Thursday, July 02, 2015
BP Reaches Settlement with DOJ
Awaiting a judgment from a federal judge in New Orleans on the size of the fine to be paid under the Clean Water Act for the Deepwater Horizon spill, the company reached a settlement with the Department of Justice at a significant discount of its potential liability. The company's stock rose 4.6% when the settlement was announced. Despite a finding that the company was grossly negligent in its operation of the Macondo well that caused a blow-out and fire killing eleven men and unknown millions of wild creatures in the Gulf of Mexico, the company agreed to pay a civil penalty of only $5.5bn over 15 years compared to potential damages of $18bn. The company set aside $43bn in internal accounting to pay all costs associated with the biggest environmental disaster in the history of the United States. BP will pay $7.1 billion under the settlement to Gulf states for natural resources damages. The remainder of the settlement total represents various economic and other claims by states and municipalities. The settlement is symptomatic of the cozy relationship the government has with big business, especially the oil industry. Of course company executives thought the settlement a "realistic outcome". BP is not out of the legal patch yet as other court proceedings remain relating to the spill including criminal penalties. Whether this settlement of the largest Clean Water Act violations affects the status of those proceedings remains to be seen. The settlement is the largest paid by a single company in US history, which fits its crime.