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BP Agrees To Pay $18.7 Billion To Resolve Claims Over Gulf Oil Spill

NEW ORLEANS — (Mealey’s) BP Exploration & Production Inc. will pay $18.7 billion over the course of 18 years to resolve Clean Water Act (CWA) and natural resource damages claims from the federal government and states of Alabama, Florida, Louisiana, Mississippi and Texas stemming from the oil spill in the Gulf of Mexico that followed the explosion of the Deepwater Horizon oil rig, the company announced July 2 (In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, April 20, 2010, MDL No. 2179, E.D. La.) 

As part of the settlement agreement, which will be filed in the U.S. District Court for the Eastern District of Louisiana, BP will pay a civil penalty of $5.5 billion under the CWA that will be payable over 15 years and pay the government and five states $7.1 billion over 15 years for natural resource damages. Moreover, BP said it will set aside an additional $232 million that will be added to the interest payment at the end of the payment period to cover any further natural resource damages that are unknown at the time of the agreement. The oil company will pay a total of $4.9 billion over 18 years to settle economic and other claims made by the five Gulf Coast states and pay up to $1 billion to resolve claims made by more than 400 local government entities. 

Liability Ruling

In 2012, U.S. Judge Carl Barbier of the Eastern District of Louisiana found that BP and Anadarko Petroleum Corp. were liable for violating the CWA.  A Fifth Circuit U.S Court of Appeals panel affirmed the ruling in June 2014, and the U.S. Supreme Court denied the companies’ requests to review the ruling on June 29, 2015. 

On Jan. 15, 2015, Judge Barbier concluded that 3.19 million barrels of oil leaked from the Macondo well into the Gulf of Mexico following the explosion of the Deepwater Horizon oil rig and that BP could face a civil penalty of up to $13.7 billion. 

BP said in its press release that the present settlement will not affect claims brought by plaintiffs who allegedly sustained economic losses, property damage or personal injuries as a result of the oil spill.  The company said that it intends to continue to vigorously defend against those claims.

 BP is represented by Don K. Haycraft and R. Keith Jarrett of Liskow & Lewis in New Orleans; Richard C. Godfrey and J. Andrew Langan of Kirkland & Ellis in Chicago; Granta Y. Nakayam, Stuart A.C. Drake and Jeffrey Bossert Clark of Kirkland & Ellis in Washington, D.C.; Robert C. “Mike” Brock of Covington & Burling in Washington; and Joel M. Gross and Allison Rumsey of Arnold & Porter in Washington.

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