State's Oyster Growers Weigh Options in Claims Process

08/10/2010 12:14 pm ET | Updated May 25, 2011

This article was published in "The Louisiana Weekly" in the Aug. 9, 2010 edition.

Oyster growers seeking compensation for losses after the spill worry that payments will hinge on whether damages were from fresh-water flows ordered by Governor Bobby Jindal or the presence of oil. For troubled producers, it may take years for beds to recover from too little salinity in some areas and tar and other spill byproducts elsewhere.

Growers have at least two compensation options, said Mike Voisin, seventh-generation owner of Motivatit Seafoods, Inc. in Houma. "Damage claims will be submitted to BP and the Feinberg fund first. If claims are rejected there, they can be presented to the Coast Guard for compensation under the Oil Spill Liability Trust Fund -- set up under the Oil Pollution Act." The spill trust fund originally provided up to $1 billion for oil removal and other damages, but is now capped at $2.7 billion.

About 30%-40% of the state's oyster areas can be harvested after recent reopenings, but the number of usable oysters there is lower than before the spill, Voisin said. Motivatit harvests 10,000 acres of oysters in central and western Louisiana, and has suffered moderate damage from oil in some spots. The company's sales are down by 50% or more from last year.

Rusty Gaude, LSU AgCenter fisheries agent for Plaquemines, St. Bernard and Orleans parishes, said "it's well documented that oysters require certain conditions, including the right amount of salinity in the water, for survival," He said seven conduits, built for varied reasons before the spill, were opened in early May "to push water out and theoretically keep oil from the inland estuaries."

In reefs east and west of the Mississippi, salinity levels dropped below a range of 5-15 parts salt per thousand parts water needed for oysters to survive, according to scientists.

"Independent lease holders are doing their own damage assessments now," Gaude said. Louisiana oyster reefs are worked mostly under private leases. And the state's Dept. of Wildlife and Fisheries plans to start conducting a damage survey soon. Gaude said that before-and-after documentation on the beds will probably be needed for the BP and Feinberg claims processes. "For lease holders, efforts to get claims payments could be settled quickly or they could drag on for years."

After Governor Jindal ordered the diversion of fresh water from the Mississippi River into nearby salt marshes, gates were open at the following conduits in May and remain ajar: Davis Pond Diversion in St. Charles Parish; Caernarvon Diversion and Violet Siphon in St. Bernard Parish; and Bayou Lamoque Diversion,West Pointe A la Hache, Naomi Siphon and Whites Ditch Siphon in Plaquemines.

Louisiana oysters normally thrive in estuaries that have all the comforts of home, but if something goes wrong, they won't develop or reproduce. A good habitat has the right amount of salinity, temperatures of 50-79 degrees, firm bottoms and continuous water circulation to bring in food and oxygen.

When asked if BP has a policy for oyster growers seeking damages from fresh water, BP spokesman Mark Proegler responded "as BP has said from the beginning, we will pay all legitimate claims. We are in transition to Mr. Feinberg, a process that should be completed in August. While the transition continues, we will be and are paying claims." Last week, BP had paid $303 million in claims to date.

In an August 3 announcement, BP gave examples of businesses included in its claims process. On the list were "fisherman, shrimpers, oyster harvesters, etc., and charter boat operators who have been affected by the oil."

The word "oil" is worrying some oyster growers, who fear that fresh-water damage might keep them from being compensated by BP or the $20 billion, Feinberg fund. Independent administrator Ken Feinberg is expected to take over the BP claims process in the third week of August.

Meanwhile, for anyone considering suing the state for opening fresh-water conduits, Voisin's view is "the state did the right thing. It kept the oil out of the beds on the east side of the Mississippi."

Johnny Smith, owner of Captain Johnny Smith Oyster Packing Plant in New Orleans, said 40% to 50% of oysters produced in Louisiana are from east of the Mississippi River, and many of them were damaged by the fresh water diversion. "Another 30% of the beds are just west of the Mississippi, and a lot them had tar and oil. About 20% of beds in the state are further west, heading toward Lake Charles, and they might be all right if we don't have a hurricane pushing tar and oil in there." His plant has been temporarily closed since June 25 because oysters are so scarce.

Smith said "dispersant-treated oil that feels like peanut-butter goo may be contaminating some of the beds west of the Mississippi." Beds with oil-contaminated shells can't reproduce and could be lost for many years. He said "in my opinion, beds affected by the fresh-water diversion could recover in 3 to 5 years, and probably faster than the beds that were contaminated by oil and tar."

From April to October, Louisiana oyster farmers move closer inland to the beds they own on land leased from the state, Smith said. Managing an oyster business requires that farmers plant oysters on various sites, hoping weather, salinity and tides will cooperate in at least some of those spots. Growers build reefs on their leased grounds by dropping old shells and limestone to provide habitat for the oysters' reproductive cycle. Private-lease oysters, caught between April and October, supply Louisiana with half the year's production, he said.

