BP Agrees to Pay Largest Environment Settlement in U.S. History for Gulf Oil Spill

The largest environment settlement in U.S. history — $18.7 billion — was announced today resolving claims against BP brought by the U.S. Department of Justice, five Gulf states and local governments for the British oil giant's role in the 2010 Gulf of Mexico oil spill.

The settlement ends years of litigation over how much BP owes in federal Clean Water Act penalties for letting 200 million gallons of oil leak into the Gulf of Mexico for three months following the April 2010 explosion of the Deepwater Horizon oil rig that killed 11 crewmen. It comes after U.S. District Judge Carl Barbier in New Orleans, Louisiana, ruled that BP was "grossly negligent" and "reckless." It was the biggest environmental disaster in U.S. history.

RELATED: BP Gulf Spill, Five Years Later: Where Did the Oil Go?

The disaster has claimed the lives of many wild animals, including hundreds of thousands of birds, tens of thousands of sea turtles and more than 1,300 dolphins since the spill was capped in July 2010. These numbers continue to mount as animals perish from complications related to prolonged exposure to oil.

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"These dolphins had some of the most severe lung lesions I have seen," said Kathleen Colegrove, a veterinary pathologist who led a government study on the ongoing spike in bottlenose dolphin deaths in the Gulf of Mexico. (image: Louisiana Department of Wildlife and Fisheries)

$5.5 billion will be paid as penalties to the Clean Water Act (with Louisiana getting $787 million of that total). $7.1 billion will be paid for damages to U.S. natural resources, on top of the $1 billion already paid to the five states — Louisiana, Texas, Alabama, Mississippi and Florida. In addition, $4.9 billion will be paid to settle the states' economic losses.

"It's an enormous settlement resolving nearly all outstanding claims for the Gulf oil spill," said David Uhlmann, former chief of the Justice Department's Environmental Crimes Section and an environmental law professor at the University of Michigan. "The message is absolutely clear: companies must place far more emphasis on environmental protection and safety than BP did prior to the Gulf oil spill."

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Oil-covered Pied-billed Grebe (image: Pedro Ramirez Jr./USFWS)

“Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise,” said BP chairman Carl-Henric Svanberg.

The company has recovered most of the $40 billion it lost in market value, not from its efforts to clean up the Gulf — and its reputation — but because of the profitability of its energy exploration and production business.

"Shareholders don't care about" BP's public-relations efforts, said Pavel Molcanov, an energy analyst at Raymond James, a financial services firm headquartered in St. Petersburg, Florida. "Much as they don't care about scholarship programs or charitable contributions." Between 2011 and 2013, BPs oil rigs in the Gulf of Mexico doubled from five to 10. The company plans to invest $1 billion in the Alaska North Slope over the next five years.

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Dolphins swim through oil in the Gulf of Mexico during the Deepwater Horizon oil spill in April 2010. (image: NOAA)

"If approved by the court, this settlement would be the largest settlement with a single entity in American history," said Attorney General Loretta Lynch in a statement. "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."

"No amount of money can ever undo the destruction of the Deepwater Horizon disaster," said Steve Cochran, director of the Mississippi River Delta Program of the Environmental Defense Fund, in an email. But he also noted that because of the settlement, "we're finally able to take steps to truly help the Gulf finally heal."


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