U.S. Announces Final Resolution Of Civil Claims Against BP For Gulf Oil Spill (Photo : Getty Images)
U.S. Attorney General Loretta Lynch ordered British Petroleum (BP) on Monday to pay a record $20.8 billion for damage it caused in the 2010 Gulf of Mexico oil spill.
It is higher by $2.1 billion from the $18.7 billion that BP was ordered to settle from U.S. government entities. Lynch justified the higher amount as a "strong and fitting response to the worst environmental disaster in American history."
Lynch said that BP got the punishment it deserves and provides critical compensation for the injuries it caused to the Gulf region's economy and the environment, reports AFP.
An explosion on BP's Deepwater Horizon rig caused the spill and killed 11 people. It took BP 87 days to cap the damaged well 1,500 meters below sea level off the Louisiana coast. The accident caused millions of barrel of oil to spill into Gulf waters which blackened beaches in five states that affected the region's tourism and fishing sectors.
The five affected states are Texas, Louisiana, Mississippi, Alabama and Florida which, with the settlement, would have financial resources to restore their ecosystems, economies and businesses in their areas, said Commerce Secretary Penny Pritzker.
BP has 15 years to settle the record fine. Nola reports that the slow payout could benefit Louisiana and other coastal states affected by the spill.
According to David Logan, complex litigation expert and law professor at Roger Williams University in Rhode Island, the prolonged payout would ensure the settlement money is distributed efficiently and used actually as intended. A big one-time payment could cause problems and waste.
BP, which will initially pay $5.5 billion in federal oil pollution fines and $7.1 billion as natural resource damage payments spread annually beginning 2017 until 2031, get time to pay rather than having to pay a big amount which would allow the oil giant to earn interest on the money allocated for oil spill payments. BP will also pay interest on the unpaid debt.
