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Web alert: BP reaches a legal settlement of $20bn with the United States and five Gulf states over the 2010 Deepwater Horizon Oil Spill.
News & Insights 19 October 2015
On 5 October 2015, a settlement of US$20bn was agreed between BP and the US and the five Gulf States (Alabama, Florida, Louisiana, Mississippi and Texas) in order to resolve BP’s civil claims emanating from the Deepwater Horizon oil spill which occurred in 2010 off the coast of Louisiana.
On 5 October 2015, a settlement of US$20bn was agreed between BP and the US and the five Gulf States (Alabama, Florida, Louisiana, Mississippi and Texas) in order to resolve BP’s civil claims emanating from the Deepwater Horizon oil spill which occurred in 2010 off the coast of Louisiana. Oil was spilt for 87 days and has affected the coastlines of Louisiana, Mississippi, Florida, Alabama as well as Texas.
Background:
A civil lawsuit brought by the US against BP and its subsidiaries was announced on 15 December 2010. BP and its other subsidiaries were sued by the US for civil penalties under the Clean Water Act. Under the Oil Pollution Act, the US also pursued to obtain a formal statement that BP was responsible for natural resource damages and response costs for the 2010 Gulf of Mexico oil spill. The federal lawsuit verified, among other things, that the oil spill at the Macondo site was as a result of BP’s gross negligence. In addition to the US civil lawsuit, the five Gulf states filed civil claims against BP in relation to the oil spill, including claims for natural resource damages and economic losses.
Proposed Terms of the Consent Degree:
The US, the five Gulf states and BP have agreed to a settlement (otherwise known as the proposed terms of the Consent Degree), the largest one made to date between the US Department of Justice and a single organisation. On 5 October 2015 the Consent Degree was lodged in federal court in New Orleans where it is open for public comment before it receives final approval from a federal judge.
The US Department of Justice provides a summary table of the payment amounts imposed on BP:
|
Clean Water Act Civil Penalty |
US$5.5 billion |
| Natural Resources Damages | US$7.1 billion |
| Early Restoration BP previously committed (partially paid) | US$1 billion |
| NRD Assessment Costs (States and the US) | US$350 million |
| Unknown Injury and Adaptive Management | Up to US$700 million |
| False Claims Act; Royalties on oil; Response and other costs | US$250 million |
|
State and Local Economic Claims |
Up to US$5.9 billion |
| TOTAL | US$20.8 billion |
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