May 29, 2010
State Agencies Request $300 Million from BP to Mitigate Short, Long-term Impacts of Oil Spill on Communities and Businesses
May 28, 2010
V.P. Government & Public Affairs
BP America Inc.
501 Westlake Park Blvd., WL1 - 25188
Houston, TX 77079
Via E-mail: Frank.email@example.com
Dear Mr. Hernandez:
The reality of future economic loss for the people and businesses of Louisiana as a result of the Deepwater Horizon oil spill is a formidable challenge that requires the cooperation and assistance of British Petroleum (BP). The impacts not only will be detrimental to our ecological assets and businesses closely aligned with the coastal industries, but also to the overall economic viability of our coastal communities and the state. In addition, this disaster is causing extreme stress to our citizens in these coastal communities that already have endured five years of recovery from four catastrophic storms. Impacted communities currently are experiencing significant increases in unemployment, and facing fewer opportunities for short- and long-term employment and the loss of industry-based economies potentially for a long period of time (particularly commercial fishing, tourism and recreation, oil and gas, and services that support these industries). In addition, the need ! for public services already has increased and will continue to do so.
Commercial fisheries in Louisiana bring over $275 million worth of seafood annually to Louisiana docks according to National Marine Fisheries Services (NMFS) data. Along with the commercial sector of the industry, the recreational fishing industry also will be impacted severely. Louisiana anglers generate approximately $1 billion in retail sales related to recreational fishing activity every year. An estimated 4.1 million recreational saltwater fishing trips are initiated from marinas in the impacted area annually. Preliminary indications based on license sales and data from the Louisiana Department of Wildlife and Fisheries (LDWF) indicate that approximately 6,127 commercial fisherman, 4,238 vessel owners, 645 wholesale/retail dealers, 420 charter captains, 107 marinas and 1,200 oyster lease holders managing 358,740 acres of leased water bottoms and 1,047,074 acres of state managed public seed grounds will be directly impacted.
When combined with other economic outputs, these industries generate a total economic effect of nearly $4 billion annually. With oil contaminating the Gulf's coastal marshes and estuaries, LDWF, in coordination with the Louisiana Department of Health & Hospitals (DHH), has been forced to close recreational and commercial fishing in most of the area east of the Mississippi River since Friday, April 30, 2010. As a result, the fishing industry in the parishes of Plaquemines, St. Bernard, Terrebonne, Lafourche and St. Tammany have begun to feel severe impacts. This area produces roughly 20 percent of Louisiana's annual seafood harvest, which is valued in the millions of dollars. With the continued migration of large volumes of oil across the Louisiana coast, other parishes are feeling the effects as well. Commercial fishermen, vessel owners, wholesale/retail seafood dealers and related commercial establishments across the coastal parishes are already suffering decreased re! venues due to area closures necessitated by the spill.
Economic forecasts currently predict that possible job losses related to this incident will be in the thousands; more than 12,000 jobs might be lost. Given the uncertainties and the potentially devastating impact on an already weakened job market, it is vital that the state prepare for reasonably anticipated scenarios.
In order to provide a swift and ameliorative response for the individuals and businesses greatly impacted by this disaster, as well as to address the long-term impacts, the State of Louisiana is formally requesting that BP establish a fund to address a variety of specific needs regarding business and community impact mitigation. The State requests that in this first phase, BP make available an initial $300 million in the fund. This fund will provide critical resources to mitigate the immediate, short- and long-term impacts on affected businesses and individuals by including financial assistance and technical support to businesses and workers in our affected parishes and public health and behavioral health resources for our residents, as well as a mechanism to analyze the short- and long-term impacts of the event.
Below is an overview of the first phase of critical programs.
Phase I focuses on the urgent need for immediate assistance to the impacted businesses and communities, recognizing significant uncertainty about the future impacts of the spill.
1. Provide Businesses and Workforce Financial and Technical Assistance
- BP individual and business claims process (ongoing). BP should proactively administer its claims process for individual loss of income and business interruption losses and damages (and make improvements where necessary, including making process details and claims activity more transparent to State agencies) to ensure that all legitimate claims are paid quickly and consistently over time. Given the magnitude of potential impacts, it is likely that many individuals and businesses will experience losses for multiple years, particularly in the fisheries and tourism sectors. This process should remain a key part of the economic response and recovery effort for the foreseeable future and ensure that all legitimate claims are addressed until impacts caused by the oil spill have fully subsided (i.e., to a degree where all businesses could reasonably resume full operations given industry- and site-specific recovery issues).
