Gulf Coast Nonprofits Can File Claims For BP’s Cash

When the Deepwater Horizon oil spill sent crude oil spewing toward the northern Gulf Coast and then coating it nearly three years ago, officials at Catholic Charities of the Archdiocese of New Orleans knew they had to quickly respond.

Within days of the April 20, 2010 well blowout beneath the Gulf of Mexico that caused an explosion killing 11 workers on the Deepwater Horizon platform, Catholic Charities workers had begun assessing needs and providing basic assistance to those affected, said Margaret Dubuisson, the agency’s director of communications. Next came mental health counseling and efforts to help those whose jobs were displaced by the oil spill. Catholic Charities became one of the lead agencies in the Southeastern Louisiana recovery effort, partnering with other agencies to operate five relief centers.

Catholic Charities provided $3.8 million in direct services — including mental health counseling, direct assistance and employment counseling — directly from its own funds, Dubuisson said.

“We had enormous expenses right away,” she said. “The Catholic Charities board authorized us to spend out of reserve funds right away to help the fishermen,” she said. Many of those fish­ing-related workers earned a subsistence living and also depended on the fish in the wetlands and Gulf for much of their own food. “Our development people worked really hard to raise money,” but realistically Catholic Charities officials did not expect to raise enough funds to cover the additional costs.

Now Catholic Charities is working on a possible claim under the “business economic loss” class of a financial settlement in which BP PCL expects to pay out $7.8 billion to more than 100,000 businesses and individuals.

The settlement, which received final approval this past December from Judge Carl J. Barbier of the United States District Court for the Eastern District of Louisiana, expressly states that nonprofits are included in the business economic loss class of claimants. According to Joe Rice of Motley Rice law firm in Charleston, S.C., who was one of the lead negotiators, “There’s no ambiguity to it whatsoever.”

Nonprofits were among the first to help those directly affected by the oil spill, digging into their own pockets to fund the effort, Rice said. Later, as businesses, corporations and individuals lost substantial revenues as a result of the spill, many could not afford grants, gifts and donations to those same nonprofits as they had in the past.

Generally speaking, Rice said, nonprofits may select any three consecutive months between May and December 2010 and compare them with the same period during 2009, or an average of the same three months in either 2008-09 or 2007-08-09, to show how the spill affected their agencies. He used as a hypothetical example an organization that had received a $100,000 grant from a business in 2009; after the oil spill the same business was unable to make a similar grant in 2010 and other donations did not make up the difference. “You have to have an economic loss.”

There is no cap to the settlement, so BP LPC could eventually pay more or less than the estimated $7.8 billion, Rice said. The official deadline for filing a claim is August 2014. “The earlier the better,” Rice said, since there is a chance the settlement could be reversed; any claims filed before any possible reversal would still be honored. “The worst thing [a nonprofit] can do is to do nothing,” he said.

“I know that a lot of times nonprofits don’t think of getting involved in claims” following disasters, he said. “But this is a very unique situation. …BP has accepted the responsibility to make everybody whole,” including nonprofits.

The conditions of the settlement led the Archdiocese of New Orleans to instruct each entity under its umbrella — including more than 100 parishes and about 75 schools — to review finances to determine whether it has a claim, said Jeff Entwisle, chief operating officer. The archdiocese has hired a law firm and accountants to assist in the determination.

“We would have thought differently if there had been a cap and if this had been pulling [money] from another pool,” Entwisle said. In that case, the archdiocese might have viewed filing a claim as competing for money with the very people it had helped because of the disaster. The settlement provides for archdiocesan entities to file claims “without having any effect on anybody else’s claim.”

The American Red Cross may file a claim, either as a national corporation or as one or more of its affiliates along the Gulf Coast, according to a statement from its national office. “During the event, the Red Cross provided some mental health assistance to people across the Gulf Coast since many of those communities had been affected by Hurricane Katrina just a few years earlier,” the statement read. “We are in the early stages of this process and have not determined the amount of any potential claim.”

The Terrebonne Readiness and Assistance Coalition (TRAC) based in Houma, La., will not file a claim despite being heavily involved in the recovery effort, said Executive Director Peggy Case. “We always stay within our means. We don’t have a cushion [reserves] to fall back on.”

That did not stop Case and TRAC, as her agency is known, from participating in the recovery effort in Terrebonne and Lafourche parishes and the town of Grand Isle, the area it serves. It partnered with Catholic Charities and other agencies to operate a relief center. When the nonprofit’s budget had no more money for payroll, Case said, “I became a volunteer.”

TRAC’s mission is to help rebuild communities after man-made or natural disasters; help individuals through the recovery process; and help plan for future crises or disasters. It formed in 1993, the year after Hurricane Andrew caused major flooding in Terrebonne Parish. Until 2010, all of the major disasters to which TRAC responded were weather-related: hurricanes, tornadoes and flooding. “This was different,” Case said.

The scope of the recovery effort – and its cost to agencies involved – is reflected in annual reports of New Orleans’ Catholic Charities for 2010 and 2011. The 2010 report showed income in 2009 as $80.4 million and expenses of $83.9 million. The next year income rose sharply to $102 million – reflecting in large part various grants, gifts, donations and government funds to help assist in the oil spill recovery – but expenses rose even more, to $107.6 million.

While the BP settlement might replenish some of the reserves Catholic Charities spent after the oil spill, Dubuisson knows any funds her agency receives probably will not remain in reserve for very long. She cited Hurricane Katrina in 2005 and Hurricane Isaac last year in addition to the 2010 oil spill.

“Here in South Louisiana we just never know when the next thing is going to come along,” she said. NPT