U.S., BP Finalize $20.8 Billion Deepwater Oil Spill Settlement

WASHINGTON—The Obama administration said Monday it has finalized the terms of a record $20.8 billion dollar settlement withBP PLC over the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

The announcement by top officials at the Justice, Commerce, Agriculture and Interior departments, along with the Environmental Protection Agency, puts the final touches on the biggest pollution penalty in U.S. history.

A consent decree was filed in federal court in New Orleans Monday morning outlining the settlement terms.

When the tentative terms of the deal were announced by the Justice Department in July, the company put the total price tag at $18.7 billion, while Justice Department officials said it was $20 billion. Monday’s announcement explained that discrepancy, which was due to the government counting money BP has already paid and because the parameters of some compensation are still being calculated.

Attorney General Loretta Lynch on Monday called the settlement “a strong and fitting response to the worst environmental disaster in U.S. history.’’

She said 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.’’

BP spokesman Geoff Morrell stressed that the announcement doesn’t mean new obligations for the company. The final deal “does not reflect a new settlement or any new money,” he said. “It covers the same money — and the same amounts — disclosed by BP when we announced this agreement in July.’’

But he said the announcement puts the company another step toward “fulfilling our commitment to help restore the gulf economy and environment.’’

The settlement resolves all federal and state claims against BP for the accident.

The Deepwater Horizon, a large oil rig, exploded on the evening of April 20, 2010, after gas seeped into the well that the rig was drilling. The largest oil spill in U.S. waters, the disaster killed 11 crew members and leaked millions of barrels of crude into the gulf, coating hundreds of miles of shoreline with oil.

In addition to BP and the U.S., the settlement’s parties include Alabama, Florida, Louisiana, Mississippi and Texas, as well as more than 400 local governments. The deal resolves penalties under the Clean Water Act, natural resources damages, and other claims.

Now that the deal is finalized, $7.1 billion in U.S. and Gulf Coast states’ claims for environmental damage are payable over 18 years, while the $5.5 billion in Clean Water Act penalties are payable over 15 years. BP has previously estimated it would pay more than $1 billion annually over the majority of the payment period.

BP has separately reached a $4 billion settlement of a federal criminal probe stemming from the disaster.

EPA Administrator Gina McCarthy said that as part of the settlement, the government will lift its suspension on doing business with BP. The agreement also will create long-term environmental restoration work to improve the quality of the Gulf Coast shores, she added.

“Justice is not about dumping a pile of money and walking away,’’ Ms. McCarthy said.

As of July, BP had taken a cumulative pretax charge of $54.6 billion since the explosion to settle the myriad claims against it from the government, shareholders and other companies, according to SEC filings. That doesn’t mean BP has actually paid out all that money, just that is has made provisions for doing so in the future.

Many civil suits are pending against BP, including a securities fraud trial set to begin in Houston in January. In that case, investors who bought BP’s American Depository Shares are suing for misconduct, claiming they were harmed because BP underestimated how much oil was spilling into the Gulf of Mexico, which was ultimately used to determine the fines BP had to pay.

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