BRADENTON, Fla. — As the Deepwater Horizon oil spill expands, attorneys in Florida have begun talking about devising an emergency financing program for a quick clean-up response.
Initial discussions have taken place among some bond attorneys and bankers as to how a program could be undertaken, for example, by a local government.
But the difficulty is determining what the repayment source would be if bonds are issued for clean-up costs, said an attorney who asked not to be identified.
Meanwhile, Gov. Charlie Crist has expanded a state of emergency to include all west coast counties, the Keys, as well as Miami-Dade, Broward, and Palm Beach counties along the Atlantic side in response to the confirmation that the oil has penetrated the “loop” current in which waters flow from the Gulf of Mexico around South Florida and up the East Coast.
Last Thursday, Attorney General Bill McCollum sent a letter to BP asking the company to immediately acknowledge its liability for any damages Florida could suffer as a result of the Deepwater Horizon disaster during the 2010 Atlantic hurricane season, which starts June 1 and runs through Nov. 30.
“A hurricane or tropical storm in the Gulf will significantly increase the environmental damage, as the storm will capture the oil in its path and deposit it much further inland than would occur under normal tidal conditions,” McCollum wrote. “In the event of a tropical storm or hurricane, the additional damage caused by the oil contamination must be paid for by BP.”
The oil spill threatens Florida’s fragile ecosystems as well as its coastal and adjacent properties with a “far more serious threat than ever before,” McCollum’s letter said.
“The risk to Florida’s wetlands, inland watershed, and estuaries is real and serious with likely long-term impacts to Florida’s environment and economy.”
The attorney general went on to say that experts predict this year will be a more active hurricane season for Florida and the Gulf Coast states now threatened by the oil spill.
“While I sincerely hope that BP will promptly acknowledge its responsibility and agree to compensate the state of Florida and its residents and businesses for any such damages, as it has thus far for other damages, I will, if necessary, use the full power of my office to ensure that BP and any other liable party live up to their responsibilities under the law,” McCollum warned.
All of the publicity and uncertainty from the oil crisis in the Gulf — especially now that it has reached Louisiana’s shores — has dampened tourism at a particularly bad time as the long Memorial Day holiday weekend approaches.
It remains to be seen whether Gulf Coast states can counter the headline risk that has created negative perceptions by the public.
BP last week provided $25 million to Florida and $15 million each to Alabama, Mississippi, and Louisiana to pay for advertising that the states are open for business in hopes of mitigating the economic losses already being felt.
Last week, Standard & Poor’s said in separate special bulletins that the oil spill in the Gulf would not have an immediate effect on Louisiana’s AA-minus general obligation debt rating or the AA ratings it assigns to Alabama and Mississippi’s GOs.
Standard & Poor’s had not released a similar bulletin on the fate of Florida’s AAA GO equivalency rating as of mid-afternoon on Friday.
Moody’s Investors Service, however, said last week in a special report that the oil spill may ultimately result in negative credit impacts for state and local governments in all four states and that extensive environmental damage is likely to occur.
“Of all the Gulf Coast states, Florida has the largest coastline and an extremely fragile ecosystem which puts it at significant economic risk depending on the migration pattern of the massive oil slick in the Gulf of Mexico,” the Moody’s report warned.