Environmental

BP oil spill settlement the largest of its kind in U.S. history

BP rig fire 435x326 BP oil spill settlement the largest of its kind in U.S. historyBP reached a record $18.73-billion agreement with the U.S. government and five Gulf states Thursday to resolve most legal claims stemming from its 2010 Deepwater Horizon oil spill in the Gulf of Mexico, considered the biggest environmental catastrophe in the U.S. The settlement is the largest environmental settlement in U.S. history.

If approved by the court, the settlement will require BP to pay the federal government $5.5 billion in civil penalties for violating the Clean Water Act. NP subsidiary BPXP will make those payments over a 15-year period.

The U.S. Department of Justice (DOJ) said that 80 percent of the Clean Water Act penalties will be devoted to Gulf of Mexico restoration efforts in Alabama, Florida, Louisiana, Mississippi, and Texas as mandated by the “Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act,” more commonly called the RESTORE Act.

BPXP will also pay $7.1 billion for natural resource damages to the federal government and five Gulf States, also payable over a 15-year period. The company will set aside an additional $232 million to cover any future natural resource damages that arise in the future.

BP will pay a total of $4.9 billion over an 18-year period to resolve economic-loss claims made by the Gulf States, and up to $1 billion to resolve claims made by more than 400 local governments in the states affected by the BP oil spill.

Louisiana, the state hardest hit by the monster spill, will receive $6.8 billion, the lion’s share of the settlement money, for its ongoing clean-up, restoration efforts, and economic losses.

Alabama will receive $2.3 billon, with $1 billion being paid to the state over the next 18 years and $1.3 billion being distributed to environmental projects over the next 15 years.

Mississippi will collect about $1.5 billion on top of the payments BP has already made to the state, which together total $2.2 billion. The funds will be paid over 17 years, with about half going toward environmental restoration efforts and the other half covering economic damages.

Florida’s Attorney General Pam Bondi said her state’s share would amount to more than $3.25 billion paid out over 18 years. She said the money “will benefit areas of the state most devastated by the spill,” but did not specifically break down how the state plans to spend the money.

Texas will receive $788 million, to be received and disbursed in similar manner, on top of $275 million the state already received from BP, which it used to purchase 17,000 acres of coastal plains for conservation.

The U.S. Justice Department announced the settlement after the U.S. Supreme Court rejected efforts by BP and its partner Anadarko Petroleum to make a final appeal of lower court rulings that left them on the hook for Clean Water Act fines.

U.S. Judge Carl Barbier in New Orleans was expected to make a ruling on the Clean Water Act fines, which would have taken into account BP’s gross negligence. Under U.S. law, those fines could have been assessed at $4,300 per barrel for 3.19 million barrels spilled. Under the agreement, however, BP had to pay just $1,724 per barrel spilled.

David Pettit, a senior attorney for the Natural Resources Defense Council, a nonprofit environmental group, told the Washington Post that it remains to be seen how the settlement agreement will help the Gulf recover from the spill.

“It’s impossible to say whether the numbers are good or not,” Mr. Pettit said. “It’s a big number, but we can’t tell if it’s big enough.”

Sources:

Washington Post
Beasley Allen
Tampa Bay Times
Texas Tribune
The Clarion-Ledger
Law360
CNN
Los Angeles Times