BP Submits to $20 Billion Fine Over Oil Spill
WASHINGTON (Dispatches) -- BP Plc will pay more than $20 billion in fines to resolve nearly all claims from its deadly Gulf of Mexico oil spill five years ago, marking the largest corporate settlement of its kind in U.S history, Attorney General Loretta Lynch said on Monday.
The agreement, first outlined in July, adds to the $43.8 billion BP had previously set aside for criminal and civil penalties and cleanup costs. The company has said its total pre-tax charge for the spill is now around $53.8 billion.
The total penalties Lynch announced on Monday sounded higher than the $18.7 billion deal reached to this summer, in part because she included $1 billion in restoration work BP had agreed to long beforehand.
The fines - to be paid to the federal government, five Gulf Coast states and hundreds of municipalities over 18 years - will fund environmental restoration and economic development programs to address the worst offshore spill in U.S. history.
"This agreement will launch one of the largest environmental restoration efforts the world has ever seen," Lynch said.
The spill fouled 1,300 miles of coastline and dumped more than three million barrels of crude into the sea, hurting fishermen and prompting overhauls of safety rules and emergency plans in one of the world's most prolific offshore oil basins.
The core of the agreement includes $7.1 billion for natural resource damages, $5.5 billion for Clean Water Act fines, and $4.9 billion in payments to states.
The Macondo well blowout and the fire on the Deepwater Horizon drilling rig on April 20, 2010 killed 11 workers.
The settlement caps five years of legal fighting to force BP to account for at least 134 million gallons of oil which leaked into the sea and took 87 days to stop.
The spill affected 1,300 miles of shoreline in the states of Texas, Louisiana, Mississippi, Alabama and Florida, crippling the ecosystems and local economies.
Attorney General Loretta Lynch said, "BP is receiving the punishment it deserves, while also providing critical compensation for the injuries that it caused to the environment and the economy of the Gulf region."
EPA Administrator Gina McCarthy said that as part of the settlement, the US government will lift its suspension on doing business with BP.
"Justice is not about dumping a pile of money and walking away,’’ she said.
BP spokesman Geoff Morrell stressed that the announcement doesn't mean new obligations for the company.
However, many civil suits are pending against BP, including a securities fraud case in Houston where investors in BP claim they were harmed because the firm underestimated how much oil was spilling into the Gulf.
A coalition of conservation organizations used the occasion to state that the full damage of the oil spill may not yet be known as it lauded the settlement "a positive step”.
U.S. government officials said the money will be used to restore wildlife, habitat and water quality and handle environmental and economic damages.
But Miyoko Sakashita, oceans director at the Center for Biological Diversity, said the oil spill had damaged the Gulf region in a way that money could never fix. She said the real solution would be to curb offshore oil and gas drilling.
The toxic oil wreaked havoc on the population of fish, birds, plankton, turtles and mammals, causing death and disease and making animals unable to reproduce.
In the past, BP has paid for liabilities by shedding assets, eroding about one-fifth of the earnings base it had before 2010. Its smaller size among the bigger oil majors has made it vulnerable to potential takeovers, analysts have said.
BP has effectively settled all big claims from the spill. Previous settlements included a fund originally set at $7.8 billion to compensate individuals claiming economic harm from the spill.
Other settlements included one with contractors Transocean Ltd and Halliburton Co.
The total penalties Lynch announced on Monday sounded higher than the $18.7 billion deal reached to this summer, in part because she included $1 billion in restoration work BP had agreed to long beforehand.
The fines - to be paid to the federal government, five Gulf Coast states and hundreds of municipalities over 18 years - will fund environmental restoration and economic development programs to address the worst offshore spill in U.S. history.
"This agreement will launch one of the largest environmental restoration efforts the world has ever seen," Lynch said.
The spill fouled 1,300 miles of coastline and dumped more than three million barrels of crude into the sea, hurting fishermen and prompting overhauls of safety rules and emergency plans in one of the world's most prolific offshore oil basins.
The core of the agreement includes $7.1 billion for natural resource damages, $5.5 billion for Clean Water Act fines, and $4.9 billion in payments to states.
The Macondo well blowout and the fire on the Deepwater Horizon drilling rig on April 20, 2010 killed 11 workers.
The settlement caps five years of legal fighting to force BP to account for at least 134 million gallons of oil which leaked into the sea and took 87 days to stop.
The spill affected 1,300 miles of shoreline in the states of Texas, Louisiana, Mississippi, Alabama and Florida, crippling the ecosystems and local economies.
Attorney General Loretta Lynch said, "BP is receiving the punishment it deserves, while also providing critical compensation for the injuries that it caused to the environment and the economy of the Gulf region."
EPA Administrator Gina McCarthy said that as part of the settlement, the US government will lift its suspension on doing business with BP.
"Justice is not about dumping a pile of money and walking away,’’ she said.
BP spokesman Geoff Morrell stressed that the announcement doesn't mean new obligations for the company.
However, many civil suits are pending against BP, including a securities fraud case in Houston where investors in BP claim they were harmed because the firm underestimated how much oil was spilling into the Gulf.
A coalition of conservation organizations used the occasion to state that the full damage of the oil spill may not yet be known as it lauded the settlement "a positive step”.
U.S. government officials said the money will be used to restore wildlife, habitat and water quality and handle environmental and economic damages.
But Miyoko Sakashita, oceans director at the Center for Biological Diversity, said the oil spill had damaged the Gulf region in a way that money could never fix. She said the real solution would be to curb offshore oil and gas drilling.
The toxic oil wreaked havoc on the population of fish, birds, plankton, turtles and mammals, causing death and disease and making animals unable to reproduce.
In the past, BP has paid for liabilities by shedding assets, eroding about one-fifth of the earnings base it had before 2010. Its smaller size among the bigger oil majors has made it vulnerable to potential takeovers, analysts have said.
BP has effectively settled all big claims from the spill. Previous settlements included a fund originally set at $7.8 billion to compensate individuals claiming economic harm from the spill.
Other settlements included one with contractors Transocean Ltd and Halliburton Co.