Federal, state governments settle Macondo spill civil claims with BP

This article was updated with comments from BP on Oct. 6.

The US government as well as the governments of five states reached a proposed $20.8-billion settlement with BP PLC to resolve civil claims arising from the 2010 Macondo deepwater well blowout and subsequent crude oil spill into the Gulf of Mexico. It was the largest such settlement with a single entity in US history, the US Department of Justice said.

A proposed consent decree filed Oct. 5 with US District Court for Eastern Louisiana requires BP Exploration & Production Inc. to pay the US government and the states of Alabama, Florida, Louisiana, and Texas the following:

• $5.5 billion, plus interest, for violating the federal Clean Water Act and for incident noncompliance penalties that the US Bureau of Safety and Environmental Enforcement issued to BP following the Apr. 20, 2010, explosion and fire that claimed 11 lives and destroyed Transocean Holdings LLC’s Deepwater Horizon semisubmersible rig, setting off the largest offshore crude oil spill in US history. The proposed settlement allocates 80% of this amount to the five states for environmental restoration and economic development projects, DOJ indicated.

• $8.1 billion in natural resource damages, including $1 billion previously committed for early restoration projects, which designated federal and state trustee agencies will use to restore injured natural resources in the gulf region.

• As much as an additional $700 million in natural resources damages for unknown conditions and adaptive management.

• $600 million in natural resources damages to reimburse governments further for assessment and removal costs, and to pay for lost royalties and to resolve a False Claims Act investigation.

DOJ said BP also proposed in separate agreements to pay the five states $4.9 billion and local governments as much as $1 billion to local governments to resolve economic damages claims.

It said in an Oct. 5 Federal Register notice that comments on the proposed settlement will be accepted for 60 days. DOJ also announced public hearings on it will be held Oct. 19 in Houma, La; Oct. 20 at the University of Southern Mississippi in Long Beach; Oct. 22 in New Orleans; Oct. 26 in Mobile, Ala.; Oct. 27 in Pensacola, Fla.; Oct. 29 in St. Petersburg, Fla.; Nov. 10 in Galveston, Tex.; and Nov. 18 in Washington, DC.

At the same time, a Trustee Council comprised of the five states and US Departments of Agriculture, Commerce, and Interior, and the US Environmental Protection Agency proposed a comprehensive gulf integrated regional environmental restoration plan and programmatic environmental impact statement. It also announced a schedule of public meetings. Comments will be accepted through Dec. 4.

The $6.8 billion that Louisiana is scheduled to receive under the proposed settlement would be its largest environmental settlement in history, and comes in addition to $2 billion the state has already received from the multinational oil company, Atty. Gen. James G. (Buddy) Caldwell (R) said.

“With this recovery, we can move forward to begin rebuilding our coast and repairing the damage caused by this spill rather than dealing with the uncertainty and delays of trial and appeals,” he said. “I am especially pleased that we have a firm commitment from BP [to pay] all of Louisiana’s costs, including litigation expenses and attorneys’ fees.”

A BP official said the proposed consent decree moves all parties one step closer to a settlement that originally was announced on July 20. “It covers the same payments—and same amounts—disclosed by BP when we announced this agreement in July,” said Geoff Morrell, BP senior vice-president for US communications and external affairs. “The government has announced a number that includes amounts previously spent or disclosed by BP.”

Morrell said, “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.”

Contact Nick Snow at nicks@pennwell.com.

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