Auditor: Oil Companies Pay Too Little For Oyster Damage

NEW ORLEANS (AP) — Oil companies that damage the state's public oyster grounds — for example when they drill wells and lay pipelines — are not required to pay enough in compensation to the state, according to a state legislative auditor's report.

         This was one of several findings in a Louisiana Legislative Auditor's report released Monday, which examined payments companies make for damage to the 1.7 million acres of public oyster grounds in Louisiana's coastal waters.

         "We're not charging enough for damages," said Karen Leblanc, an audit director with the Louisiana Legislative Auditor. "It's not actually enough to mitigate the damages."

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         Oyster farmers take oysters from the public grounds and plant them on their private leases. They also sell oysters taken from public grounds on the open market.

         The report looked at 411 permits handed out to companies working in oyster grounds between 2010 and 2014. It found the state charges less than it should for compensation and that compensation had not been paid for 92 percent of those permits as of last October.

         In that time period the state received $2.7 million in compensation for damage, the audit said. Unpaid compensation for 378 permits amounts to $3.5 million, the audit said.

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         The payments go into building new oyster grounds, which typically involves placing oyster shell, limestone and crushed concrete in places where seed larvae can settle and grow.

         The auditor suggested raising fees and getting companies to pay faster, perhaps by requiring companies to post a bond before being given a permit to do work.

         The Louisiana Wildlife and Fisheries Department — the agency that oversees the public oyster grounds — said it was looking at charging companies more for compensation.

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         When companies do damaging work to oyster grounds the compensation they pay goes into a fund to build more oyster breeding grounds.

         Based on the cost of creating new oyster grounds, the report said the state should have charged about $870,000 more than it did between 2010 and 2014. The state is using an outdated payment formula drawn up in 2003, the audit said.

         Auditors also urged the state to do a better job of going back to places where companies do work and see if payments should be increased "based on actual damages." Payments are made often based on an initial estimate on damage, the report said.

         The report also questioned why damage amounts were reduced "without defining its justification" by $1.1 million for two permit holders that received 56 permits. The report advised coming up with rules to outline when compensation amounts can be lowered.

         Leblanc, the audit director, said her agency could not disclose the names of the permit holders who received the lowered payments.

         Officials with the state fisheries department did not immediately return a message seeking details about the companies.

         In a response to the auditor's report, Robert Barham, the secretary of the state Wildlife and Fisheries Department, agreed with recommendations to require a bond before work can start. But he said the agency does a good enough job of assessing damages after work is completed.

         Leblanc said changes recommended in the audit can be done through administrative action and do not require legislative approval.

         – by AP Reporter Cain Burdeau



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