BP Ahead of Feds

Louisiana has so far received significantly more cash from BP than from the federal government for remediation of environmental and economic damages from the oil spill in the Gulf of Mexico, Standard & Poor’s said last week in a report on fiscal damages suffered by Gulf Coast state and local governments.

The oil company has given $25 million of grants to Louisiana, Alabama, Florida, and Mississippi for clean-up of beaches and a total of $70 million to the four states to promote tourism, Standard & Poor’s said.

In addition, Louisiana has received $25 million from BP for initial payments on an estimated $300 million project to build sand barriers to protect the coast. Another $6 million has been paid to coastal parishes and $65 million to Louisiana businesses and individuals.

In contrast, remediation payments to Louisiana from the federal government total $35 million. The state has submitted invoices for $6.1 million in reimbursements from the federal Pollution Removal Fund Authorization, and has received $2.9 million.

The federal government expects to be reimbursed for its payments to the states through a $20 billion escrow account established by BP.

The report said the closing of fishing areas off Louisiana could affect the state’s fishing industry that generates $2.3 billion a year.

“It’s an open question when the industry will begin operating normally again, but the longer fisheries remain closed, the greater the potential damage to state and local budgets,” the report said. “However, state officials expect that much of the economic damage will likely be offset either by direct payments from BP or from its escrow fund.”

The creditworthiness of state and local governments along the Gulf Coast has not been significantly damaged, at least not yet, Standard & Poor’s said.

“Although tourism, fishing, shipping, and energy — the businesses likely to be most affected by the oil spill — have long been major contributors to the Gulf state economies, we believe that in the near term, the Gulf states, where these industries are important, will retain their current credit ratings,” the agency said.

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