Polluter’s Paradise: How Oil Companies Avoided Environmental Accountability After 10.8 Million Gallons Spilled

By Joan Meiners, The Times-Picayune and The Advocate

This article was produced by ProPublica in partnership with The Times-Picayune and The Advocate, which is a member of the ProPublica Local Reporting Network.

( ProPublica ) – Louisiana still hasn’t finished investigating 540 oil spills after Hurricane Katrina. The state is likely leaving millions of dollars in remediation fines on the table — money that environmental groups say they need as storms get stronger.

In the aftermath of Hurricane Katrina in August 2005, while stranded New Orleanians flagged down helicopters from rooftops and hospitals desperately triaged patients, crude oil silently gushed from damaged drilling rigs and storage tanks.

Given the human misery set into motion by Katrina, the harm these spills caused to the environment drew little attention. But it was substantial.

Nine days after the storm, oil could still be seen leaking from toppled storage tanks, broken pipelines and sunken boats between New Orleans and the Mississippi River’s mouth. And then Hurricane Rita hit. Oil let loose by Katrina was pushed farther inland by Rita three weeks later, and debris from the first storm caused damage to oil tankers rocked by the second.

All told, the federal agency overseeing oil and gas operations in the Gulf of Mexico reported that more than 400 pipelines and 100 drilling platforms were damaged. The U.S. Coast Guard, the first responder for oil spills, received 540 separate reports of spills into Louisiana waters. Officials estimated that, taken together, those leaks released the same amount of oil that the highly publicized 1989 Exxon Valdez disaster spilled into Alaska’s Prince William Sound — about 10.8 million gallons.

The Oil Pollution Act, passed by Congress in response to the Valdez incident, requires that federal and state agencies work with the companies that spilled the oil to conduct a preliminary assessment of damage to natural resources. Once a comprehensive report is finalized on the value of the affected plants, soil, water and wildlife, those so-called responsible parties must pay for restoration efforts.

Fourteen years later, not one assessment of the damage to natural resources after the two 2005 hurricanes has been completed. None of the 140 parties thought to be responsible for the spills has been fined or cited for environmental violations. And no restoration plans have been developed for the impacted ecosystems, fish, birds or water quality, a review by The Times-Picayune and The Advocate and ProPublica has found.

The extent of the damage to the environment may never be known.

Even small spills have impacts, said Darryl Malek-Wiley, an organizer with the environmental conservation organization Sierra Club. Oil seeps into the marsh mud and affects the worms and snails. Birds that eat those animals are affected, as are the fish and the fishermen who bring them home. Then the marsh plants start to die, and saltwater intrudes to push them over. The coastline recedes. The next storm churns closer.

“I think it’s an outrage that they haven’t made any progress,” Malek-Wiley said. “Here we are 14 years later and they haven’t done anything. A year after Katrina, things had settled down significantly. I think the oil response team should have been moving forward with environmental damage claims.”

Over the same period, some of the very same companies responsible for spills have gotten reimbursements totaling $19 million from a federal trust fund that allows private parties to submit claims for expenses incurred cleaning up their spilled oil. In order to get their money back, companies have to file papers saying how much oil they spilled, why it spilled and what they did to capture it. They often describe the spill as the result of an “unforeseeable act of God.”

By failing to hold anyone accountable for the spills, Louisiana is likely leaving on the table hundreds of millions of dollars in environmental remediation money. When BP spilled 134 million gallons of oil into the Gulf of Mexico in 2010, the company agreed to pay $8.8 billion to help restore the natural environment. If the companies responsible for the Katrina and Rita spills paid up at the same rate, Louisiana would add more than $700 million to its restoration budget — money that Steve Cochran, associate vice president for coastal resilience at the Environmental Defense Fund, said is desperately needed.

“It’s pretty clear what the value of money is in a place like Louisiana, where we have these restoration needs,” Cochran said. “Every dollar that’s not collected [in fines] is a dollar that we can’t spend on this work.”

Indeed, most of the coastal restoration work going on in Louisiana is being funded with the BP settlement. When reached by phone, Cochran was just leaving a meeting with state natural resource managers about coastal resilience projects slated for next year, funded with about $750 million of money from the BP spill.

