La. shuffling funds to pay for Bayou Corne sinkhole

Jindal administration expects to recoup costs

Seventeen days into the new state budget year, the state Department of Natural Resources needed to borrow $8 million from the state treasury to meet the day-to-day expenses of Bayou Corne.

Months later, the money’s almost gone.

DNR’s biggest expense is paying CB&I to help with the science behind a 25-acre sinkhole in northern Assumption Parish.

The agency also is spending dollars on supplies, travel and personnel. DNR’s expenditures on Sept. 18, roughly two months after Commissioner of Administration Kristy Nichols signed the request for a seed of federal funds, already clocked in at $7.4 million.

Across state government, dollars are being shifted to pay for sinkhole-related expenses.

The Jindal administration banks on recouping the money through litigation against Texas Brine Co. and a Dallas subsidiary of oil giant Occidental Petroleum. To date, the state’s sinkhole-related expenses are approaching $10 million.

At issue: Who is to blame for the collapse of a Texas Brine well that punched a giant hole in the ground felling trees, releasing gas and threatening hundreds of homes. A suit was filed in August on behalf of all state agencies involved in the response to the sinkhole.

Meanwhile, Texas Brine launched its own legal battle against the Occidental subsidiary and three other companies.

Below Louisiana’s surface are towers of salt deposits rising from what used to be an ocean floor. Oil and gas companies mine into the salt to store butane and natural gas or to extract brine for industrial uses.

The state contends that Texas Brine and Occidental mined the Napoleonville Dome to the point that it became unstable, triggering a collapse that sucked in the earth and forced Bayou Corne-area residents to evacuate their homes.

Texas Brine blames Occidental Chemical Corp., Vulcan Materials Co., Adams Resources Exploration Co. and Browning Oil Co. Inc.

The litigation will unfold in 23rd Judicial District.

Back when the sinkhole was 8.6 acres, DNR hired Baton Rouge’s The Shaw Environmental Group to deal with issues, such as determining how to vent off the methane.

CB&I later acquired Shaw.

DNR expected to pay CB&I $6.3 million as of Sept. 18. The state Department of Transportation and Development has spent nearly $1.4 million on feasibility studies, monitoring and equipment. The state Department of Environmental Quality spent $593,538 on a mobile air monitoring lab, command center, mileage and equipment, not including other expenses.

The treasury loan that DNR received came from federal funds. DOTD Secretary Sherri LeBas tapped into an emergency fund. DEQ and other agencies are using money from their budgets.

Deputy State Treasurer Jason Redmond said seeds or treasury loans are granted one fiscal year at a time. He said DNR must repay the money by Aug. 15, 2014.

LeBas said she spent dollars putting in place a monitoring system to pinpoint any problems in the highways and bridges near the sinkhole. She said she also spent money on feasibility studies in case a detour or a bypass is needed because of issues with La. 70. So far, she said, there is no indication of problems.

“We’re just being proactive and moving through the process,” she said.

Patrick Courreges, communications director for DNR, said his agency might need another treasury seed, given the speed with which the $8 million is being spent. He said there is no timeline for pulling out of Bayou Corne.

“The governor’s committed we’re going to be there,” he said.

In a prepared statement, Nichols, who is the governor’s chief financial adviser, said the game plan is for the state to recoup its expenses from Texas Brine.

“Texas Brine owes the state money, and we want to make sure they are held accountable,” she said.