BP to pay $18.7 billion; the largest environmental settlement in US history

Global Business

Gulf Oil Spill Mississippi FILE – In this April 21, 2010, file photo, the Deepwater Horizon oil rig burns in the Gulf of Mexico, more than 50 miles southeast of Venice, La. BP and five Gulf states announced an $18.7 billion settlement Thursday, July 2, 2015, that resolves years of legal fighting over the environmental and economic damage done by the energy giant’s oil spill in 2010. The settlement involves Florida, Alabama, Mississippi, Louisiana and Texas. (AP Photo/Gerald Herbert, File)

BP’s  2010 Deepwater Horizon disaster gushed millions of gallons of crude oil in the worst offshore oil spill in U.S. history, killing 11 people, damaging delicate marine ecosystems, and polluting popular beaches. Hoping to bring closure to the legal battles that has cost the company billions, BP has now agreed to pay a record settlement to five coastal states.

BP said it will pay $18.7 billion to the affected states, bringing the company’s total compensations to an estimated $53.8 billion. The states aren’t the only ones who could benefit from the money. The payments will be made over the next 18 years, and much of it could be tax-deductible – allowing BP to launch new projects by appeasing investors with a clearer financial forecast. Company CEO Bob Dudley said BP could launch as many as 20 major new projects by 2020, depending on oil prices.

The Justice Department said Thursday’s agreement would be the largest environmental settlement in U.S. history as well as the largest-ever civil settlement with a single entity. Civil claims by the five Gulf states and the federal government were, by far, the largest unresolved piece of BP’s financial obligations for the spill.

BP Gulf Oil spill 2010

FILE- In this June 5, 2010 file photo, oil slicks move toward the beach in Gulf Shores, Ala. BP and five Gulf states announced a record $18.7 billion settlement Thursday, July 2, 2015, that resolves years of legal fighting over the environmental and economic damage done by the energy giant’s oil spill in 2010. (AP Photo/Dave Martin, File )

“It’s definitely a win for BP. No company can really do well when you have such a big litigation issue hanging over it,” Brian Youngberg, an energy analyst for Edward Jones, said.

Though federal and state government officials hailed the record-breaking agreement as a breakthrough in the Gulf Coast’s recovery,  some environmental groups and local officials thought BP should have paid more.

U.S. District Judge Carl Barbier, who presided over a three-phased trial, already found the colossal London based oil company grossly negligent in the nearly 134 million gallon spill.

David Uhlmann, a University of Michigan law professor and former chief of the Justice Department’s environmental crimes section, said BP’s total price tag will make drillers more careful in the future.

“No company will ever conduct deep-water drilling in the way that BP did prior to the Gulf oil spill,” Uhlman said.

The government of one of Louisiana’s hardest-hit areas, coastal Plaquemines Parish, says it has not yet agreed on the amount, raising questions about whether BP could still face at least some legal hurdles.

Without saying how much it was offered or how much it seeks, the parish said it wants to be able to rebuild pelican nesting grounds and recover millions of dollars in spill-related administrative costs.

This story was compiled with information from AP.