“It’s a lot of work that’s desperately needed but that is only possible because that [BP settlement] money became available,” Cochran said.

With no statute of limitations on assessing oil spills in Louisiana, officials at the Louisiana Oil Spill Coordinator’s Office, or LOSCO, say they are still working their way through a complex process of using computers to model the damage. But Stephanie Morris, a lawyer for the agency, says that even if they complete that work, it will be difficult to fine responsible parties or otherwise hold them accountable for damages caused 14 years ago.

“The [oil companies] always fight with us,” Morris said. “Their position with us is always: ‘Louisiana has a lot of spills. You have a degrading coast. Are you trying to say these injuries are from my little spill?’”

Charlie Henry, a member of the regional National Oceanic and Atmospheric Administration response team, oversees the damage assessment process for spills in Louisiana, Texas and Oklahoma and has worked with LOSCO on oil spill response for 30 years. If the 2005 spills had not been signed over to LOSCO, assessing them would likely have fallen to Henry’s group.

He says it’s common for five years to pass before a spill assessment and remediation plan is complete. He thinks that the fact that LOSCO is still working on the 2005 hurricane spills shows diligence, not fecklessness.

“Some states would have given up on [the hurricane spills] — just moved them to a cold-case file like a police department would when they can’t solve it,” Henry said.

Since the 2005 spills, little action has been taken to help prevent something similar from recurring. Neither Patrick Courreges, communications director at the Louisiana Department of Natural Resources, nor Greg Langley, the press secretary of the Louisiana Department of Environmental Quality, were aware of any new regulations since Katrina to protect against storm-related oil spills or the associated damage to the environment.

“The thing about Katrina was, it came to shore as a Cat 3 but really it still had a Cat 5 storm surge with it,” Langley said. “When you get that much water rushing in on you at that velocity, it’s going to knock things down. That’s like, an act of God.”

At the federal level, the catastrophic 2010 Deepwater Horizon spill prompted some reforms. The Obama administration decided that it was problematic to have the same agency oversee oilfield leasing and offshore safety, and those functions were split between new divisions within the Interior Department. The administration also imposed a series of more stringent well safety regulations. However, many of them have been rolled back by the Trump administration.

While hurricanes gain speed due to the effects of climate change, the push for oil leasing in the Gulf of Mexico shows no sign of slowing down. In 2014, the Obama administration opened up 40 million new acres in the Gulf for oil and gas development. Four years later, the Trump administration announced plans to open up most of the rest, in what would be the largest expansion of offshore oil and gas drilling in U.S. history. Many of these 76 million acres are to be offered at reduced royalty rates to encourage additional near-shore drilling in Louisiana waters.

Meanwhile, scientists expect that future storms will exacerbate oil damage to the environment.

“In the Gulf, storms are predicted to be less frequent but more intense when they do come,” said Sunshine Van Bael, an ecologist at Tulane University who evaluated damage to marsh ecosystems from the BP oil spill. “One thing that storms do is, if oil has been buried underneath the marsh because it wasn’t rehabilitated, a storm could come along and whip that back up to the surface. So, the aftereffects of the oil spills might be greater [with climate change] since the storms are predicted to be more intense.”

The Regulatory Pipeline: The Way It’s Supposed to Work

In 1967, a 37 million gallon spill of crude oil from the tanker Torrey Canyon caused massive environmental damage off the coast of England, prompting the U.S. to develop a national strategy the following year to guard against a similar outcome. The Oil Pollution Act, passed in 1990, established the framework for state and federal oil spill response that is still used today.

When oil spills into water, it sets into motion a complex series of events. The spiller, or someone who notices oil in water, calls the U.S. Coast Guard, which gives the spill an identification number and logs it into the National Response Center database. In Louisiana, the state police are also notified. They assign each spill a different number and relay information to LOSCO. Depending on the size of the spill and the resources affected, as many as 12 other state and federal agencies are notified.

To create clearer jurisdiction, the Louisiana Legislature in 1991 created LOSCO to manage the process. Its deputy director, Karolien Debusschere, said, “I’ve been doing this a long, long time, and I feel it’s a pretty well-functioning system.”

Along with having to pay for cleanup and mitigation, the company that caused the spill could be subject to fines from the U.S. Environmental Protection Agency or the state DEQ. It might also face civil lawsuits from private parties and from LOSCO on behalf of state residents.

