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Louisiana coastal projects allowed to offset cost of New Orleans post-Katrina levees

Aerial view of the 1.8-mile-long Lake Borgne Surge Barrier. The Army Corps of Engineers is allowing Louisiana to use part of the costs of building several major coastal restoration projects as credit for part of the state's share of the cost of building the post-Katrina hurricane levee system.

Posted on October 11, 2023

Louisiana has been allowed by the Army Corps of Engineers to count $110 million spent on two major coastal restoration projects in recent years as credits towards the state’s $1.12 billion share of the cost of the $14.6 billion post-Katrina New Orleans area hurricane levee system.

The deal was signed Sept. 27, just three days before the state was required to have repaid two-thirds of its share of the levee projects, or be forced to pay an estimated $1.5 billion in additional interest costs when the remainder of its share is due in 2031.

The agreement followed a six-week argument between the state Coastal Protection and Restoration Authority and the Corps over whether the state actually owed that additional money this year.

At issue were differing opinions between the state and Corps over slightly different provisions in 2020 and 2022 legislation that allowed the state to pay part of its share of the levee costs early to avoid the huge interest costs. The state had originally negotiated to pay for the levee system over 30 years, but its construction wasn’t completed until last year, and the Corps was going to charge the state interest from the time its construction began.

The state paid $400 million in 2021 and another $400 million in 2022, thinking it was meeting the requirements of the 2020 legislation. But a 2022 change was interpreted by the Corps as meaning the state owed about $100 million more to meet a goal of paying 2/3 of the project’s cost remaining after the first $400 million payment.

A map of the New Orleans area hurricane levees built after Hurricane Katrina. The Army Corps of Engineers has agreed to allow Louisiana to use its investment in several major coastal restoration projects as matching funds to cover part of the state’s share of the levee system’s construction costs.

Fortunately for the state, Congress has provided it with the ability to count payments made for major coastal restoration projects as credits towards the levee costs, even in cases where construction is paid for with settlement money from the BP Deepwater Horizon oil spill. That option allowed the state to avoid more drastic options, including the calling of an emergency session of the Legislature to appropriate the funds the Corps required, state officials said.

The state would be able to count $69.8 million from the $120.7 million Whiskey Island barrier island restoration project and $40.5 million from the $212.9 million Caminada Headlands restoration project as payments towards the levee system.

Sand dunes are protected by fences atop the Caminada Headland beach and dune restoration project that stretches from the mouth of Bayou Lafourche to Caminada Pass. More than 1,000 acres of shoreline were rebuilt with 8.84 million cubic yards of sand dredged from Ship Shoal. Louisiana is being allowed to use part of the cost of building this project as matching funds for the state’s share of the cost of building the post-Katrina New Orleans area hurricane levee system. Photographed on Tuesday, March 21, 2017.

Whiskey Island is part of the Isles Dernieres chain of barrier islands in Terrebonne Parish, while the Caminada Headlands are along the Lafourche Parish shoreline, adjacent to Port Fourchon.

The Corps also informed the state it could use another $96.5 million spent on the Caminada Headlands project in the future as credits to reduce the remaining money it owes on the levees, but only if it can prove by 2031 that its ownership or control of the land that money was used to rebuild meets federal regulations.

Some of the Caminada Headlands project is built atop privately owned property, so the state would likely have to purchase it to gain the credits. But much more of the headlands property is owned by the Wisner Donation Trust, which is overseen by the city of New Orleans and family members of the late Edward Wisner, who set up the trust more than a century ago. Funds generated by the trust’s 50,000 acres of land, which includes part of the port of Port Fourchon, are used by the city and a variety of non-profit groups.

Project manager John Huit walks near a large pipe spewing sand and water on Whiskey Island on March 14, 2018. The sand, dredged from the bottom of the Gulf of Mexico, is being used to restore the barrier island. The state is being allowed to use part of the cost of building this project as a match to cover part of its cost of rebuilding the post-Katrina New Orleans hurricane levee system.

The trust – and its land holdings – have been the subject of several lawsuits, including by the New Orleans City Council, which has so far unsuccessfully argued that Mayor LaToya Cantrell improperly extended the trust when it expired in 2014, and that the property should have become solely owned by the city.

Bren Haase, chairman of the state Coastal Protection and Restoration Authority, said the state hopes to solve the land ownership issues well before the 2031 deadline.


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