By Sarah Kent and Daniel Gilbert
LONDON-- BP PLC on Thursday agreed to pay $18.7 billion to
settle all federal and state claims arising from the 2010 Deepwater
Horizon oil spill, ending most litigation stemming from the deadly
accident with what federal authorities called the biggest
settlement ever with a corporation.
The settlement, to be paid out over 18 years, ends five years of
uncertainty for the U.K. oil giant, which has already taken charges
of more than $40 billion in legal and cleanup fees for the Gulf of
Mexico disaster, which killed 11 workers after a deep water oil
well blew out. The spill leaked millions of barrels of crude into
the Gulf and coated hundreds of miles of sensitive beaches, marshes
and mangroves.
BP said the agreement involved the states of Alabama, Florida,
Mississippi, Louisiana and Texas as well as claims made by 400
local government entities. As part of the deal, BP agreed to pay a
civil penalty of $5.5 billion under the U.S. Clean Water Act,
payable over 15 years--the largest fine ever imposed under that
statute. The company also agreed to pay $7.1 billion to the U.S.
and five Gulf states over 15 years, and $4.9 billion to be paid
over 18 years to settle economic and other claims made by the five
Gulf states. The company said payments would be made at a rate of
around $1.1 billion a year for the bulk of the payment period.
The settlement brings BP's total tab for the spill to $53.8
billion, more than its combined profits since 2012.
The Justice Department hailed the BP settlement as the largest
settlement ever struck with a corporation. U.S. Attorney General
Loretta Lynch said the payment "would justly and comprehensively
address outstanding federal and state claims, including Clean Water
Act civil penalties and natural resource damages."
If the deal is ultimately approved by a judge, Ms. Lynch said 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."
BP's lawyers had fought the litigation, arguing the company
should pay no more than $2 billion and offering evidence that its
massive cleanup effort helped avert an environmental calamity and
diminished its ability to pay a big fine.
On Thursday, BP Chairman Carl-Henric Svanberg said in a news
release that the agreement provides "a path to closure for BP and
the Gulf."
"It resolves the company's largest remaining legal exposures,
provides clarity on costs and creates certainty of payment for all
parties involved," he said.
Shares in BP climbed 4% after the announcement, gaining 20 pence
to trade at 439 pence in early afternoon trading in London.
The Clean Water Act settlement is a much smaller fine than the
$13.7 billion maximum penalty a judge could have levied against the
company, but still larger than the $3.5 billion BP had set aside to
pay for Clean Water Act liabilities.
However, the settlement is far from the end of the litigation
over the Deepwater Horizon spill, as shareholder lawsuits
remain.
Justin Scheck, Ed Ballard and Devlin Barrett contributed to this
article.
Write to Sarah Kent at sarah.kent@wsj.com and Daniel Gilbert at
daniel.gilbert@wsj.com
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