That’s how Louisiana’s system works. In theory, at least.

A Leaky Process

The reality is quite different and much more opaque.

An analysis of Coast Guard National Response Center data by ProPublica and The Times-Picayune and The Advocate shows that Louisiana out-spills every other state. In some years, it has as much as 10 times the number of crude oil spills into water reported as in other oil-producing states like Texas, California, Oklahoma and Alaska. This amounts to around 1,000 spills into Louisiana waters every year, though most are small. Nearly a quarter of these spills are due to an ongoing leak by Taylor Energy, reported every weekday, but even without these, the state still far outspills every other.

Since its creation in 1991, LOSCO has settled assessments for 24 spills. No method exists for the public to track individual spills through the assessment process, how many spills are being addressed, or at what stage they leak out of the system.

Unless citizens monitor the National Response Center database, or the Coast Guard announces the spill in a press release, the public only learns that a spill has occurred when a notice of intent to restore the habitats is released. That, in turn, only happens after a spill has made it through the damage assessment pipeline. If the spills never gets assessed, a public notice is never filed.

No such notices have been filed for the 2005 spills. A list of 407 spills from Katrina and Rita, down from the original count of 540 for unexplained reasons, sits cued up in a spreadsheet on Debusschere’s computer — unevaluated, unresolved and unremediated.

All these years later, the only way Debusschere figures she can still evaluate the impacts is to work with scientists to build a computer model to simulate damages. She says she has no idea when that effort might be complete.

LOSCO did complete preliminary assessments for at least some of the 2005 spills, as well as some modeling of the damage. But none of it has been released to the public and Morris declined to share it with a reporter, saying it was a work in progress.

There is limited baseline data on the natural, pre-spill state of the environment along Louisiana’s coastline, making it hard to accurately estimate the ecological damage.

And it’s even harder now. The oil that fouled Louisiana’s waters in the summer of 2005 has long since dispersed or settled into the marsh mud. The plants, pelicans, fish and otters that might have been affected are gone.

“You know, the natural environment is always changing,” Henry explained. “There’s some studies on turtles and marine mammals you can draw from, for example, but none of them are comprehensive. And none of them are current, because maybe they were all done five, 10 years ago.”

That’s not how it’s done in Alaska. According to Henry, after the Valdez spill, the state of Alaska started requiring oil companies to document the condition of the environment at the desired site before issuing a drilling permit, ensuring that if a spill does occur, the damage can be measured.

The outdated data available for Louisiana, on the other hand, has been collected at the state’s expense, most of it only after the latest massive disaster.

Knocked Off Track

Debusschere said that LOSCO was making progress before the Deepwater Horizon offshore rig gushed 134 million gallons of crude into the Gulf. She blames the BP spill for knocking the agency off track in processing the Katrina-era spills.

“It kind of sucked up the room,” Morris, the LOSCO attorney, said. “It’s the same folks on both sides, you know, all got engaged to work on Deepwater Horizon.”

Still, critics wonder why LOSCO hadn’t completed any of the 2005 work before the BP spill.

“There should have been some kind of action in the late 2006, 2007 period,” said Malek-Wiley of the Sierra Club. “A year after Katrina, things had settled down significantly. I think the oil response team should have been moving forward with environmental damage claims.”

During that 4 1/2-year lull between Gulf oil catastrophes, LOSCO did finish damage assessments for five small oil spills that occurred before Katrina. Two of them dated to the late 1990s. For one of these, remediation efforts are ongoing.

The BP disaster may have actually helped streamline the processing of both past and future spills at LOSCO by coalescing a network of experts who now have extensive experience evaluating oil damage to Gulf habitats, Morris said.

It also made a powerful argument for more resources. At the time Katrina hit, LOSCO only had five employees working response and damage assessment and an annual operating budget of just over $5 million. Today, LOSCO has 19 people handling those duties, and its budget has had a modest increase, to $7.5 million.

Resorting to Civil Litigation

Where LOSCO’s small team has failed to fully assess the harm caused by a single spill from Katrina or Rita, some damages from a 2005 spill have been resolved through civil litigation.