Louisiana also holds thousands of acres of wild, public reefs, where anyone with required, commercial fishing licenses can harvest oysters. The public season roughly runs from October to April.

This summer, wholesalers and retailers scaled back operations as supplies dwindled. "We've been able to deliver oysters in the shell to all our long-time, oyster-bar customers since the spill, though not always as many as they need," said Al Sunseri, president and co-owner of P&J Oyster Co. in New Orleans. "An old family friend is shucking oysters from East Plaquemines Parish for us. Our business is in a state of transition because the farms west of the Mississippi--that we get 95% of our oyster to shuck from--have been closed for two months."

P&J has laid off more than half its staff recently. "Our skeleton crew of two drivers and two processing personnel are working much shorter hours, while my brother, my son and I come in about two hours later than usual," Sunseri said. At one time, he started his day at 2:30 in the morning. The company, which dates back to 1876, has been a fixture on Toulouse St. in the French Quarter since 1921.

Sunseri offers some reasons for oyster shortages. "Beds in Area 1 in Lake Borgne have been open, but they were heavily harvested in May and June," he said. "Area 6 is currently open for harvest but has experienced large mortalities due to the opening of the Caernarvon freshwater river diversion. Areas 1,4,6,7 and parts of 9 and 10 are open now." To the southeast of Port Sulphur, west of the Mississippi, beds in Bay Batiste and Wilkinson Bay both had oil, he noted.

C.J. Gerdes, co-owner of Casamento's Restaurant in New Orleans, said "we expect to open for the season on Sept. 8, our usual time after being closed for the summer. We're taking a wait and see as to whether we'll have Louisiana oysters, which we usually get from P&J and Louisiana Seafood Exchange. We may start with big sacks of oysters from Louisiana Seafood Exchange that come from Apalachicola, Florida, which for an out-of-state product is about as close you can get to Louisiana oysters." The restaurant tried oysters from Oregon, California and Virginia but they didn't taste like local varieties.

Gerdes, like others, said that while more fishing areas are open now, oysters in some of those locations, especially in Barataria Bay, were hurt by fresh water. And he said "four or five oyster areas were open a month ago but the oyster men were working for BP, cleaning up oil, so you couldn't get much from those places. It was a Catch-22."

Tommy Cvitanovich, owner of Drago's Seafood, said prices he pays for oysters have escalated and business is down since the oil spill. "We've absorbed the price increase and haven't passed it on to our customers" at the firm's two restaurants, located in Metairie and downtown New Orleans. He plans to submit a loss claim to BP for the difference.

In the New Orleans office of Atlanta-based Inland Seafood, sales manager Robby Hare said "we haven't had any Gulf oyster gallons to sell for five weeks. In this same week a year ago, our office sold 106 gallons worth $4,000. Our oysters in gallons are from Mississippi and Louisiana and are shucked at plants near the docks." Inland Seafood sells to restaurants, institutions and supermarkets.

"We are able to get Gold Band pasteurized oysters from Motivatit Seafood," Hare said."We can also buy oysters from Apalachicola, Florida. We tried selling Pacific oysters, but they had a different taste and consistency and weren't as desirable here."

Because of the drop in oyster availability, prices per sack charged by boat owners to processors have risen about 45% since late April, Smith said. Oysters in open areas aren't necessarily usable, he said. "In many places, growers are having to hunt for them, making their day less productive. They can't catch enough usable stuff to pay for the fuel and labor to make the trip."

The state plans to conduct an impact study in addition to its routine research. "We take oyster samples every month, all year long, to assess condition in the beds," said Randy Pausina, New Orleans-based head of fisheries for the Louisiana Dept. of Wildlife and Fisheries. "At this time of year, for example, oysters can be subject to high temperatures, heavy rainfall and tropical storms. We're working on a longer term, post-spill oyster study under NRDA," or Natural Resource Damage Assessment conducted by National Oceanic and Atmospheric Administration. That study will consider ways to return natural resources to pre-spill conditions and to replace lost resources, he said.

Randy Lanctot, executive director of the Louisiana Wildlife Federation, said "I think there will be benefits to the coast of keeping river diversions wide open for the past three months. But they will not be known for sure until after the water has fallen. Then we'll be able to see how much land was created." Whether large discharges of fresh water and sediment stimulated marsh growth won't be know until next spring, he said.

The Louisiana Wildlife Federation advocates "no, net loss of oyster-growing capacity" for state waters, and supports meshing that policy with the state's plan for coastal protection and restoration, Lanctot said. Some growers may have to move their harvests from places that have been productive for them, however, Lanctot said. "For oyster leaseholders, who have built productive beds over many years, that can be troublesome." He said the state should provide reasonable assistance to fishing-community members who will need help making transitions.