After years of court battles and litigation, it looks like the end is finally here. BP has agreed on a payment of $18.7 billion to settle the legal battle it’s been fighting with federal and state governments over the 2010 Gulf of Mexico oil spill, making this the largest environmental fine in U.S. history.
The finality of this settlement has been welcome news to both sides of the case, with the government happy to have secured such a large fine and BP glad to be free of the courts. Once news of the settlement broke, BP’s share price rose by more than 5% as investors breathed a sigh of relief. The money is to be paid over a period of 18 years, which has angered some groups, and will be used to pay for a mixture of habitat restoration, natural resource damages, and economic damages.
“If approved by the court, this settlement would be the largest settlement with a single entity in American history,” said Attorney General Loretta Lynch in a statement from the U.S. Department of Justice. “It would help repair the damage done to the Gulf economy, fisheries, wetlands and wildlife; and it would bring lasting benefits to the Gulf region for generations to come.”
The battle between BP and the U.S. federal and state governments has been going on for the past 5 years and 73 days after an explosion on their Deepwater Horizon oil rig in the Gulf of Mexico. This was the deepest ever blowout of a well head, killing 11 people on board and spewing oil into the ocean. Despite early attempts to seal the well, it continued to gush 3.19 million barrels of oil over 87 days, causing catastrophic environmental damage.
Even though this is the largest single fine, some groups are still not satisfied. They argue that because it’s to be paid over 18 years, BP can easily swallow the cost with their annual profit of $20 billion, and that once adjusting for inflation and interest payments, the actual fine is lower than the $18.7 billion set out at the start.
But BP say that this final fine is not the true cost to them as a company. By their own accord, they estimate that the total cost of the oil spill is in the region of $53 billion. To their credit, rather than fight tooth and nail to wash their hands of responsibility like Exxon did after the 1989 spill off Alaska, BP immediately offered to shoulder the bill for the clean-up, and have since been paying out to fishermen and states alike to cover the loss of earnings.
While the financial impacts may now be nearing an end, the environmental ones are still playing out. Results are starting to trickle in as to the true effect of the spill on the region's wildlife, and just how damaging the event really was.
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