BP Agrees to Pay Record Environmental Fine
- Business & Finance
Five years on from the Deepwater Horizon accident and spill in 2010 that took 11 lives, oil major BP has reached agreements in principle to settle all federal and state claims arising from the event by paying the largest environmental fine in the US history, worth USD 18.7 billion.
BP today announced that its US Upstream subsidiary, BP Exploration and Production Inc (BPXP) has executed the agreements with the US federal government and five Gulf Coast states which also includes settlement of claims made by more than 400 local government entities.
The principal payments are as follows:
- BPXP is to pay the United States a civil penalty of USD 5.5 billion under the Clean Water Act (CWA) – payable over 15 years.
- BPXP will pay USD 7.1 billion to the United States and the five Gulf states over 15 years for natural resource damages (NRD). This is in addition to the USD 1 billion already committed for early restoration. BPXP will also set aside an additional amount of USD 232 million to be added to the NRD interest payment at the end of the payment period to cover any further natural resource damages that are unknown at the time of the agreement.
- A total of USD 4.9 billion will be paid over 18 years to settle economic and other claims made by the five Gulf Coast states.
- Up to USD 1 billion will be paid to resolve claims made by more than 400 local government entities.
The principal payments arising from the agreements will be made over extended periods of time, BP said.
Carl-Henric Svanberg, BP’s chairman, said: “Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise. We have made significant progress, and with this agreement we provide a path to closure for BP and the Gulf. It resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved.”
“The Board therefore believes that this agreement is in the best long-term interest of BP and its shareholders. The Board set out its position on the dividend at the first quarter and this remains unchanged by the agreement.”
“Ocean Conservancy is encouraged by today’s news of a global settlement with BP, especially by the inclusion of over $1 billion to address impacts beyond the shore. This settlement will help us achieve comprehensive, long-term restoration of the Gulf of Mexico. For restoration to be successful, efforts must address both short- and long-term damage in three key areas: coastal environments, marine habitats and wildlife, and coastal communities,”commented Bethany Carl Kraft, Director of Ocean Conservancy’s Gulf Restoration Program.
“The settlement appears to include a dedicated restoration reserve of USD 232 million to address restoration from injuries documented after the effective date of the settlement. This is a critical element of the agreement because we don’t yet know what the long-term impacts of the disaster could be. For wildlife like sperm whales or bluefin tuna, it can take decades to understand the full impact of the BP oil disaster. However we are concerned that, given the scope of this disaster and the breadth of known impacts, that USD 232 million may not be sufficient to fully address impacts that may emerge over time,” she added.