A record-breaking environmental settlement is reached after years of litigation from the 2010 Gulf of Mexico oil spill.
The 2010 oil spill in the Gulf of Mexico brought on years of litigation, but the federal government and Gulf Coast states have agreed upon a settlement with BP. The settlement is for a record-setting $18.7 billion. This is the largest environmental settlement ever.
In April 2010, BP was leasing the Deepwater Horizon rig when it exploded and sank off the coast of Louisiana, killing 11 crewmen and spilling 200 million gallons of crude into the Gulf.
According to a report by USA Today, the settlement that has been reached includes $5.5 billion in Clean Water Act penalties as well as $8.1 billion in natural-resource damages. The settlement will help states reverse the damage from the spill and includes the $1 billion BP had already committed to the restoration.
A judge must approve the settlement before it is final, and David Uhlmann, former chief of the Justice Department’s Environmental Crimes Section and environmental law professor at the University of Michigan has stated that the settlement has the highest totals for those federal penalties ever.
BP had estimated its the spill-related costs would exceed $42 billion without the Clean Water Act fine. BP will not only be paying in the settlement with the gulf states, but also under a 2012 settlement with individuals and businesses who claimed spill-related losses.
This settlement is expected to resolve nearly all claims for the 2010 spill. Attorney General Loretta Lynch claimed that the settlement will help repair the damage to the Gulf economy, wetlands, fisheries and wildlife, as well as benefit the Gulf in years to come.
It is estimated that BP has incurred costs of $14 billion for response and cleanup as well as $4.5 billion in penalties in a settlement of a criminal case with the government. BP reached this settlement in 2012 over economic and property damage claims which arose from the spill.
In its 2015 first-quarter earnings report, BP estimated that it could reach at least $10.3 billion cost, but it also stressed that costs may be higher depending on the number of claims filed by the recently passed deadline.
A federal judge in New Orleans concluded that BP had acted with “gross negligence” in the rig explosion that resulted in the spill in the third phase of a civil trial against the federal government earlier this year.
However, BP appealed that ruling, paving the way for the multibillion-dollar Clean Water Act penalty.