'Spillionaires' the new rich after Gulf crisis
The oil spill that was once expected to bring economic ruin to the Gulf Coast appears to have delivered something different: a gusher of money — to some.
The oil spill that was once expected to bring economic ruin to the Gulf Coast appears to have delivered something different: a gusher of money.
So many people cashed in that they earned nicknames: "spillionaires" or "BP rich." Others hurt by the spill wound up getting comparatively little. In the end, BP's attempt to make things right — spending more than $16 billion, mostly on damage claims and cleanup — created new divisions and even new wrongs.
Some inequities arose from the chaos that followed the explosion and spill last April 20. But in at least one part of Louisiana, the differences can be traced in part to local power brokers.
To show how the money flowed, ProPublica interviewed people who worked on the spill and examined records for St. Bernard Parish, a coastal community about five miles southeast of downtown New Orleans.
Those documents show that companies with ties to parish insiders got lucrative contracts and then charged BP for every possible expense. The prime cleanup company submitted bills with little or no documentation. A subcontractor billed BP $15,400 a month to rent a generator that usually cost $1,500 a month. Another company charged BP more than a $1 million a month for land it had been renting for less than $1,700 a month. Assignments for individual fishermen also fell under the control of political leaders.
"This parish raped BP," said Wayne Landry, chairman of the St. Bernard Parish Council, referring to the conduct of its political leadership. "At the end of the day, it really just frustrates me. I'm an elected official. I have guilt by association."
Economic benefits rippled throughout the Gulf region. In the six months after the spill, sales-tax receipts, a key measure of economic activity, rose significantly in eight of the 24 most affected communities from Louisiana to Florida. Only one community, in Mississippi, saw its receipts dip significantly.
Sales-tax collections from Louisiana's Plaquemines Parish rose more than 71 percent. St. Bernard collected almost $26.8 million in sales- and lodging-tax receipts in the six months after the spill, almost twice as much as in the same period in 2009. Flush with cash, many fishermen bought new boats and trucks. Sales at the nearest Chevrolet dealer rose 41 percent.
Days into the crisis, St. Bernard's parish president, Craig Taffaro Jr., invoked a Louisiana law to declare a 30-day emergency and handle the crisis without most normal government checks and balances. He chose the prime contractor that supervised the cleanup. He and people close to him decided which fishermen would be hired to put out booms and search for oil.
In some ways, parish residents seemed to view the disaster and BP's culpability as a way to recover from earlier blows. St. Bernard bore the brunt of Hurricane Katrina, which flooded almost every home in August 2005.
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 no money.
The spill changed that. Fishermen were paid to lay out protective booms to try 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 and 712 shirts emblazoned with the parish name. Taffaro and other officials said the parish shouldn't have to spend its own resources to respond to the spill. The shirts were necessary to identify employees at the cleanup site, they said.
Some 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. St. Bernard's homeland-security director, David Dysart, a salaried employee, got almost $23,000 for working 497 hours of overtime in less than seven weeks, a fact first reported by the New Orleans Times-Picayune. Dysart did not respond to a query about his overtime.
As the money flowed, complaints spread. Subcontractors said those at the top of the cleanup skimmed off money, while those at the bottom earned much less for doing the work.
BP provided only limited information about cleanup costs. The federal government ceded control of cleanup spending to BP, and the U.S. Coast Guard, the federal agency most involved with overseeing BP's response, said BP was spending whatever was required to clean up the spill.
Taffaro and other St. Bernard officials also refused to respond to public-records requests that began in November. When asked again last week why the parish hadn't provided records, Dysart said that he would be happy to help but that filling the request would take time and cost a lot of money.
In response to questions submitted in March, Taffaro said through his spokeswoman that he can approve overtime for salaried employees in extenuating circumstances and that Dysart eventually decided to stop taking overtime. Taffaro said that paying overtime for picking up dog food was necessary because the spill had caused fishermen to abandon their dogs.
Many companies and people earning big money in St. Bernard Parish had connections to parish power brokers, according to court documents, parish records and interviews.
BP based its cleanup operation in the parish on land leased by Amigo Enterprises, which had been paying less than $1,700 a month to the Arlene & Joseph Meraux Foundation, according to the nonprofit's most recent tax returns. But Amigo billed BP more than $1.1 million a month, said BP spokesman Joe Ellis. One of Amigo's owners was St. Bernard's sheriff of 26 years, Jack Stephens, who also sat on the board of the Meraux Foundation.
Anthony Fernandez Jr., Stephens' cousin and manager of Amigo Enterprises, said BP's figure of $1.1 million was too high, but he refused to provide the amount. Stephens didn't return calls for comment.
BP had no comment on claims that it was overcharged.
The company that benefited most from BP's checkbook was Loupe Construction, a small, family-owned business. Taffaro chose Loupe on May 5 to manage the cleanup in St. Bernard, a contract that eventually would be worth up to $125 million. Until then, its main job in St. Bernard had been helping to rebuild levees.
Taffaro said he selected Loupe after asking for proposals from several companies. The decision didn't sit well with everyone.
"That company had no particular expertise in oil mitigation — none," said Landry, the parish council chairman. "But we've been kept in the dark on the entire operation. Pardon the pun, but we've been left out of the loop."
Company owner Paul Loupe referred questions to his lawyers. One, Karl Dix, said the company was chosen because of its levee projects and heavy construction work, and because it was available.
BP sent a letter to the company in late August stating that most of Loupe's bills had little or no documentation.
By fall, the small amount of oil that had hit parish waters was mostly gone, and the fishermen were getting the bulk of their BP money through the claims process, not the cleanup. The $20 billion compensation fund that BP and the federal government set up in August would run for three years, pay people who could prove damages from the spill and in theory avoid costly court battles.
Kenneth Feinberg, who administers the fund, admitted that his team was initially overwhelmed by the number of claims it received.
The system didn't differentiate between fishermen who got cleanup jobs with BP and those who didn't. The amount people received for their initial six-month emergency claims was based on the paperwork they submitted, not on their actual losses.
One man who earned $67,000 in 2009, fishing crabs and hunting a swamp rat called nutria, got $100,000 for his six-month claim. That was on top of $90,000 for working on the cleanup and $20,000 he received in initial BP claims. In the eight months after the spill, he made $210,000, more than three times his 2009 income.
But Thomas Gonzales, who said he filed $90,000 in taxable income in 2009, received only $22,000 in his six-month payment. "They're giving the money to the young generation," said Gonzales, 73. "They figure I got one foot over the hole."
Many fishermen fretted that businesses that had been hurt by the recession, not the spill, were getting BP money: hairdressers, waiters, restaurant owners.
Felesia Carter, a manager at St. Bernard's only off-track betting parlor, said customers were gambling away claims money. Her business was so good, she said, that employees worked overtime.
"I don't understand how BP is just giving its money out like this," Carter said. "Give it to the people who deserve it."
ProPublica's research director, Lisa Schwartz, and researchers Kitty Bennett, Sasha Chavkin and Liz Day contributed to this report.
Sam and Sara Lucchese create handmade pasta out of their kitchen-garage adjacent to their Ballard home. Here, they illustrate the final steps in making pappardelle pasta.