A federal judge has approved the $20.8 bn settlement for BP’s oil spill in the Gulf of Mexico. This fine will account for civil claims against the company set forth by the Department of Justice and five Gulf states. US Attorney General Loretta Lynch previously called the settlement “the largest with a single entity in American history.”
In September 2014, a federal judge has called major oil company BP (British Petroleum) “reckless”, and oil services giants Transocean and Halliburton “negligent” following the major oil spill of 2010. The US District Judge Carl Barbier has ruled that BP’s “gross negligence” was responsible for the 11 lives which were lost and the 4.9 million barrels (210 million US gal; 780,000 cubic meters).
It’s one of the largest environmental disasters in history, The spill area hosts 8,332 species, and several peer reviewed studies and governmental reports have shown that the environmental damage (both in short and the long run) is inestimable. However, when it comes to fines and lawsuits, everything has to be quantified, and this sum was deemed acceptable by both sides.
BP has reportedly already spent $28 billion on cleanup and compensation, but their measures were nowhere near as effective as predicted. If those figures seem absurdly high, then you need to understand the scale at which BP operates. The company has revenues on the order of hundreds of billions, while their net profit was generally around $10 billion – so the fine is basically their profit for a couple of years. The company reported a net loss of almost $8 billion in 2015, but this includes the cleaning money and a part of the fine. They had several years to prepare for this, and while other companies would have been completely dismantled by such a punishment, BP seems to be able to land on is feet.
Out of the settlement money, $5.5 billion will go toward penalties incurred under the Clean Water Act, most of the money will be given to five states — Alabama, Florida, Louisiana, Mississippi, and Texas — and 400 local government entities to cover damages from the spill.