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Government officials defend questionable use of BP oil spill grants

BILOXI -- Local government leaders are defending what has been called a shopping spree with millions of dollars of emergency grants from BP, saying they were uncertain what they needed for the unprecedented disaster and didn’t want to be caught ill-equipped.

According to a database of spending compiled by the Associated Press, they bought fleets of expensive SUVs and trucks, boats, personal watercraft, all-terrain vehicles -- even kayaks and a motor home -- and bedecked them with gadgets of every description. They paid government workers overtime and special compensation and hired scores of consultants. All this despite Mississippi’s shoreline being mostly spared the feared deluge of oil.

Much of the equipment would have been needed if large amounts of oil had washed in, local leaders said, and it is being put to use in day-to-day government operations. Some governments, such as Bay St. Louis, Moss Point and Waveland, appeared to be frugal with BP’s money. But some of the governments’ purchases appear to have little direct correlation to the oil disaster and frugality appears not to have been a top consideration.


“We tried to get as much equipment as we could, so it wouldn’t fall back on the taxpayers of Biloxi,” said Biloxi spokesman Vincent Creel. “If they think there needed to be tighter oversight, that wasn’t our call.”

Biloxi bought 14 expensive trucks and SUVs with BP money, including a new Chevy Tahoe for Mayor A.J. Holloway to drive, one of seven Tahoes it bought, ranging in price from $28,000 to $42,000. Local governments don’t pay state sales tax on purchases.

Creel said Holloway needed the vehicle for oil disaster–related travel, and he was overdue for a replacement for the 2006 GMC Yukon he drove before the BP money flowed. Creel said city agencies were attempting to gather a list of where the vehicles are now and who is driving them, but that had not been supplied as of Tuesday.

South Mississippi governments, the AP database shows, spent nearly $3 million on vehicles and vehicle equipment, more than double the combined amount spent by its sister Gulf states of Louisiana, Alabama and Florida. Florida spent only $15,000 on vehicles and related equipment.

Some local governments shied away from buying passenger vehicles with BP money. Gulfport bought only one, a Chevy Silverado pickup for $34,000.

“Any kind of vehicles generally look a lot more suspicious than working equipment,” said Gulfport Chief Administrative Officer John Kelly. “We shied away from that, and we didn’t have a real need.”


Gulfport did buy a couple of boats, including a 30-foot Argus for $150,000. Though this might look spurious, Kelly said, it was needed.

“This is not just a boat -- it’s a rescue boat,” Kelly said. “Our fire department has never had one of those, and we do a lot of underwater work and work on the water. At the time we bought it, we were going out front and working with the Coast Guard, showing them areas we thought needed to be screened off (from oil) . Not only was it used for that, but it can be used for saving lives. It has a radar on it that can detect a body deep under water, on the bottom.

“Most of what we do here in the city of Gulfport, we ask, ‘Would it pass the ‘60 Minutes’ test?’ That’s a good rule of thumb -- would you want Mike Wallace sticking a microphone in your face asking you about it?

“I’m very comfortable with what we bought.”


Though the millions of dollars state and local governments spent came from BP, once it hits government coffers it becomes government money, said State Auditor Stacey Pickering. He said he and his agency held seminars on the Coast and made this clear to local governments when the BP money started coming.

“It becomes public funds, and the spending must comply with all public laws and rules of management of those funds,” Pickering said. “ I have seen some of that (BP-money spending list) and it definitely raised some questions with me. We are just getting to the point we are going to start auditing those monies, as part of the regular government audits.”

But the spending also came during a declared state of emergency, so many state spending regulations, such as requiring bids for large purchases, were waived for the BP money.


BP has thus far not publicly criticized or scrutinized how state and local governments spent its money. It placed few conditions on the money, although states are required to provide an accounting for how it was spent.

“We recognized the importance of getting funding to the states, parishes and counties quickly, and therefore provided advance funding to help kick-start their response efforts,” BP spokesman Ray Melick said. “ Our hope is that the communities used those funds in an appropriate manner.”

Department of Marine Resources Director Bill Walker and his counterpart at the state Department of Environmental Quality were charged with oversight of the state’s BP money for local governments.

