$20.8 billion settlement marks end of government litigation against BP

By Emma Gallimore | Apr 9, 2016

NEW ORLEANS – BP will pay a $20.8 billion settlement for the 2010 Deepwater Horizon oil spill in the Gulf of Mexico after a federal judge gave final approval on April 4.

“The approval of this agreement will open a final, hopeful chapter in the six-year story of the Deepwater Horizon tragedy,” said Attorney General Loretta Lynch in a public statement.

An earlier ruling by U.S. District Judge Carl Barbier in July found the BP petroleum company grossly negligent. The Deepwater Horizon oil rig explosion resulted in the death of 11 workers and caused 3 million barrels of oil to leak into the Gulf of Mexico. Coastal communities and ecosystems were damaged as oil spread across 43,000 square miles over the 87 days after the explosion.

“Today’s action holds BP accountable with the largest environmental penalty of all time while launching one of the most extensive environmental restoration efforts ever undertaken,” Lynch said.

BP will pay the Department of Justice about $1,720 per barrel of oil spilled, a total of about $5.5 billion to fund the cleanup costs. The settlement also includes $5.5 billion in Clean Water Act fines, $7.1 billion for natural resource damages and $4.9 billion to the five U.S. states directly affected by the spill, which filed civil suits soon after the U.S. Government filed its suit. These include Alabama, Florida, Louisiana, Mississippi and Texas. Local and governmental bodies will also receive a cut of the settlement.

“The Department of Justice will continue to stand with the people of the Gulf as they seek to rebuild and protect the marine life, coastal systems and beautiful beaches that have made the region a treasured natural resource,” Lynch said.

BP will pay the settlement in installments over the next 15 years or so. It is the largest settlement the Justice Department has ever reached with a single entity.

The approval of this settlement marks the end of litigation between BP and the governments of both the United States and the five affected states.

“I want to thank everyone who made this outcome possible, including my predecessor, Attorney General Eric Holder, and the federal agencies and states that developed the comprehensive restoration plan,” Lynch said.

Private businesses and individuals have also secured settlements from BP after their coastal businesses and fisheries were shut down due to the spill. BP paid around $12.4 billion to these companies.

However, Judge Barbier ruled that BP was not responsible for moratoria losses, that is, losses suffered by drilling rig workers, rig support personnel, transport personnel and other workers who lost work due to the six-month drilling moratorium the U.S. Department of the Interior issued after the oil spill.

Barbier ruled that the losses did not result from the spill itself but from actions by the U.S. government due to the perceived threat of additional discharge. He found that the Oil Pollution Act required only that BP compensate losses caused by the spill, not those caused by secondary action.

According to estimates released by BP, the spill will end up costing the British company more than $53 billion.

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