BP oil to pay US$20 billion for gulf oil spill

BP Oil is set to pay around US$20.8 billion in settlements to the US for the Macondo well blowout that lead to an oil spill in the Gulf of Mexico in 2010, the US Department of Justice said in a press release.

According to the US Department of Justice, the settlement resolves the governments’ civil claims under the Clean Water Act and natural resources damage claims under the Oil Pollution Act, as well as economic damage claims of the five Gulf states and local governments.

Taken together this global resolution of civil claims is worth $20.8 billion, and is the largest settlement with a single entity in the department’s history.

Each of the Gulf States – Alabama, Florida, Louisiana, Mississippi and Texas – also filed civil claims against BP relating to the spill, including claims for economic losses and natural resource damages.

Under the terms of a consent decree lodged in federal court in New Orleans, BP must pay:

• US$5.5 billion federal Clean Water Act penalty, plus interest, 80% of which will go to restoration efforts in the Gulf region pursuant to a Deepwater-specific statute, the RESTORE Act. This is the largest civil penalty in the history of environmental law.

• US$8.1 billion in natural resource damages, this includes US$1 billion BP already committed to pay for early restoration, for joint use by the federal and state trustees in restoring injured resources.

• BP will also pay up to an additional US$700 million, some of which is in the form of accrued interest, specifically to address any later-discovered natural resource conditions that were unknown at the time of the agreement and to assist in adaptive management needs.

• US$600 million for other claims, including claims for reimbursement of federal and state natural resource damage assessment costs and other unreimbursed federal expenses and to resolve a False Claims Act investigation due to this incident.

The payments will be made over time and are backed by parent company guarantees from BP Corporation North America Inc. and BP P.L.C.

Additionally, BP has entered into separate agreements to pay US$4.9 billion to the five Gulf states and up to a total of US$1 billion to several hundred local governmental bodies to settle claims for economic damages they have suffered as a result of the spill.