BP today announced an $18.7 billion settlement with the U.S. government, five Gulf Coast states and more than 400 local governments. The agreement comes five years after the Deepwater Horizon rig spewed millions of gallons of oil into the Gulf of Mexico. In the explosion that triggered the largest man-made environmental disaster in the Gulf of Mexico, eleven workers were killed. The company says the payments, to be made over the next 18 years, “settle all state and local claims arising from the event.” BP says it will pay a civil penalty of $5.5 billion under the Clean Water Act over 15 years. The company will also pay $7.1 billion to the U. S. and the states of Alabama, Florida, Louisiana, Mississippi and Texas over 15 years for natural resource damages, and $4.9 billion over 18 years to settle economic and other claims made by the five states. BP says an additional $1 billion will be paid to more than 400 local government entities. Details of the settlement BP will pay a total of $20.2 billion in environmental damages and penalties:

  • $5.5 billion in Clean Water Act penalties. This amount will fund projects in the Gulf-Wide RESTORE Act plan.
  • $8.8 billion in Natural Resource Damages. This is under the federal Oil Pollution Act.
  • $4.9 billion in Economic Damages to the Gulf States.

It is important to note that much legal work remains to complete the settlement. The U.S. Justice Department will “work diligently” over the next several months to incorporate the agreement into a consent decree, which would be open to public comment before court approval. You can find a timeline of settlement litigation here.