The US and five Gulf states have reached a US$20.8 billion civil claims settlement with BP from the 2010 Deepwater Horizon disaster, according to the US Department of Justice (DOJ).
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Transocean's Deepwater Horizon before the explosion. Image from USEPAGOV. |
The settlement, which is the largest settlement with a single entity in the department’s history, resolves the governments’ civil claims under the Clean Water Act, natural resources damage claims under the Oil Pollution Act, and economic damage claims of the five Gulf states Alabama, Florida, Louisiana, Mississippi and Texas, and local governments.
BP has been ordered to pay $5.5 billion for a federal Clean Water act penalty, plus interest, marking the largest civil penalty in the history of environmental law. A total of 80% will go to restoration efforts in the Gulf region as part of the RESTORE Act.
BP will also pay $8.1 billion in natural resource damages, which includes the $1 billion BP already committed to pay for early restoration, for joint use by the federal and state trustees in restoring injured resources. A total of $700 million will go to a form of accrued interest to address any later-discovered natural resource conditions that were unknown at the time of the agreement and to assist in adaptive management needs.
According to the DOJ, the natural resource damages money will fund Gulf restoration projects that will be selected by the federal and state trustees to meet five different restoration goals and 13 restoration project categories. These include restoration focusing on supporting habitats such as coastal wetlands, but also provide for specific resource types, such as marine mammals, fish and water column invertebrates, sturgeon, submerged aquatic vegetation, oysters, sea turtles, birds and lost recreational use, among others.
There will also be $600 million allotted for other 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.
Separate agreements between BP and the five Gulf states state that BP will pay $4.9 billion to the states, and up to $1 billion to several hundred local governmental bodies to settle claims for economic damages they have suffered as a result of the spill.
Alongside the settlement, the Deepwater Horizon Trustees Council, made up of representatives of the five Gulf states and four federal agencies, published a draft damage assessment and restoration plan and a draft environmental impact statement, which 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.
“With this settlement, federal, state and local governments and the Gulf coast communities will have the resources to make significant progress toward restoring ecosystems, economies, and businesses of the region. We are committed to ensuring the Gulf Coast comes back stronger and more vibrant than before the disaster. If made final, the settlement will provide the US and Gulf states with the resources and certainty needed for effective restoration planning and improvements,” said Secretary of Commerce Penny Pritzker.
“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. I am proud that the Department of Justice has helped lead the way from tragedy to opportunity, and I am confident that our actions today will help to ensure that Gulf communities emerge from this disaster stronger and more resilient than ever before.”
Macondo
On 10 April 2010, less than 50mi off the coast of Louisiana, the Macondo well suffered a catastrophic blowout, causing an explosion and fire that destroyed the Transocean Deepwater Horizon drilling rig, and killing 11 men. The devastating incident caused an oil spill of more than 3 MMbbl into the Gulf of Mexico over a period of nearly three months.
According to the DOJ, oil flowed within deep ocean water currents hundreds of miles away from the blown-out well, resulting in oil slicks that extended across more than 43,000sq mi, affecting water quality and exposing aquatic plants and wildlife to harmful chemicals. Oil was deposited onto at least 400sq mi of the sea floor and washed up onto more than 1300mi of shoreline from Texas to Florida.
Past settlements
In July, the UK supermajor’s 2Q 2015 took a massive loss of $6.3 billion due to Deepwater Horizon settlements. BP had reached an $18.7 billion settlement that month to be paid over an 18-year period to federal, state, five Gulf Coast states including Alabama, Florida, Louisiana, Mississippi, and Texas, and more than 400 local government entities. The settlement came one week after the US Supreme Court denied to hear an appeal from BP.
In February 2013, Transocean, the Deepwater Horizon’s owner and operator, pleaded guilty to violating the Clean Water Act and was sentenced to pay $400 million in criminal fines and penalties, for its conduct in relation to the disaster. A separate civil settlement imposed a record $1 billion Clean Water Act penalty on Transocean and required the company to take significant measures to improve its performance and prevent recurrence of this conduct.
One month prior, BP pleaded guilty to illegal conduct leading to and after the 2010 Deepwater Horizon disaster, and was sentenced to pay $4 billion in criminal fines, penalties and restitution, including $2.4 billion for natural resource restoration.
Read more:
BP sees red over Deepwater Horizon
BP in US$18.7 billion Deepwater Horizon settlement
US Supreme Court rejects Deepwater Horizon appeal
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