Funds to litigate oil leak damages running low

The Louisiana Attorney General’s Office is running out of funds to pay ongoing expenses in the BP Deepwater Horizon oil disaster litigation, officials said.

“We have been able to patch things together to get this far ... After the first of the year, we will be asking for additional spending authority,” First Assistant Attorney General Trey Phillips said.

The funding problem comes as the state is facing a budget shortfall that has prompted reductions in agencies across state government. State revenues have not kept up with earlier projections and had to be adjusted downward recently.

Rene Free, director of administrative services for state Attorney General Buddy Caldwell, said no new funds were appropriated in the current year’s budget for Deepwater Horizon litigation. The office submitted a request for additional spending authority in July — soon after the start of the fiscal year — but it has yet to be considered, she said.

Requested was an additional $16.2 million through what is known as the BA-7 process — in essence a budget adjustment made during the fiscal year when the Legislature is not in session.

In the meantime, the Attorney General’s Office continues to work with the governor’s Division of Administration and the Joint Legislative Committee on the Budget on the money hole, Free said.

“We don’t ask for more money than we need cash-wise to pay current bills, but we definitely need more spending authority and more cash,” Free said.

“Will it be the total amount of that BA-7? Probably not. But we will have to have some because currently what we are doing is we are getting cash and using our current spending authority to operate our regular day-to-day business. So we will have to have some kind of adjustment in order to make ends meet,” Free recently told legislators.

The litigation stems from the April 20, 2010, explosion of the Deepwater Horizon rig off the Louisiana coast. The blast killed 11 oil rig workers and set in motion what some are calling the nation’s worst offshore oil disaster.

The Deepwater Horizon rig, owned by Transocean Ltd. and drilling for BP, was drilling about 50 miles southeast off the Louisiana coast when a blowout of the well a mile under the Gulf of Mexico surface caused an explosion and fire.

The rig sank less than two days later.

More than 200 million gallons of oil flowed from the well, soiling marshes and fishing grounds, before a cap was placed over the well several months later.

Michael DiResto, spokesman for the state Division of Administration, said $4.8 million in spending authority was carried forward from the last fiscal year for Deepwater Horizon bills. “All of that funding has been made available,” DiResto said.

“We will work with the AG if additional resources are needed,” he said.

Phillips said the trial in the Deepwater Horizon case will start in February. “That is causing us to ramp up our work,” he said.

He said Louisiana issues will not likely be tackled in that phase of litigation “but we have to prepare for that.”

“There are a lot of depositions, hundreds of depositions taking place, which is very expensive,” Phillips said.

So far, Phillips said, gathering of state data has cost $6 million.

“We looked at that and realized we would likely have to come back” for additional funds during the current fiscal year, he said.