BP Reaches Agreement with Gulf States to Pay Historic $18.5 Billion Settlement over Deepwater Horizon
On July 2, 2015, BP reached an agreement in principle with five Gulf States to settle claims against the company arising from the Deepwater Horizon oil spill in 2010. This marks the largest environmental settlement in history, and, if approved, would bring BP’s total obligations for the spill to nearly $54 billion.
Political figures in the states involved and the United States Department of Justice applauded BP’s decision to settle. Attorney General Loretta Lynch commented that “after productive discussions with BP over the previous several weeks, 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.” Ms. Lynch cheered the “extraordinary effort of the many state leaders” who collaborated to advance settlement. Mississippi Governor Phil Bryant expressed approval over the settlement and announced that the state would receive approximately $2.2 billion in compensation for its claims against the company.
Undoubtedly to have a voice in the crowd and to hearten wary investors, BP simultaneously announced the news, and its chairman called the agreement “a path to closure for BP and the Gulf.” He further commented that the settlement would resolve the company’s largest legal exposure and provide clarity on costs while creating certainty of payment for all involved. Several BP representatives seconded their leader, optimistic that the company’s “resilient and robust financial framework” would sustain the payout, which is scheduled over the 18 years following final agreement.
This agreement, if approved by the court, would be the largest settlement with a single entity in American history. Although this settlement does not address all outstanding claims against BP, it certainly clears a path for BP to put the Deepwater Horizon spill behind it and provides funding for the Gulf States to do so as well.