BP Pays Louisiana $350M Lump Sum, Settles Coastal Suits
Louisiana will get an accelerated $350 million lump sum from BP, and the remaining parish coastal damage suits are being resolved. BP announced the deal Friday, according to a Reuters report via BOE Report.
Market Impact
The $350 million payment replaces a schedule under which Louisiana was owed $373 million over the next seven years. By our arithmetic, the lump sum is $23 million, or about 6%, below the nominal amount. In exchange, the state gets the money at once.
The payment sits inside the larger 2015 settlement, in which BP agreed to pay up to $18.7 billion to the federal government and five states. That total includes $4.9 billion payable over 18 years to settle the states’ economic and other claims.
BP said the remaining coastal zone lawsuits by Louisiana parishes will be resolved, but gave no further details. Gov. Jeff Landry said in a statement distributed by BP: “We have now disposed of claims and settled with all but one of the major defendants in these coastal cases.”
Project stage: This is a settlement, not a procurement. The source does not say how Louisiana will spend the money, when it will be paid, or which projects it will fund. Any work would come through state agency programs that have not yet been announced.
What It Means for Subcontractors
- Check CPRA’s procurement and letting pages regularly over the coming months. Louisiana’s Coastal Protection and Restoration Authority (CPRA) is the state coastal agency to watch. Set alerts for marsh creation, dredging, shoreline protection and earthwork solicitations, and compare new lettings against your capacity.
- Get on prime contractors’ lists now. Dredging and marsh creation subs should send capability statements and insurance and safety documentation to the estimating departments of prime dredging and heavy civil contractors this quarter. Primes build their sub lists before a letting, not after.
- Pile, bulkhead and pipeline relocation crews: Our inference is that these scopes would come as secondary packages under larger marsh or shoreline contracts. Ask primes which of these they plan to self-perform and which they will sublet, so you are on the bid list before packages are priced.
- Ask about payment terms before bidding. A lump sum could let the state fund projects faster than a seven-year schedule. The source gives no payment date or terms. Before you commit equipment and crews, confirm pay-when-paid language and the funding source behind any CPRA job.
- Don’t count on parish work yet. BP gave no terms for the parish settlements. Coastal parish contacts are worth keeping warm, but no scope or schedule is public.
