BP Reaches $18.7b Oil Spill Settlement

BP Reaches $18.7b  Oil Spill SettlementBP Reaches $18.7b  Oil Spill Settlement

Officials in Florida, Alabama, Mississippi, Louisiana and Texas announced an $18.7 billion settlement with BP on Thursday that resolves years of litigation over the deadly 2010 Gulf of Mexico oil spill.

The April 20, 2010, rig blast killed 11 workers and sent millions of barrels of oil gushing into the gulf for nearly three months on to the shorelines of several states.

The settlement, which BP said also includes claims made by more than 400 local government entities, comes as a federal judge was preparing to rule on how much BP owed in federal Clean Water Act penalties after millions of gallons of oil spewed into the gulf, Bloomberg reported.

The oil giant said it would pay the United States a civil penalty of $5.5 billion under the Clean Water Act over 15 years, along with $7.1 billion to the United States and the gulf states over 15 years for natural resource damages. The tally is in addition to the $1 billion already committed for early restoration, with the company also setting aside an additional $232 million to be added to the natural resource damages interest payment at the end of the payment period to cover further damage unknown at the time of the agreement.

A total of $4.9 billion will be paid over 18 years to settle economic and other claims made by the Gulf Coast states, and up to $1 billion will be paid to resolve local claims, BP said.

"Since the Deepwater Horizon oil spill—the largest environmental disaster in our nation's history—the Justice Department has been fully committed to holding BP accountable," attorney general Loretta Lynch said in a statement. "BP is also resolving significant economic claims with the impacted state and local governments."

The settlement was applauded by environmentalists. "Now Gulf Coast restoration can begin in earnest. It's time to heal the wounds that BP tore in Gulf Coast ecosystems and communities," Audubon President and CEO David Yarnold said in a statement. "We look forward to the day that the people, waters, lands and birds of the Gulf Coast are whole once more."

In arguing against such a high penalty, BP has said its spill-related costs already were expected to exceed $42 billion—even without the Clean Water Act fine. It's also unclear how much BP will end up paying under a 2012 settlement with individuals and businesses claiming spill-related losses.

Costs incurred by BP so far include an estimated $14 billion for response and cleanup, and $4.5 billion in penalties announced after a settlement of a criminal case with the government.

BP said the government and the states could jointly demand an acceleration of payments if the company were acquired.

Previous settlements also included an uncapped fund originally set at $7.8 billion to compensate individuals claiming economic harm from the spill.

BP also settled with Transocean Ltd, which owned the Deepwater Horizon drilling rig, and Halliburton Co, which worked on the Macondo well.

"Now Gulf Coast restoration can begin in earnest. It's time to heal the wounds that BP tore in Gulf Coast ecosystems and communities," said David Yarnold, CEO of the National Audubon Society.