BP Settles with Justice Department

Just before 10 AM on April 20, 2010, a massive explosion rocked the Deepwater Horizon semi-submersible offshore oil drilling rig. The oil rig was home to a crew of 126 individuals, employees of BP, Transocean, Anadarko, Haliburton, and M-1 SWACO. They attempted to save the oil rig, but failed. Safety precautions, which had been put into place to prevent an oil spill in the event of a catastrophe, failed as well. The result was one of the largest oil spills of all time.

The Immediate Consequences

BP and Transocean underwent a great deal of scrutiny following the oil spill incident, however penalties were not quickly enacted. Rather, Transocean received a $401 million insurance pay out for the destruction of the oil rig. This was above the estimated total value of the rig. Litigation followed a few years later. Transocean actions were found to violate the US Clean Water Act, and in 2013 they were ordered to pay the US $1.4 billion. BP was fined $2.4 billion as well, however they faced the prospect of additional sanctions from the Justice Department.

Today’s Deal

Recently, the final terms of BP’s settlement with the Justice Department have been made public. BP PLC has resolved to pay $20 billion dollars to resolve all remaining claims held against the company. BP will not be held responsible for this $20 billion all at once. They spread out payments over a period of 15 years. $5.5 billion is owed directly to the United States government for violation of the Clean Water Act, while $7.1 billion is owed to Gulf Coast states who will be using the money to repair the environmental damage which has been done. US Attorney Loretta Lynch mentioned that the deal was, “a strong and fitting response to the worst environmental disaster in U.S. History.”