“The guidance from BP was pretty open-ended, with very little criteria attached to those funds,” Walker said. “At the time, oil was flowing and heading toward Mississippi. We left it fairly open with the cities and the counties, to allow them to do what they felt they needed to do to defend themselves. We didn’t have time to wait around and look at everything. The oil was flowing. We tried to get it on the streets and get the purchases moving. I don’t feel like anything was way out of line. We were pretty much in crisis mode then.”


South Mississippi governments spent BP money on overtime and special pay for government workers dealing with the disaster, and contract labor.

Long Beach Mayor Billy Skellie said this was justified -- the disaster pulled employees away from their regular government work, including him.

“I think they paid me one time for being most of the day tied up with it in the beginning,” Skellie said. He said he stopped accepting BP compensation for his work, but other employees were paid overtime.

Walker said governments had the option of paying employees with BP money if they were dealing with disaster preparations or cleanup, “not just overtime, straight time, too.”

Kelly said after Gulfport realized the disaster was “burning up too much of the administration’s time” it hired an engineering firm to handle much of the work.

“While this was going on, there would be 15 or 20 companies coming in every day, wanting to sell you something that was the bullet that was supposed to solve the problem,” Kelly said. “We hired an engineering firm to vet these projects and systems, and we tried not to burn up a lot of people’s time and taxpayers’ money.”

Needs were uncertain

Local leaders said they were in uncharted territory with the oil disaster and uncertain exactly what they would need to fight it.

“Local governments -- most didn’t have anything beyond a few little aluminum boats,” said Butch Loper, who helped handle Jackson County’s response. “There are multiple miles of bayous, and areas that are usually flooded, and marsh. At first we were having to borrow boats large enough to carry boom.”

Loper defended Jackson County’s purchase of an $88,000 motor home -- used as a command and communications center -- and a $39,000 air boat, needed for going into marshy areas.


Ocean Springs bought eight cars and trucks, and spent more BP money -- more than $1.8 million -- than any other local government. An Associated Press report recently questioned the city’s purchase of $8,400 worth of police Tasers with BP money.

Ocean Springs Mayor Connie Moran defended the city’s purchases, including the Tasers.

“We had to put our police reserves on the beach for surveillance 24 hours a day,” Moran said, “especially on East Beach, where thieves were stealing the anchors off the boom. We hired our reservists, put them on payroll, which BP also paid for, and instead of buying them guns we bought Tasers, which were less costly and, we felt, more appropriate.

“You have a lot of Katrina-hardened elected officials on the Coast. But we didn’t know what to expect. We saw on TV where marshes in Louisiana were being completely ruined by massive amounts of oil. We didn’t know if we’d be dealing with looting on the waterfront if people had to leave. We bought boom, hazmat suits and had our public works and law enforcement people go through hazardous-material training. We bought the kind of gear we thought we might need to have.”

Walker said the tens of thousands of dollars local governments spent on police overtime and gear is not such a stretch -- more security was needed on the beachfront.

“We relied on local law enforcement,” Walker said. “We made the decision that we were not going to put National Guardsmen on the beach.”


Skellie said although BP was generous with emergency grants, it’s doubtful local governments will be made whole from the disaster.

“We’re still putting together what we might have lost on sales taxes, but its very hard to calculate, because we were already in a (Katrina) recovery mode and things were just finally getting ready to reopen,” Skellie said. “We don’t have a full year to show, because a lot of places hadn’t been in business for a year.”

And Skellie said there are intangibles, such as businesses and housing developers that were seriously eyeing his city a year ago but dropped their plans after the oil disaster.

“The economy was so iffy anyway that the oil was the coup de gras,” Skellie said. “You know it, feel it, but you couldn’t make a claim.”


Loper noted state government spent far more of BP’s money than local governments did. He questions that, and said more money should have been set aside “in escrow” for local governments, which are still trying to figure out economic damages from the disaster.

“Again the locals got the short end of the stick, just like with the stimulus funds,” Loper said. BP has paid nearly $800 million to state and local governments on the Gulf, much of which has been spent. Walker said the state made local governments quit most BP spending in August, after the well was capped and the threat of oil slicks had abated.

He said there is “somewhere in the neighborhood of $20 million” left from the emergency grants, which Walker said would likely be added to recent money BP has given the state for seafood marketing and tourism advertising.

He said besides marketing to help economic recovery, remaining money might be used for things such as rebuilding oyster reefs or other restoration projects.

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