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BP Settles With US Gov For $20.8 Billion

In announcing the settlement reached by BP with the U.S. Justice Department and five states, Attorney General Loretta Lynch said the British energy giant got “the punishment it deserves” for its role in the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

The $20.8 billion settlement, announced Oct. 5 in Washington, will be used in part to pay for final cleanup and restoration of the damaged gulf and its coastline. That includes as much as $1 billion to compensate local governments in this effort and $4.9 billion to five coastal states affected by the spill – Alabama, Florida, Louisiana, Mississippi and Texas.

The deal, which ends five years of legal maneuvering by both sides, would require BP to pay a $5.5 billion fine for violating the U.S. Clean Water Act and $7.1 billion in damages under the terms of the Oil Pollution Act. BP already had settled a federal criminal case for $4 billion.

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“BP is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region,” Lynch said at a news conference in Washington. “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 the accident “inflicted unprecedented damage. … Ecosystems were disrupted. Businesses were shuttered. Countless men and women lost their livelihoods and their sense of security.”

The settlement, which was filed in U.S. District Court in New Orleans, will not be final until it is subjected to a 60-day period of public comment and receives final approval by a federal judge.

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The Deepwater Horizon, a huge rig operating in the gulf off the coast of Louisiana, exploded on April 20, 2010, killing 11 workers and leaking an estimated 134 million gallons of crude oil into the gulf until the breach was capped 87 days later.

The accident, the worst oil disaster ever in U.S. waters, soiled more than 1,300 miles of shoreline in the five affected states, fouled at least 400 square miles of the sea floor and poisoned wildlife that inhabit the gulf and its coast.

Besides the 11 dead rig workers, the disaster also had a profound emotional effect on people in the region, according to Gina McCarthy, the administrator of the Environmental Protection Agency.

“[T]he spill drove Gulf communities into a period of painful uncertainty,” McCarthy said, “forcing questions that no American family should ever have to ask: Is my food safe to eat? Is it dangerous for my kids to play near the shore? Is the air still clean to breathe? And will my businesses ever recover?”

Several environmental groups, including the National Audubon Society, issued a joint statement welcoming the settlement. They said it “will help bring the Gulf back to the state it was before the spill, and the release of this plan is a positive step toward that end.”

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This sentiment wasn’t universal, however. Miyoko Sakashita, the oceans director at the Center for Biological Diversity, said no amount of money could compensate for the environmental loss caused by the spill. Instead, she said, the United States should act to restrict offshore drilling for oil and gas. “All of this drilling is really just deepening our climate crisis,” she said.

The deal announced by the Justice Department isn’t the end of the fight over the disaster. In one case, for instance, some claimants decided not to accept a settlement reached in 2012 and therefore their claims are still pending. And even parts of that settlement are the subject of an appeal before a federal appellate court.

BP also faces unresolved claims by some businesses arising out of a drilling moratorium imposed by the U.S. government, and some BP stockholders say they were financially harmed by BP’s role in the disaster.

By Andy Tully of Oilprice.com

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