BP has reached an agreement to settle claims for the worst offshore spill in US history
BP will pay a record $18.7bn in damages the US government and five Gulf states related to the worst offshore oil spill in American history.
A record $5.5bn of the total settlement will cover federal penalties under the Clean Water Act, topping the previous high of $1bn.
Louisiana, Mississippi, Alabama, Florida and Texas will all receive payouts.
This is a realistic outcome which provides clarity and certainty for all parties,” BP chief executive Bob Dudley, said in a statement on Thursday.
“This agreement will resolve the largest liabilities remaining from the tragic accident and enable BP to focus on safely delivering the energy the world needs.
“For the United States and the Gulf in particular, this agreement will deliver a significant income stream over many years for further restoration of natural resources and for losses related to the spill.
“When concluded, this will resolve not only the Clean Water Act proceedings but also the Natural Resource Damage claims as well as other claims brought by Gulf States and local government entities.”
The $18.7bn settlement will be paid over 18 years to the US and the five Gulf states affected by the oil spill.
That figure is less than $40bn that the US and the states had originally sought, but is sitll the largest environmental settlement from BP.
The deal comes as a federal judge was weighing pollution fines under the Clean Water Act against the London-based oil company.
BP has already spent at least $28bn on response, clean-up and compensation. The company has set aside $43.8bn for fallout from the spill.
BP will pay…
• The US a civil penalty of $5.5bn under the Clean Water Act, payable over 15 years
• The United States and five Gulf States $7.1bn over 15 years for natural resources damages, in addition to the $1bn already committed
• A total $4.9bn ove 18 years to settle economic and other claims made by the five Gulf Coast states
• Upt o $1bn to resolve claims mde by more than 400 local government entities
• Will set aside $232m to cover any further damages related to naural resources that are currently unkown
The settlement increases the total pre-tax charge associated with the Deepwater Horizon catastrophe by $10bn, from the $43.9bn set aside by the company at the end of the first quarter.
The 2010 explosion on BP’s Deepwater Horizon oil rig killed 11 men and allowed millions of barrels of oil to flow out of the Macondo well into the Gulf of Mexico.
The incident was ranked as the biggest marine disaster in US history, and wreaked billions of dollars’ of damage to tourism and fishing businesses along the Louisiana coastline.
It also threatened to destroy BP, which saw its share price more than halve in the weeks after the accident as it struggled to contain the spill and came under political fire from President Barack Obama.
After the incident, Louisiana, Mississippi, Alabama and Florida sued BP for damages not covered by the company’s earlier settlements with businesses and individuals harmed by the worst offshore spill in US history.
The states sued BP under a federal law, known as the Oil Pollution Act, that holds polluters liable for municipal losses caused by oil spills.
The statute requires corporations to make state and local governments whole for shortfalls in tax revenues and increased costs for services after a spill.
BP at first downplayed the states’ damage claims in court filings for almost two years, saying the company deserved credit for the hundreds of millions of dollars it paid an array of public entities to promote tourism, which plunged after the spill. BP also argued that state losses should be offset by increased sales and income taxes paid by thousands of cleanup workers BP employed throughout the region.