Louisiana to Receive Multi-Billion Dollars in Massive BP Oil Spill Settlement with Gulf States | State policy

BP, the federal government and five states have reached an interim agreement on the economic and environmental damage caused by the 2010 Deepwater Horizon disaster, a record $18.7 billion deal that will direct much-needed resources to coastal restoration and will help replenish cash-strapped local and state coffers. across the Gulf Coast.

Louisiana is expected to receive $6.8 billion, the biggest chunk among the five states. This includes $5 billion to be spent on repairing the disaster’s toll on natural resources, money that will largely go to coastal restoration and repairing damaged wetlands and wildlife habitats.

Another $1 billion will be used to cover the state’s economic losses from the spill. The state will also receive $787 million in Clean Water Act fines from BP, which are also expected to be used to repair natural resources.

In addition to the $6.8 billion allocated directly to Louisiana, the agreement also provides that up to $1 billion will be spent to resolve loss claims with local governments on the Gulf Coast, including those in the ‘Pelican State.

More than 500 lawsuits for damages have been filed by local governments, sheriffs, school boards and tax districts across the region, seeking compensation for lost resources and tax revenue. These figures should be finalized in the coming weeks.

The tentative deal, still pending federal judge approval, largely ends a five-year legal battle unfolding in New Orleans courtrooms in the wake of the April 20, 2010 explosion that killed 11 men and spilled millions of barrels of crude into the Gulf of Mexico.

Louisiana Attorney General Buddy Caldwell announced the deal at a Thursday morning news conference in Baton Rouge; simultaneous announcements were made in the other states.

The agreement ends years of litigation by the federal government and the five states bordering the Gulf: Texas, Louisiana, Mississippi, Alabama and Florida.

As part of the settlement, Florida will receive $3.25 billion; Alabama, $2.3 billion; Mississippi, $2.2 billion; and Texas, $788 million. Some of the money is not earmarked for a particular state.

Officials hailed the deal, saying it could give Louisiana the momentum it needs to pursue a $50 billion coastal restoration plan.

“Today is a day that presents an opportunity,” said Chip Kline, chairman of the Coastal Protection and Restoration Authority. “We have to be responsible and make wise decisions about how this money is used.”

The money Louisiana receives for economic losses will replenish money that was taken from the state’s trust fund after the disaster. But how the rest of the settlement can be spent is mostly governed by law, officials said.

The lion’s share of the money will be paid over the next 15 to 18 years; BP will pay the bulk of its claims at an average rate of about $1.1 billion a year.

Legal experts and industry analysts said the deal offers something for both parties and falls within an expected range. Wall Street responded favorably to the settlement: BP shares rose more than 5% on Thursday, closing the day at $41.29.

“I think it was a win” for the oil giant, said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis who tracks BP.

“Look, the money that this business generates, most years, will be north of $30 billion,” he said. “They put $20 billion to $25 billion back into the business and then they pay out a healthy dividend. A billion dollars seems like a lot of money, but for a company the size of BP, it’s very manageable.

Part of the settlement calls for BP to pay $5.5 billion to resolve its penalties for violating the federal water quality law. That’s about 40% of the $13.7 billion the company could have been forced to pay had U.S. District Judge Carl Barbier imposed the maximum sentence in the current case.

Environmental groups have offered a mixed reaction to this aspect of the deal.

After previous discussions have failed, BP probably thought its time to strike a deal was running out. This week, the U.S. Supreme Court refused to hear the company’s appeal to allow certain oil spill fines to be transferred to a drilling partner, the latest of countless federal appeals the company has since launched. the start of the sprawling dispute.

Many legal experts and others who have followed the case expected Barbier to issue a ruling soon on how much BP should pay, culminating in a three-phase federal lawsuit that began in 2013. This year , Barbier, who is overseeing litigation related to the spill, issued the second of two court rulings that paved the way for a multibillion-dollar fine against BP.

From the first phase of the trial, which included eight weeks of testimony to determine responsibility for the spill, Barbier ruled that BP’s conduct before the accident was “reckless”, which opened the company up to steep penalties under the Clean Water Act of up to $4,300 per barrel. of spilled oil.

