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Deepwater Horizon Settlement Finalized

Deepwater

Published Oct 5, 2015 5:50 PM by The Maritime Executive

The U.S. Department of Justice (DOJ) has finalized a settlement of more than $20 billion with BP PLC arising from 2010’s Deepwater Horizon oil spill.  The settlement resolves all federal and state claims against BP for the accident. Louisiana, Mississippi, Alabama, Texas and Florida will be the settlement’s primary recipients and will use the funds for environmental remediation and economic development.   

The Deepwater disaster, the largest oil spill in U.S. waters, killed 11 crew members and leaked millions of barrels of crude into the gulf, coating hundreds of miles of shoreline with oil. DOJ announced tentative terms of the deal in July.

The $20.8 billion settlement comes in addition to the $44 billion BP has already incurred in legal fees and cleanup costs.

Deepwater Horizon exploded on April 20, 2010 after gas seeped into the well the rig was drilling. The leak caused an eruption on the deck and the rig sank soon after. Plugging the leak took several months.

BP’s payments will reportedly make payments of about $1.1 billion per year over the next 18 years.

In addition, BP has also committed to paying about $500 million over 10 years to support independent research through the Gulf of Mexico Research Initiative.

The Gulf of Mexico Research Initiative had awarded approximately $315 million in grants as at the end of 2014. Grant recipients are investigating topics including the fate of oil released, the ecological and human health impact of spills and the development of new technology for future spill response, mitigation and restoration.

The Gulf of Mexico Research Initiative was created following the spill through an agreement between BP and the Gulf of Mexico Alliance, a non-profit partnership formed by the states of Alabama, Florida, Louisiana, Mississippi and Texas.

Deepwater Horizon Gulf Restoration Plans Announced

NOAA and the other Deepwater Horizon Natural Resource Trustees have released a 15-year environmental ecosystem restoration plan for the Gulf of Mexico.

The Draft Deepwater Horizon Oil Spill Draft Programmatic Damage Assessment and Restoration Plan and Draft Programmatic Environmental Impact Statement allocates monies that are part of a comprehensive settlement agreement in principle  among BP and the U.S. Department of Justice on behalf of federal agencies and the five affected Gulf States announced on July 2, 2015. 

In the draft plan, the Trustees detail impacts from the Deepwater Horizon oil spill to wildlife, habitats and recreational potential. They determined that “overall, the ecological scope of impacts from the Deepwater Horizon spill was unprecedented, with injuries affecting a wide array of linked resources across the northern Gulf ecosystem.” 

The Trustees are proposing to accept a settlement, which includes, among other components, an amount to address natural resource damages of $8.1 billion for restoration and up to $700 million for addressing unknown impacts or for adaptive management. These amounts include the $1 billion in early restoration funds which BP has already committed. 

“NOAA scientists were on the scene from day one as the Deepwater spill and its impacts unfolded. NOAA and the Trustees have gathered thousands of samples and conducted millions of analyses to understand the impacts of this spill,” said Dr Kathryn D. Sullivan, undersecretary of commerce for oceans and atmosphere and NOAA administrator. “The scientific assessment concluded that there was grave injury to a wide range of natural resources and loss of the benefits they provide. Restoring the environment and compensating for the lost use of those resources is best achieved by a broad-based ecosystem approach to restore this vitally important part of our nation’s environmental, cultural and economic heritage.”

NOAA led the development of the 1,400 page draft damage assessment and restoration plan, with accompanying environmental impact statement, in coordination with all of the natural resource Trustees. Specific projects are not identified in this plan, but will be proposed in future project-specific restoration proposals. 

The draft plan has an array of restoration types that address a broad range of impacts at both regional and local scales. It allocates funds to meet five restoration goals, and 13 restoration types designed to meet these goals.

The 13 proposed restoration activities cover:

•    Restoration of wetlands, coastal and nearshore habitats
•    Habitat projects on federally managed lands
•    Nutrient reduction
•    Water quality
•    Fish and water column invertebrates
•    Sturgeon
•    Submerged aquatic vegetation
•    Oysters
•    Sea turtles
•    Marine mammals
•    Birds
•    Low-light and deep seafloor communities
•    Provide and enhance recreational opportunities

The draft plan is available for 60 days of public comment. Public comments on the draft plan will be accepted at eight public meetings to be held between October 19 and November 18 in each of the impacted states and in Washington, DC.

Comments will also be accepted online and by mail sent to: U.S. Fish and Wildlife Service, P.O. Box 49567, Atlanta, GA 30345. The public comment period will end on December 4, 2015.

The plan is available here.

Timeline of Events

April 20, 2010, RIG EXPLODES: An explosion on the Deepwater Horizon oil rig at the Macondo exploration well kills 11 workers and releases millions of barrels of crude oil into the Gulf of Mexico. The well is capped in mid-July. BP ultimately sets aside $42 billion to pay for cleanup costs, damages and penalties.

November 2012, CRIMINAL CASE SETTLED: BP agrees to pay $4.5 billion in fines and other penalties and pleads guilty to 14 criminal charges. The U.S. government bans BP from new federal contracts, imperiling the company's role as a top U.S. offshore oil producer and No. 1 military fuel supplier. Separately, the U.S. Department of Justice files criminal charges against three BP employees in connection with the accident.

December 2012, CLASS ACTION SETTLED: U.S. District Judge Carl Barbier gives final approval to BP's settlement with individuals and businesses claiming to have lost money and property because of the spill. BP initially estimates it will pay $7.8 billion to settle more than 100,000 claims, but the dollar amount is not capped. The company later says the payout may grow substantially, in part because of payouts to many claimants who suffered no harm, and files numerous legal challenges to the agreement.

February 2013, CIVIL TRIAL BEGINS: Officials from the federal government and several U.S. states begin facing BP in court at a three-phase civil trial over how blame should be apportioned between BP, Transocean Ltd, which owned the drilling rig, and Halliburton Co, which did cement work. Government lawyers urge Barbier to find BP grossly negligent, which could roughly quadruple the amount of fines under the U.S. Clean Water Act.

September 30, 2013, SECOND PHASE OF TRIAL BEGINS: The second phase begins to determine how much oil was spilled.

September 4, 2014, JUDGE FINDS BP BEARS MOST OF THE BLAME: Barbier finds BP "grossly negligent" for its role in the oil spill. He assigns 67 percent of the fault to BP, 30 percent to Transocean and 3 percent to Halliburton. BP pledges to appeal.

January 15, 2015, SIZE RULING: Barbier determines that 3.19 million barrels of oil spilled. The amount would be used to calculate damages.

Feb. 24, 2015, SIZE APPEAL: BP appeals judge's ruling on size of the oil spill.

July 2, 2015, SETTLEMENT REACHED: BP agreed to pay about $18.7 billion in damages for water pollution caused by the spill, settling claims with the U.S. government and Louisiana, Mississippi, Alabama, Texas and Florida.