- Emergency Commercial and Recreational Fisheries Industry Assistance ($250 million) The state is requesting that BP set aside this funding and implement a direct assistance program that is designed by the Louisiana Department of Wildlife and Fisheries to assist those persons that actively participate in Louisiana's multibillion dollar commercial and recreational fishery and are in the impacted areas. LDWF estimates that the state of Louisiana has lost most of its spring fishing season. While some of these businesses have received compensation through the BP claims process, these funds do not nearly cover the full losses of the spring season. The funds requested should be made available immediately to compensate for the spring season that has been lost by those dependent upon the commercial or recreational fishery, including commercial fishermen, dock owners, wholesale brokers/dealers, marina owners, charter boats and other direct support businesses.
- Support Technical Assistance Organizations in Assisting Individuals and Businesses ($25 million) Funds should be made available to support the efforts of business technical assistance organizations that provide services to businesses and individuals intended to mitigate losses due to the oil spill and prepare claims for damages. Services provided may include but are not limited to education, outreach, damage calculations, loss analysis, documentation preparation and claims processing assistance. Funds may be used to provide assistance to individuals or businesses seeking assistance from any party responsible for the oil spill, the Oil Spill Liability Trust Fund, an insurance policy or any other program administered the state or federal government. Organizations can utilize funds to provide assistance to specific business sectors, provide services and support operations.
- Fund assessment tool to monitor continued economic impact of oil spill on local businesses It is critical that the state understand the impacts of the spill on local businesses, workers, and communities, as well as the overall state economy. An assessment should be funded to monitor these ongoing impacts. This funding should be directed to the Louisiana Department of Children & Family Services.
- Tools for Coordinated Service Delivery. The state must prepare for the extreme pressure likely to be placed on public systems that connect people displaced from employment with individual and family assistance and with job training and placement. The magnitude of the disaster also requires coordination of services across multiple state agencies, non-government partners and private industry. This can only be accomplished effectively through the use of a shared electronic tool for displaced persons and all service and hiring entities. Such a tool will serve as a state point of contact and single point of entry for resource information and assistance.
Counseling services will utilize a broad range of best practice interventions, including immediate, short-term grief counseling for persons and families. The counselors will work in collaboration with local community leaders and side-by-side with the workforce and business providers. Additionally, debt counselors and other financial services will be brought in as necessary to address financial health issues of community member
While this cost estimate is for Phase I only, experience from the Exxon Valdez incident indicates that a minimum of 3 years of sustained behavioral health support must be available to these communities, responders, and individuals as they make the necessary economic and lifestyle transitions necessary to continue to survive once the consequences of their immediate losses are accepted. Funds should be directed by BP to behavioral health service providers operating locally in the affected parishes, including the local human service districts, as well as community support agencies performing behavioral health outreach, screening and education.
While Phase I confronts the existing situation, future impacts cannot yet be predicted; therefore, it will be necessary to address the longer-term effects in a second phase of the fund. In the meantime, the state will work with our local partners to continue to assess and plan responses to address the direct impacts from the event and the downstream impacts on individuals, communities, employers and industries. This will include economic development recovery funding to attract jobs to replace those lost due to the spill and to develop a large marketing program to offset the negative effects the spill is having on Louisiana's business image. It also will include funds for state-designed efforts to provide for the gear and technology needed to address the spill's impacts on the commercial and recreational sectors so that these industries are held harmless by the spill and to ensure transparency and accountability of where fishing activity occurs.
The goal of Phase II is to ensure that those who suffer a direct loss as a result of the spill are made whole and that appropriate resources are identified and allocated up front for social, mental health and retraining efforts to prepare people to become self-sufficient again.
Congruently, Louisiana's seafood industry is so important that the State will be submitting a separate plan addressing ongoing seafood testing and certification and programs designed to educate the public about those efforts. Everything from fisheries species sampling and frequency to an education program designed to help consumers and restaurants understand the safety and quality of Louisiana seafood will be included. That plan is forthcoming.
On behalf of the State of Louisiana, we formally request that BP provide this financial and technical assistance so that we may work together to provide resources and services for the many businesses and individuals adversely impacted by the oil spill. It is imperative that we address the immediate identified needs as soon as possible.
Governor Jindal has tasked DSS with coordinating individual, community and family assistance recovery resulting from the oil spill. Please contact DSS Secretary Kristy Nichols with your response by June 4, 2010.
Louisiana Department of Wildlife and Fisheries
Louisiana Workforce Commission
Louisiana Recovery Authority/Office of Community Development
Louisiana Economic Development
Louisiana Department of Children & Family Services
Louisiana Department of Health and Hospitals