Feds, BP reach $20B settlement over Gulf spill

The Department of Justice has finalized a $20.8 billion settlement with BP over its role in the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. 

Attorney General Loretta Lynch called the settlement a “historic resolution” of the government’s claims against BP, which is responsible for spilling 3.19 million gallons of oil into the Gulf of Mexico following the April 10, 2010, explosion at its Deepwater Horizon rig. 

{mosads}“This resolution is strong and fitting,” Lynch said at a press conference with a host of cabinet officials on Monday morning. “BP is receiving the punishment it deserves while also providing critical compensation to the damage to the Gulf region.”

BP will spend $5.5 billion to settle civil claims under the Clean Water Act. The company will also spend $7.1 billion for environmental restoration work, plus $700 million to compensate for still-unknown damages to natural resources in the region.

The company will pay $4.9 million to Gulf Coast states affected by the spill, as well as $1 billion to local communities. Florida, Alabama, Mississippi, Louisiana and Texas will split that portion of the settlement.

The settlement — which still needs to be approved by a federal court — is the largest with a single entity in the Department of Justice’s history.

“The steep penalty should inspire BP and its peers to take every measure necessary to ensure that nothing like this can ever happen again,” Lynch said. 

Details of the settlement were first released in July, and the one announced Monday incorporates money BP has already spent on spill restoration. A BP spokesman said the announcement is “another step closer to finalizing” that agreement. 

“As BP said in July, this settlement resolves the largest litigation liabilities remaining from the tragic accident, providing BP certainty with respect to its financial obligations and allowing us to focus on safely delivering the energy the world needs,” BP spokesman Geoff Morrell said.

The federal government sued BP over its rule in the Gulf spill in December 2010, and it was soon followed by several states damaged by the spill. 

Litigation against BP has been extensive, and the company and its partners has already settled several claims related to the spill. BP has also spent more than $1 billion on environmental restoration work in the area, a sum included in the total announced Monday. 

The government’s case is separate from the class-action settlement BP has agreed to with businesses and individuals affected by the spill. In July, the Supreme Court denied the company’s appeal to block benefits for those not directly affected by the spill.  

Officials also announced an $8.8 billion restoration fund for the Gulf, using settlement money from BP.

The fund will go toward coastal and habitat repair, water quality improvement in wetlands and recreational projects in the region. 

“Together, these initiatives will add on to our efforts of the last five years to move Gulf communities from recovery to restoration to resurgence,” Commerce Secretary Penny Pritzker said. 

The settlement marks a new chapter in one of the most contentious environmental legal fights in U.S. history. Lynch acknowledged Monday that BP could ultimately have faced a Clean Water Act penalty of more than $13 billion, though that would have needed to go through the courts to be realized. 

“This is still the largest environmental penalty under the Clean Water Act and Oil Pollution Act, ever,” she said.

Adm. Paul Zukunft, the commandant of the U.S. Coast Guard, said the last report of oil from the spill came in March. He said the region’s fishing and tourism industries have recovered nicely since the spill, though the wetlands in the region are still feeling the effects.

Environmental Protection Agency Administrator Gina McCarthy noted that the settlement includes $700 million to address any potential environmental damages that officials have yet to discover. 

“Justice is not about dumping a pile of money and walking away,” she said. “It is about investing in sustainable ways that empower and strengthen the Gulf communities over the long term.”

— This post was updated at 12:45 p.m.