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US judge approves £14bn BP oil spill settlement

Published 05/04/2016

BP's total costs are estimated at more than £37 billion
BP's total costs are estimated at more than £37 billion

A federal judge in New Orleans has granted final approval to an estimated 20 billion US dollar (£14 billion) settlement over the 2010 BP oil spill in the Gulf of Mexico.

The settlement, first announced in July, resolves years of litigation over the worst offshore spill in US history.

It includes 5.5 billion dollars (£3.85 billion) in civil Clean Water Act penalties and billions more to cover environmental damage and other claims by the five Gulf states and local governments.

The money is to be paid out over roughly 16 years. The US justice department has estimated that the settlement will cost the oil giant as much as 20.8 billion dollars, the largest environmental settlement in US history as well as the largest-ever civil settlement with a single entity.

US district judge Carl Barbier, who approved the settlement, had set the stage with an earlier ruling that BP had been "grossly negligent" in the offshore rig explosion that killed 11 workers and caused a 134-million-gallon spill.

In 2012, BP reached a similar settlement agreement with private attorneys for businesses and residents who claim the spill cost them money.

That deal, which was not capped, led to a protracted court battle over subsequent payouts to businesses. A court-supervised claims administrator is still processing many of these claims.

BP has estimated its costs related to the spill, including its initial clean-up work and the various settlements and criminal and civil penalties, will exceed 53 billion dollars (£37 billion).

BP spokesman Geoff Morrell said: "We are pleased that the Court has entered the Consent Decree, finalising the historic settlement announced last July."

US attorney general Loretta Lynch praised the settlement, saying: " Today's action holds BP accountable with the largest environmental penalty of all time while launching one of the most extensive environmental restoration efforts ever undertaken."

In Louisiana, where delicate coastal marshes were damaged by the oil, Governor John Bel Edwards said the decision clears the way for the state to receive critical coastal restoration funding.

Alabama attorney general Luther Strange, who acted as a coordinating lawyer for the five Gulf states, also was among those welcoming the settlement.

David Uhlmann, a University of Michigan law professor and former chief of the justice department's environmental crimes section, said Judge Barbier's ruling "ends a long sad chapter in American environmental history".

"The question that remains is whether we have learned enough from this tragedy to prevent similar environmental disasters in the future," he said.

While overall reaction to the settlement has been positive, there were lingering complaints that some of the BP payments may be tax-deductible for the oil giant. Court documents state that the civil penalties will not be tax deductible, although other settlement costs could be.

Lukas Ross, of Friends of the Earth, said: "We are saddened to learn that the gross negligence of BP continues to enjoy taxpayer subsidies."

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