BP’s Deepwater Horizon Settlement Caps USD 20 Billion

The value of a settlement to resolve civil claims against oil major BP arising from the 2010 Deepwater Horizon oil spill in the Gulf of Mexico between the company and the US and the five Gulf states rose to USD 20.8 billion, the US Department of Justice informed.

The global settlement is the largest settlement with a single entity in the department’s history and resolves the governments’ civil claims under the Clean Water Act and natural resources damage claims under the Oil Pollution Act, as well as economic damage claims of the five Gulf states and local governments.

An extensive, high-level restoration planning document that will guide spending of USD 8.1 billion to restore the natural resource damages related to the oil disaster has been released as well.

The plan includes a comprehensive assessment of natural resource injuries resulting from the oil spill and provides a detailed framework for how the trustees will use the natural resource damage recoveries from BP to restore the Gulf environment.

“Building on prior actions against BP and its subsidiaries by the Department of Justice, this historic resolution is a strong and fitting response to the worst environmental disaster in American history,” said Attorney General Loretta Lynch“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.”

“While there are many details that require further review, Ocean Conservancy’s initial reaction to the consent decree and draft restoration plan is largely positive. In particular, the Trustees’ comprehensive approach to restoration is absolutely necessary given the scale and complexity of injuries to wildlife and habitats,“said Bethany Carl Kraft, Director of Ocean Conservancy’s Gulf Restoration Program.

“We are concerned that a number of the early restoration projects to address lost recreational use are classified as open ocean projects. Given the extent of known impacts in the Gulf waters, it is imperative that every restoration dollar available is allocated to projects that actually restore impacted resources. Additionally, the proposed governance structure of the Trustee Council creates eight decision-making bodies instead of one Trustee Council. This approach also appears to decrease funding available for open ocean projects, given that all of the federal trustees’ administrative costs across the eight restoration planning areas will be coming from the open ocean allocation,” she added.

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

  • USD 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. This is the largest civil penalty in the history of environmental law.
  • USD 8.1 billion in natural resource damages, this includes USD 1 billion BP already committed to pay for early restoration, for joint use by the federal and state trustees in restoring injured resources
  • USD 600 million for other claims

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

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.