BP ‘Receiving The Punishment It Deserves’ Over Deepwater Horizon Spill


Oil giant BP will be forced to pay out more than $20 billion in compensation for its gross negligence in the lead up to the Deepwater Horizon oil spill, after a settlement was reached on Monday with the US Department of Justice following a five year legal battle over the environmental tragedy.

Announcing the terms of the settlement, Attorney General Loretta Lynch said it was appropriate that “the largest environmental disaster [America] has ever endured” should attracted “the largest settlement with a single entity in American history”.

The civil claims have also set records for the greatest penalty in the history of US environmental law, with BP set to pay out $5.5 billion under the Clean Water Act.

The company will also need to find $7.1 billion in natural resources damages under the Oil Pollution Act, on top of the $1 billion it had already committed to pay for early restoration work.

Gulf states will receive $5.9 billion in economic damages, and affected local governments will be paid $1 billion.

According to court filings, the compensation will be paid out progressively over the next 16 years, out to 2031.

“BP is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region,” Lynch said.

“Five and a half years ago, the world watched as the Deepwater Horizon oil rig exploded, burned and sank into the Gulf of Mexico.

“Over the course of nearly three months, the Gulf region was inundated with more than three million barrels of oil [and]by the time the torrent stopped, it had inflicted unprecedented harm on the economy, the environment and the population.”

Oil from BP’s Macondo well spread hundreds of miles, coating the sea floor and forming huge slicks across the ocean’s surface, while more than 2,000 kilometres of coastline was stained.

According to Lynch, much of the settlement will be deployed for habitat restoration and used to reinvigorate wildlife populations that include marine mammals, sea turtles, oysters, and birds.

The US Department of Justice had already secured more than $4 billion from the company in 2013, after it pleaded guilty to a string of criminal offences arising from the explosion, which killed 11 workers.

The announcement of the final $20.8 billion bill largely confirms earlier statements from July this year, and includes some money which has already been paid out.

At that time, the company issued a statement in which Chairman Carl-Henric Svanberg argued the “agreement is in the best long-term interest of BP and its shareholders”.

“Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise,” Svanberg said at the time.

“We have made significant progress, and with this agreement we provide a path to closure for BP and the Gulf.

“It resolves the company’s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved,” he said.

Thom Mitchell is New Matilda's Environment Reporter.