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Decision on Damages Settlement: $18.7 Billion for Deepwater Horizon Oil Spill

July 2, 2015 3:00 PM

Today, BP and the Department of Justice announced that they had reached an $18.7 billion settlement for all clean water act fines, natural resource damage penalties and for all claims made by gulf states and local governments for economic damages resulting from the Deepwater Horizon Oil Spill. Louisiana will receive more than $6.8 billion from the settlement, including $5 billion for natural resource damage penalties and $1 billion for state economic damages. The state also will receive as much as $787 million in clean water act penalties. BP will also pay for attorney fees and other costs associated with the state's lawsuit as well as the $350 million expense to cover the cost of outstanding natural resource damage assessment.

The money will be distributed over a fifteen year period. To address natural resource damages that are unknown at this time, the federal government or the gulf states may request accelerated payment of interest on the natural resource damage payments.

Payment Schedule: 

Year after consent decree Civil Penalty payments Natural Resource Damages (NRD) payments NRD additional final payment State Claims payments
0           $1,000,000,000
1 $379,310,345 $489,655,172  
2 $189,655,712 $244,827,586    
3 $379,310,345 $489,655,172   $260,000,000
4 $379,310,345 $489,655,172   $260,000,000
5 $379,310,345 $489,655,172   $260,000,000
6 $379,310,345 $489,655,172   $260,000,000
7 $379,310,345 $489,655,172   $260,000,000
8 $379,310,345 $489,655,172   $260,000,000
9 $379,310,345 $489,655,172   $260,000,000
10 $379,310,345 $489,655,172   $260,000,000
11 $379,310,345 $489,655,172   $260,000,000
12 $379,310,345 $489,655,172   $260,000,000
13 $379,310,345 $489,655,172   $260,000,000
14 $379,310,345 $489,655,172   $260,000,000
15 $379,310,343 $489,655,172   $260,000,000
16     $232,000,000 $260,000,000
17       $260,000,000
Totals $5.50 billion $7.10 billion $0.23 billion $4.90 billion
 

(Graphic above from BP website)

Other quick observations provided by Tulane Institute on Water Resources Law and Policy: 

-->Adding up the amounts listed as going to the five Gulf Coast States under the Clean Water Act penalties confirms that these are almost certainly Pots 1, 3, and 5 of the RESTORE Act. 80% of $5.5 billion to the RESTORE Act is $4.4 billion. $2.97 billion to the four states is 67.5% of that $4.4 billion. Pots 1 (35%), 3 (30%), and 5 (2.5%) add up to 67.5% of RESTORE Act funds. 
 
-->$5.5 billion in Clean Water Act penalties for 3.19 million barrels of oil means BP is paying a fine of about $1,724 per barrel - far below the maximum fine available under the finding of gross negligence, $4,300 per barrel. 
 
-->NRDA funds will be directed  to "regionwide projects" and "open ocean projects." This means most doubts that federal NRDA Trustees the Department of Interior and NOAA would not remain involved should dissolve. 

Check out the Order defining the settlement here: http://www.laed.uscourts.gov/OilSpill/Orders/070215ConfidentialityOrderReSettlementDocuments.pdf


 
 
 
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