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After completing its second phase last year, Barbier determined that 3.19 million barrels of oil were released during the 87-day oil spill, the midpoint between a higher estimate offered by the federal government and a lower estimate from BP.

Most legal experts who followed the legal fallout from the spill did not expect the oil giant to be hit with the maximum sentence. But they surmised that the specter of such a large fine likely led BP to settle rather than leave the matter in Barbier’s hands.

“There’s no getting around that: he was indifferent to many, many of their legal demands and their factual arguments, and to think that would change when there were billions of dollars at stake was probably a risk that ‘they weren’t ready to take,’ he added. said David Logan, a law professor at Roger Williams University in Rhode Island.

Edward Sherman, a law professor at Tulane University who specializes in complex litigation, believes Barbier would have given BP a higher civil penalty than the company agreed to pay as part of the settlement. But he said any court-ordered payout was likely to get tangled up in years of future appeals, when that settlement is expected to start paying dividends soon.

“Obviously the government felt it was useful to end it now,” Sherman said.

Moving forward with a settlement removes BP’s largest remaining area of ​​legal exposure, an uncertainty that has plagued the company for years, and clarifies how much it will ultimately pay for its role in the worst environmental disaster in history. the history of the United States.

The deal brings BP’s total price for the spill above $50 billion, including $14 billion the oil giant spent on response and cleanup.

In 2012, the company agreed to plead guilty to 11 counts of manslaughter, obstruction of Congress and a series of environmental crimes, and pay a $4 billion fine to settle a case federal criminal prosecution.

It has also paid more than $5.2 billion to date in a class action settlement reached in 2012 with hundreds of thousands of private claims filed by Gulf Coast residents and businesses, and he also reached a multi-billion dollar settlement with the seafood industry.

BP’s drilling partners in the Macondo well, meanwhile, have already reached agreements to resolve claims against them. Halliburton, who was BP’s cement contractor on the well, agreed to pay $1.1 billion to settle most claims for damages arising from its role in the spill. He also pleaded guilty to a misdemeanor charge of destroying evidence in connection with the spill, and he agreed to pay a maximum fine of $200,000, serve five years of probation and donate $55 million. at the National Fish and Wildlife Foundation.

The owner of the Transocean platform agreed in 2013 to pay $1.4 billion in civil and criminal fines and penalties, primarily to resolve federal claims under the Clean Water Act.

While some critics felt the deal was too easy for BP, others saw Exxon Valdez’s prior litigation as a cautionary tale of what can happen when a settlement is not reached.

In 1989, the Valdez spilled 11 million gallons of oil over 1,200 miles of Alaskan coastline, and Exxon Mobil Corp. was originally sentenced by a jury in 1996 to pay litigants $5 billion. But the figure was later reduced to around $508 million on appeal.

“We think that’s enough money. We wouldn’t be here if we didn’t,” Kyle Graham, executive director of the state’s Coastal Protection and Restoration Authority, said of of Thursday’s rules.

BP had argued in recent court documents that Gulf ecosystems had returned to normal and, in some cases, were healthier than ever. But many scientists say it will take longer, possibly decades, to grasp the full impact of the spill.

The $5 billion Louisiana will receive for natural resource damages is the result of five years of work by federal and state administrators to assess and assess the damage caused by the spill.

The process involved dozens of scientists conducting hundreds of studies designed to measure the consequences of the spill on organisms and habitats, from marine mammals and sea turtles to mudflats and coral reefs.

“We established the science to make sure we had a case,” U.S. Representative Garret Graves, R-Baton Rouge, Graham’s predecessor told thecoastal news agency.

In 2011, BP agreed to a $1 billion down payment for all Gulf Coast states. Louisiana’s share, $371 million, was used for restoration work on various barrier islands, including Breton Island, Shell Island West, Chenier Ronquille and Whiskey Island.

The next step in the natural resource damage assessment process is to finalize the assessment and a restoration plan, possibly early next year.

Rosemary S. Bishop