In 2009, a class-action lawsuit against Murphy Oil Corp. ended in a settlement requiring the company to pay $330 million to 6,200 claimants, including owners of about 1,800 homes in St. Bernard Parish. The damage occurred when one of Murphy’s storage tanks floated off its foundation during Katrina and dumped over a million gallons of crude oil into a square-mile segment of Meraux and Chalmette.

Paul Thibodeaux, the lawyer who represented Murphy Oil, called the incident “the largest environmental disaster [of Katrina] that affected people directly.”

Thibodeaux thinks that similar lawsuits against companies that spilled oil farther out along the coastline were never pursued because there weren’t enough plaintiffs in these rural areas to land a lucrative settlement.

But even in the areas affected by the Murphy Oil spill, many owners of damaged properties could not be located. In a flooded post-Katrina neighborhood, few left forwarding addresses.

In 2007, the EPA fined the same Murphy Oil facility $395,313 in civil penalties plus $1.5 million in cleanup costs after a large benzene leak. That case was settled in April 2019. But there has been no official accountability for the 1 million-plus gallon oil spill that occurred in 2005.

Debusschere says Murphy Oil’s million-gallon spill will be included in LOSCO’s modeling of Katrina and Rita damages.

Murphy Oil officials did not return several voicemail messages seeking comment.

Malek-Wiley notes that there are simple methods to secure an oil tank in place when a hurricane is on the way.

“If you know a hurricane is coming, you fill your tanks with additional water to make them heavier so they won’t shift. Murphy didn’t do that, and their tanks shifted, allowing the oil to come out,” Malek-Wiley said.

Murphy wasn’t the only company to make such a mistake.

The largest single spill of the 2005 hurricanes occurred when tanks owned by Bass Enterprises succumbed to strong winds and tides, spilling 3.8 million gallons of crude oil into Cox Bay, on the Mississippi’s east bank between Port Sulphur and Empire in Plaquemines Parish. It was four times larger than the Murphy spill.

The EPA’s database on environmental violation enforcement, ECHO, does not report any action against Bass Enterprises since the company paid a $1,760 fine for an unrelated violation in 2003. Bass Enterprises declined to comment.

Despite the hurricane danger, Louisiana doesn’t specifically mandate that oil companies weigh or bolt down their tanks. According to Dwight Bradshaw, a senior environmental scientist at the DEQ, you just can’t protect against some storm-related spills.

“Down at the Bass Cox Bay spill, you had 18 to 20 feet of water,” Bradshaw said. “It’s the laws of physics. Oil is lighter than water, so those tanks are gonna be lifted off their foundations. It’s an act of God. So, they’re not responsible.”

Under state and federal laws, oil companies are supposed to have risk management plans in place for so-called act of God events like hurricanes. But it’s not clear how many do have such plans. Bradshaw said that the DEQ makes site visits and can ask to see the written plans anytime, but that the companies are not required to file anything.

Environmental activists worry that the failure to hold anyone accountable for the 2005 spills sends the wrong message.

“To the extent that fines are supposed to be disincentives for behavior, it’s a failure of the system,” Cochran of the Environmental Defense Fund said. “If I get a speeding ticket but I don’t have to pay it, I probably won’t slow down.”

“Acts of God”

While natural resource damage assessments stagnate and civil cases fail to find plaintiffs, some claims from oil companies have moved more quickly.

To date, more than $19 million has been paid out from the federal Oil Spill Liability Trust Fund to reimburse at least two oil companies for costs they incurred cleaning up oil they spilled during Katrina and Rita. According to U.S. Coast Guard documents, those expenses include $38,000 for an oil recovery barge that succumbed to hurricane turbulence and $16.5 million in oil recovery costs that resulted when debris from a hurricane-damaged drilling platform punctured an oil transport tank.

Since 2000, at least 28 hurricanes or tropical storms have made landfall in Louisiana — an average of more than one per year. But still they are treated by the state as unforeseeable events.

Adam Babich, former director of the Tulane Environmental Law Clinic, said Louisiana has had a more liberal application of the act of God defense than other states or federal courts. He explained that while the act of God defense does not usually release oil companies from liability, it can weaken arguments to hold them accountable.

“We don’t normally penalize [companies] for act of God events,” Greg Langley of the DEQ said. “We just get right to remediation.”

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