BP agrees to record $18.7 billion settlement over Gulf of Mexico oil spill

UK oil giant BP has agreed to a record $18.7 billion settlement to cover all federal, state and local claims arising from the 2010 Gulf of Mexico oil spill. The deal comes as the largest environmental settlement - and the largest civil settlement with any single entity - in the nation's history, officials said yesterday.

If the settlement is approved by a federal judge, it could spell a closure to the largest unresolved legal dispute arising from the April 2010 explosion aboard the Deepwater Horizon oil rig, which left 11 dead and spewed millions of gallons of oil into the Gulf of Mexico.

The deal would, besides the federal government, also include the states of Alabama, Florida, Louisiana, Mississippi and Texas, as also over 400 local government entities along the coast that had argued the spill had ruined tourist seasons, crippled the seafood industry and dried up sales tax revenue.

The agreement would see BP pay the federal government a civil penalty of $5.5 billion under the Clean Water Act over a 15 year time frame. Further, the company would pay $7.1 billion under the Natural Resource Damage Assessment to the gulf, which was meant to compensate for direct environmental harm caused by the spill.

The tentative deal had been reached by the federal government and the five Gulf Coast states.

A US BP subsidiary, BP Exploration and Production, would pay at least $7.1 billion, and possibly more, to the federal government and the states of Louisiana, Alabama, Mississippi, Texas, and Florida for damage to natural resources; $5.5 billion in penalties to the federal government for violation of the Clean Water Act; the states would get $4.9 billion by way of compensation for harm to their economies; and up to $1 billion to over 400 local governments.

''This is a landmark settlement,'' governor Robert Bentley of Alabama said at a news conference in Montgomery. ''It is designed to compensate the state for all the damages, both environmental and economic.''

''If approved by the court, this settlement would be the largest settlement with a single entity in American history,'' attorney general Loretta E Lynch said in a statement. ''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.''