BP to Pay Record $18.7 Billion to Settle Gulf Oil Spill Claims

A platform burns off excess gas near near the site of of the Deepwater Horizon oil well on the Gulf of Mexico off of the Louisiana coast on Tuesday, July 13, 2010. (AP Photo/Dave Martin)

A platform burns off excess gas near near the site of of the Deepwater Horizon oil well on the Gulf of Mexico off of the Louisiana coast on Tuesday, July 13, 2010. (AP Photo/Dave Martin)

July 2, 2015

BP has tentatively agreed to pay approximately $18.7 billion to settle civil claims related to the 2010 explosion of its Deepwater Horizon oil rig, which killed 11 people and poured millions of barrels of oil into the Gulf of Mexico.

If approved, it will be the largest environmental settlement in U.S. history, the Justice Department said, and the largest ever civil settlement with a single entity.

The deal is now subject to public comment and court approval, a process the Justice Department estimated would take months. But here are the main terms:

  • A $5.5 billion Clean Water Act penalty, 80 percent of which will be dedicated to efforts by the Gulf states — Alabama, Florida, Louisiana, Mississippi and Texas — to restore the environment.
  • Another $8.1 billion to cover damages to natural resources, Gulf restoration and improvement projects. This includes $1 billion that BP already committed for earlier restoration efforts, plus an additional $700 million for any unknown damages.
  • $5.9 billion to settle claims with state and local governments for economic damages.
  • $600 million for other claims, such as reimbursement for damage assessments, and other federal expenses related to the spill.

The government had argued that BP should pay a penalty of $13.7 billion — or $4,300 for each barrel of oil spilled, as required under the Clean Water Act.

Carl-Henric Svanberg, BP’s chairman, said in a statement that the agreement allowed the company to avoid “many years of litigation” and a chance to “set a clear course for the future.”

Svanberg said BP had already been working to deliver on its promise to restore the Gulf economy and environment. “We have made significant progress, and with this agreement we provide a path to closure for BP and the Gulf,” he said. “It resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved.”

The Justice Department announced in December 2010 that it would bring a civil lawsuit against BP, Transocean, which owned the Deepwater rig and Halliburton, which provided cement for the well, charging that the companies had engaged in “gross negligence.”

Last year, in a scathing decision, U.S. District Court Judge Carl Barbier found BP had acted with “gross negligence,” making “profit-driven decisions” that, “taken together, evince an extreme deviation from the standard of care and a conscious disregard of known risks.”

The judge found that Transocean and Halliburton were guilty of “negligence,” which carries lesser penalties.

Two years ago, BP pleaded guilty to 14 criminal counts for its role in the spill in 2013, paying out $4 billion in fines and penalties.

In May, BP settled its remaining claims with Halliburton and Transocean, the Wall Street Journal reported, indemnifying the two companies against future court findings related to the spill.

Related Film: The Spill

Dive into this joint investigation by FRONTLINE and ProPublica into the trail of problems — deadly accidents, disastrous spills, countless safety violations — which long troubled the oil giant, BP. Could the disaster in the Gulf of Mexico have been prevented?

Sarah Childress

Sarah Childress, Senior Editor & Director of Local Projects, FRONTLINE



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