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BP Settles Deepwater Disaster for $20B

Thursday, October 8, 2015

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BP will pay more than $20 billion to settle claims against it for the Deepwater Horizon explosion and oil spill in 2010.

The final settlement, announced Monday (Oct. 5), is the largest settlement in history between the U.S. Department of Justice and a single entity, according to multiple reports.

“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,” said Attorney General Loretta Lynch in a statement to The Guardian and several other media outlets.

“The steep penalty should inspire BP and its peers to take every measure necessary to ensure that nothing like this can ever happen again.”

Settlement Details

The settlement totals $20.8 billion and includes some payments the company already has made. In total, BP will pay $54.6 billion for the April 20, 2010, disaster, according to a CNN Money report. By way of comparison, CNN said that only Volkswagen’s costs to settle its diesel emissions scandal would top the landmark settlement.

By U.S. Coast Guard / Public Domain via Wikimedia Commons

BP has reached a $20.8 billion settlement with the U.S. Department of Justice for claims related to the April 20, 2010, Deepwater Horizon disaster.

Volkswagen’s settlement costs could top $87 billion, CNN reported.

Of the $20.8 billion, The Guardian reported that:

  • $5.5 billion would go toward Clean Water Act penalties;
  • $5 billion would help reimburse five states involved in the aftermath of the disaster: Alabama, Florida, Louisiana, Mississippi and Texas;
  • $5.84 billion will go to people and businesses harmed by the 87-day oil spill that followed the initial explosion;
  • $700 million for injuries and losses not yet known to be related to the spill;
  • $350 million will reimburse assessment costs;
  • $16.74 million will go toward non-reimbursed costs related to the spill; and
  • $82.6 million will cover lost royalties BP would have owed the U.S. for the spilled oil.

Lynch reportedly said that 85 percent of the money from the Clean Water Act fines would go to “clean up the damages the Gulf region has suffered.

“In addition, it will fund Gulf restoration projects that will revitalize damaged habitats such as coastal wetlands and support the revival of marine mammals, sea turtles, oysters and birds,” said Lynch, according to The Guardian.

Louisiana’s attorney general also told The Guardian that the money Gulf states receive will help them recover.


The Shell Island restoration project in Louisiana, at a cost of $318.4 million, is one of several Deepwater Horizon restoration projects along the Gulf coast.

“With this recovery, we can move forward to begin rebuilding our coast and repairing the damage caused by this spill rather than dealing with the uncertainty and delays of trial and appeals” said Buddy Caldwell.

According to Work Boat, BP will make the payments—which are guaranteed by BP Corporation North America and BP P.L.C.—over time. The settlement follows earlier criminal and civil settlements, including with MOEX Offshore 2007 LLC (in 2012); BP Exploration and Production Inc. (2013); and Transocean Deepwater Inc. (2013).

CNN reports that it also comes on the heels of 11 felony manslaughter charges against BP for the workers who were killed the day of the explosion. BP pleaded guilty to those charges in 2012.

The Disaster

As previously reported, the 11 crew members died and vanished forever in the Deepwater Horizon explosion, which also set off an 87-day oil gusher at the bottom of the Gulf of Mexico.

More than 3 million barrels of oil spilled into the Gulf before the well was capped in July 2010. The marine disaster was the largest of its kind.

In addition to the immediate loss of life and environmental impact, the disaster had wide-reaching effects throughout the Gulf that are impossible to calculate. They included damage to the fishing industry; the tourism industry; and to marshes and beaches.

Cleanup efforts are ongoing as a mountain of lawsuits has piled up in the wake of the disaster.

Nearing the End

But Monday’s settlement takes care of the “largest litigation liabilities remaining from the tragic accident,” a BP spokesman told CNN. The spokesman told the news agency that while some smaller claims remain, the outcome of those would not be significant.

News of the settlement first came out in July. Preliminary figures at that time showed that the BP settlement would top $18.7 billion.

The figures released Monday reflect that preliminary agreement but also include payments that BP already has made, according to CNN.

Meanwhile, the public has until Dec. 4 to review and comment on the consent decree, which is available on the Department of Justice’s website and published in the Federal Register.


Tagged categories: BP; Environmental Control; Environmental Controls; Environmental Protection; Environmental Protection Agency (EPA); Government; Laws and litigation; Lawsuits; North America; Offshore; Oil and Gas

Comment from Thomas Van Hooser, (10/8/2015, 6:38 AM)

The value of a proper and comprehensive risk assessment process by competent persons coupled with good management and viable inspection practices by competent persons cannot be over emphasized as clearly evidenced by this event.

Comment from Tony Rangus, (10/8/2015, 9:38 AM)

Granted they need to pay, but I wonder how much will be to pay for fraudulent claims for: $5 billion would help reimburse five states involved in the aftermath of the disaster: Alabama, Florida, Louisiana, Mississippi and Texas; $5.84 billion will go to people and businesses harmed by the 87-day oil spill that followed the initial explosion; $700 million for injuries and losses not yet known to be related to the spill.

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