A new report by the Mississippi state auditor’s office alleges that funds associated with a multi-billion-dollar lawsuit stemming from the 2010 Deepwater Horizon oil spill have been spent without proper oversight.
State Auditor Shad White’s team is vouching that 62% of the money delivered to the Gulf Coast Restoration Fund (GCRF) was spent on projects that were not green-lit by the fund’s advisory council or the Mississippi Development Authority (MDA). Instead, the auditor argues that state lawmakers have been approving projects at will without any viable guardrails.
The GCRF was created to help Mississippi’s coastal communities recover after the largest oil spill in U.S. history. The spill released over 205 million gallons of oil into the Gulf. The MDA works with the GCRF’s advisory board on projects linked to the fund by gauging public interest and making recommendations to the state legislature for appropriations or matching funds.
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While auditing the fund, White’s office noticed some disparities in the project-approval process. Notably, in 2020, the George County Board of Supervisors requested money to improve highways and roads serving the Enviva Biomass wood pellet facility in Lucedale. The local board requested nearly $370,000 from the GCRF in cooperation with the terms of an overarching federal grant.
After reviewing the application, MDA did not recommend the project for GCRF subsidies. Regardless, the state legislature appropriated $1.6 million for the project — more than what was initially requested by George County officials. After receiving the appropriation, officials amended the project to include railroad transportation improvements serving the wood pellet facility for a total cost of $3.3 million.
Another project flagged by White’s audit was a downtown development in Ocean Springs. In 2019 and 2020, the coastal city and development company OHOS applied for GCRF funding for a multi-purpose project. The project application included lofts, condos, restaurants, retail stores, a hotel, and a free public parking garage. Officials cited the prospect of leveraging private investment to drive economic development to justify spending GCRF money on the project.
The state legislature appropriated a combined total of $8 million for the project in 2019 and 2020, while the developer secured $20 million in private financing to satisfy the GCRF program’s matching funds requirement. As part of the initial agreement, the city was supposed to own the garage once construction was finished. A “reworked deal” in 2021 found the city leasing the facility from OHOS, which no longer exists.
Now, it is unclear who owns the parking garage. But, according to White’s report, if Ocean Springs officials cannot prove to the state that a lease agreement was reached with OHOS to transfer the garage to the city through a lease agreement, the city will be required to repay all GCRF funds to MDA.
“While MDA can recommend certain projects be funded, the Legislature still has the legal power to ignore their recommendations and spend money on what they want,” White said. “I worry that, in the future, projects may be funded just because a politician likes the project, not because the project is well-designed and meets a vital need.”
Mississippi began receiving BP settlement funds for the GCRF in 2018. From 2018 to 2033, the fund will receive over half a billion dollars to be spent on projects intended to boost the coast’s economy. But White is concerned that certain pet projects will be given preferential treatment over plans aimed at boosting the region’s economic development capabilities.