BP settles Gulf oil spill claims for record $18.7B

British oil giant BP has agreed to pay the federal government and five states up to $18.7 billion to settle environmental claims from the 2010 Gulf of Mexico oil spill, the largest settlement with a single entity in United States history.

The settlement announced Thursday morning, which is still subject to a public comment period and court approval, closes a major chapter of the worst environmental disaster in recent U.S. memory. It comes more than five years after the Deepwater Horizon rig exploded at a BP-owned well, killing 11 workers and pouring 3.19 million barrels of crude oil into the Gulf for 87 straight days.

{mosads}“We have reached an agreement in principle that would justly and comprehensively address outstanding federal and state claims, including Clean Water Act civil penalties and natural resource damages,” Attorney General Loretta Lynch said in a statement.

“If approved by the court, this settlement would be the largest settlement with a single entity in American history; it would help repair the damage done to the Gulf economy, fisheries, wetlands and wildlife; and it would bring lasting benefits to the Gulf region for generations to come,” she continued.

BP Chairman Carl-Henric Svanberg said the agreement “resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved.”

“This is a realistic outcome which provides clarity and certainty for all parties,” added Bob Dudley, the company’s group chief executive.

The agreement is separate from the class-action settlement BP agreed to with businesses and individuals affected by the spill and its aftermath, and from the claims from those who opted out of that settlement.

The oil company has been arguing that those who were not directly affected by the spill should not get benefits from that class-action settlement, but the courts have disagreed, and the Supreme Court declined Monday to hear an appeal from the oil company. 

The states receiving money through the settlement said they were glad to be able to close the legal saga over the oil spill.

“This agreement will not only restore the damage inflicted on our coastal resources by the Deepwater Horizon oil spill, it will also allow Louisiana to continue aggressively fighting coastal erosion,” 2016 presidential hopeful Gov. Bobby Jindal (R-La.) said.

“These funds will allow us to build on the momentum gained through the state’s increased investment in coastal protection and restoration since 2008.”

Through various provisions in the settlement, Louisiana stands to receive $6.8 billion from BP, in addition to the more than $3 billion the company has already paid the state because of the spill.

Florida Attorney General Pam Bondi (R) said more than $3.25 billion will go to her state.

“I’m pleased to announce that Florida has entered into an agreement in principle of more than $3 billion with BP for the state’s economic and environmental recovery which will benefit areas of the state most devastated by the spill,” she said.

“Today is a victory for Mississippi and a victory for a treasured way of life on the Gulf Coast,” Gov. Phil Bryant (R-Miss.) said in a statement, referring to his state’s $1.5 billion share of the total.

Environmental groups were also glad to get a new round of money going to environmental restoration projects.

“No monetary award can ever undo the destruction of the Deepwater Horizon disaster,” Fred Krupp, president of the Environmental Defense Fund, said in a statement. “But, while we look forward to additional details, today’s agreement, the largest environmental settlement in American history, represents a significant step toward justice for the Gulf Coast ecosystems, economies and communities that were damaged by the disaster.”

“You break it, you pay for it — that’s how this is supposed to work,” said Audubon Society President David Yarnold. “Now Gulf Coast restoration can begin in earnest. It’s time to heal the wounds that BP tore in Gulf Coast ecosystems and communities.”

The Justice Department said the settlement includes a $5.5 billion penalty under the Clean Water Act, much lower than the $13.7 billion maximum the company faced. Eighty percent of that amount will go to the states.

The settlement also includes $8.1 billion for natural resources damages, plus $700 million for damages not yet known; $5.9 billion for state and local governments’ economic claims; and $600 million for other claims including the costs of assessing damages and various federal response costs.

— Updated at 10:34 a.m.