30-day emergency and handle the crisis without most normal government checks and balances. But Taffaro used his powers more broadly than most, saying that he wanted to put money back into the community….

In some ways, parish residents seemed to view the disaster and BP’s culpability as a way to recover from earlier blows. More than other coastal communities, St. Bernard bore the brunt of Hurricane Katrina, which flooded almost every home in August 2005. The population dropped almost in half, from about 67,000 in 2000 to about 36,000 in 2010, largely because people didn’t come back after Katrina and the hurricanes that followed. Before the spill, the parish slashed its budget by 11 percent, cutting garbage collection, the fire department and mosquito control. There was just no money.

The spill changed that. Fishermen were paid to lay out protective boom, the floating material used to corral the oil. Contractors were hired to manage the cleanup and provide security. Claims money began flowing to people who said their lives had been upended by the crisis.

The parish government was among the first to benefit, snagging a $1 million check for oil-spill expenses. Parish employees went shopping for cameras, printers, a file cabinet, staplers, six pairs of children’s scissors and 712 shirts emblazoned with the parish name. Some of the money also went to overtime pay for more than 40 parish employees, including three who claimed overtime for picking up dog food for the animal shelter. …

As the money flowed, complaints spread. Some beneficiaries didn’t necessarily suffer from the spill but had social or political connections. Subcontractors said those at the top of the cleanup creamed off money for doing very little, while those at the bottom earned much less for doing the actual work.

At first, everyone was angry with BP. But as the months wore on, some St. Bernard residents directed their frustration at Taffaro, blaming him for handing out jobs and money to a small group of insiders.

Meanwhile, Taffaro was attacking BP and the federal government in the media, appearing on TV alongside Gov. Bobby Jindal and testifying in Congress. His outrage was palpable. There wasn’t enough boom, coordination or respect for the local government. BP wasn’t making good on its obligations.

The pressure paid off. Taffaro at one point boasted that St. Bernard had doled out more BP cleanup money to commercial fishermen than any other Louisiana parish. His claim is impossible to verify, because neither Taffaro nor anyone else would provide details about the spending numbers.

There is more, none of it very encouraging about the role local politics plays in local business in coastal Louisiana:

The company that benefited most from BP’s checkbook was Loupe Construction and Consulting Co., Inc., a small, family-owned business in a nearby parish with few employees and a bare-bones website that misspelled the company name. On May 5, Taffaro chose Loupe to manage the cleanup in St. Bernard, a job that would eventually be worth as much as $125 million.

Taffaro said he selected Loupe after asking for proposals from several companies and because of its disaster experience….

“That company had no particular expertise in oil mitigation — none,” said [Wayne Landry], the parish council chair. “But we’ve been kept in the dark on the entire operation. Pardon the pun, but we’ve been left out of the loop.”

In other Louisiana parishes, BP chose the lead cleanup companies, all of them certified by the Coast Guard as official Oil Spill Response Organizations, meaning they had some experience responding to spills. But Loupe didn’t have that certification. In fact, the company that would eventually manage more than 50 subcontractors and 150 vessels had no oil-spill experience at all. Its main job in St. Bernard had been helping rebuild levees….

Owner Paul Loupe had a long history of debts and lawsuits. Four lawsuits, three of which have been settled, accused him of not paying his bills after Katrina and Hurricane Rita, when he and another small Louisiana company joined up to clear debris in nearby Jefferson Parish, the company’s only major experience responding to a disaster. Loupe’s website says the two companies performed more than $100 million worth of work for Ceres Environmental Services Inc., the Minnesota-based company that hired them.

But much of that work was actually performed by layers of subcontractors, which is why Loupe was accused of being one of the “pass-through” companies that proliferated after the hurricanes. Workers at the bottom of the contracting chain earned so little for debris-removal work that the U.S. Department of Labor later ordered Ceres to pay $1.5 million in back wages to more than 2,000 laborers….

It was “a once-in-a-lifetime opportunity”:

After Loupe was picked, there was a feeding frenzy to get hired by the company, which operated out of a family compound about an hour from St. Bernard. People with little connection to commercial fishing used old boats or bought new ones and signed up to work. Companies from Washington state, Nevada and Mississippi came to town. Contracts were fought over. Everyone wanted a piece, just as they did after Hurricane Katrina. Only this time, the federal government wasn’t footing the bill; a reviled corporation was, and the prices reflected that.

“There was a lot of gouging,” said David Northcutt, who worked for a Loupe subcontractor and has since sued for unpaid wages. “Everybody had their hand out, of course. It was a once-in-a-lifetime opportunity for a lot of people.”