$20B civil settlement in Deepwater Horizon oil spill

The United States and five Gulf states have reached a $20.8 billion settlement in a civil lawsuit over the Deepwater Horizon oil spill in April 2010.

On April 20, 2010, the Macondo well suffered a catastrophic blowout. Eleven crew members on the Deepwater Horizon were killed, the oil platform was destroyed and more than 3 million barrels of oil spilled into the Gulf of Mexico.

During the three months oil was spilled into the Gulf, oil slicks extended across more than 43,000 square miles. The oil affected water quality and exposed aquatic plants and wildlife to harmful chemicals.

Oil was deposited onto at least 400 square miles of the sea floor and washed up onto more than 1,300 miles of shoreline from Texas to Florida.

The spill damaged and temporarily closed fisheries vital to the Gulf economy, oiled hundreds of miles of beaches, coastal wetlands and marshes and killed thousands of birds and other marine wildlife, among other economic and natural resource injuries. 

The settlement is the largest settlement with a single entity in Department of Justice history. The Justice Department says the settlement will assure continued restoration of the Gulf Coast.

The settlement resolves the government's civil claims under the Clean Water act and natural resources damage claims under the Oil Pollution Act, as well as economic damage claims of the five Gulf states and local governments.

Total, the settlement is worth $20.8 billion.

The Deepwater Horizon Trustees Council, made up with representatives from the five Gulf states and four federal agencies, released a draft damage assessment and restoration plan and a draft environmental impact statement.

The plan details how the trustees will use the natural resource damage recovery funds to restore the Gulf environment.

The civil lawsuit was filed on December 15, 2010 by Attorney General Eric Holder against BP and several co-defendants. The lawsuit resulted in a three-phase civil trial in which the US proved, among other things, the spill was caused by BP's gross negligence.

Each of the Gulf States – Alabama, Florida, Louisiana, Mississippi and Texas – also filed civil claims against BP relating to the spill, including claims for economic losses and natural resource damages.

Under the terms of a consent decree lodged in federal court in New Orleans, BP must pay the following:

  • $5.5 billion federal Clean Water Act penalty, plus interest, 80 percent of which will go to restoration efforts in the Gulf region pursuant to a Deepwater-specific statute, the RESTORE Act. This is the largest civil penalty in the history of environmental law.
  • $8.1 billion in natural resource damages, this includes $1 billion BP already committed to pay for early restoration, for joint use by the federal and state trustees in restoring injured resources. BP will also pay up to an additional $700 million, some of which is in the form of accrued interest, specifically to address any later-discovered natural resource conditions that were unknown at the time of the agreement and to assist in adaptive management needs.  The natural resource damages money will fund Gulf restoration projects that will be selected by the federal and state trustees to meet five different restoration goals and 13 restoration project categories.  These include restoration focusing on supporting habitats such as coastal wetlands, but also provide for specific resource types, such as marine mammals, fish and water column invertebrates, sturgeon, submerged aquatic vegetation, oysters, sea turtles, birds and lost recreational use, among others.
  • $600 million for other claims, including claims for reimbursement of federal and state natural resource damage assessment costs and other unreimbursed federal expenses and to resolve a False Claims Act investigation due to this incident.

Additionally, BP has entered into separate agreements to pay $4.9 billion to the five Gulf states and up to a total of $1 billion to several hundred local governmental bodies to settle claims for economic damages they have suffered as a result of the spill.

Share this article: