BP to Pay $20.8bn Gulf Oil Spill Settlement

BP will pay a $20.8 billion final settlement to resolve environmental damage claims related to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

The final settlement, announced yesterday by the US Department of Justice and five Gulf states, is about $2 million more than the tentative settlement, announced in July, and is the largest settlement with a single entity in the Department of Justice’s history.

“BP is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region,” said US attorney general Loretta Lynch.

On April 10, 2010, less than 50 miles off the coast of Louisiana, the Macondo well suffered a catastrophic blowout. The ensuing explosion and fire destroyed the Deepwater Horizon drilling rig, killing 11 men aboard and sending more than three million barrels of oil into the Gulf of Mexico over a period of nearly three months.

Oil slicks extended across more than 43,000 square miles, affecting water quality and exposing aquatic plants and wildlife to harmful chemicals. Oil was deposited onto at least 400 square miles of the sea floor and washed up onto more than 1,300 miles of shoreline from Texas to Florida.

The spill damaged and temporarily closed fisheries vital to the Gulf economy, oiled hundreds of miles of beaches, coastal wetlands and marshes and killed thousands of birds and other marine wildlife, among other economic and natural resource injuries.

Under the terms of a consent decree lodged in federal court in New Orleans yesterday, BP must pay the following:

• $5.5 billion federal Clean Water Act penalty, plus interest, 80 percent of which will go to restoration efforts in the Gulf region pursuant to a Deepwater-specific statute, the RESTORE Act.
• $8.1 billion in natural resource damages, this includes $1 billion BP already committed to pay for early restoration, for joint use by the federal and state trustees in restoring injured resources. BP will also pay up to an additional $700 million to address any later-discovered natural resource conditions that were unknown at the time of the agreement and to assist in adaptive management needs.
• $600 million for other claims, including claims for reimbursement of federal and state natural resource damage assessment costs and other unreimbursed federal expenses and to resolve a False Claims Act investigation due to this incident.

Additionally, BP has entered into separate agreements to pay $4.9 billion to the five Gulf states (Alabama, Florida, Louisiana, Mississippi and Texas) and up to a total of $1 billion to several hundred local governmental bodies to settle claims for economic damages they have suffered as a result of the spill.