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BP settles with U.S. coastal states for $18.7 billion

Announcement follows a series of court decisions tied to Deepwater Horizon tragedy.

By Daniel J. Graeber
P.J. Hahn, an employee of Plaquemines Parish, Louisiana, rescues a brown pelican from oil-filled waters on Queen Bess Island, Louisiana, June 5, 2010. BP expected to announce a settlement with states bordering the Gulf of Mexico. File photo by A.J. Sisco/UPI
P.J. Hahn, an employee of Plaquemines Parish, Louisiana, rescues a brown pelican from oil-filled waters on Queen Bess Island, Louisiana, June 5, 2010. BP expected to announce a settlement with states bordering the Gulf of Mexico. File photo by A.J. Sisco/UPI | License Photo

NEW ORLEANS, July 2 (UPI) -- British energy company BP announced Thursday it agreed to pay $18.7 billion total to resolve claims associated with the oil spill in the Gulf of Mexico in 2010.

"Five years ago we committed to restore the Gulf economy and environment and we have worked ever since to deliver on that promise," BP Chairman Carl-Henric Svanberg said in a statement. "We have made significant progress, and with this agreement we provide a path to closure for BP and the Gulf."

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A record $5.5 billion spread out over 15 years will cover federal costs associated with penalties under the Clean Water Act.

The U.S. Supreme Court, in one of the final decisions of this session, refused to hear two separate cases filed by BP and Anadarko Petroleum challenging fines related to the spill.

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The nation's highest court let stand a decision from a New Orleans court, which in June 2014 said the companies are liable for penalties under the Clean Water Act.

The U.S. District Court of the Eastern District of Louisiana ruled last year that BP released 3.2 million barrels of oil into the Gulf of Mexico in 2010, about 1 million barrels less than the government estimated.

The ruling left BP facing a maximum $13.7 billion fine, down from the maximum $18 billion for violations of the Clean Water Act. BP said in an early 2015 statement it suspected the penalty would be "at the lower end of the statutory range."

BP said Thursday it would also pay $7.1 billion over 15 years to the federal government, along with Alabama, Florida, Louisiana, Mississippi and Texas, for natural resource damages tied to the spill. That's on top of the $1 billion BP already set aside for remediation.

A further $4.9 billion will be paid over 18 years to settle economic and other claims made by those states. Up to $1 billion more will be used to resolve local government claims.

"This agreement lets us focus right away on improving the state without further litigation delays and appeals that could take years," Louisiana Attorney General Buddy Caldwell said in a statement.

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Louisiana was party to the multi-state suit against the British energy company. State coasts, along with the businesses they supported, were devastated by what was the worst offshore oil spill in the history of the industry.

Eleven rig workers died in the incident that led to the collapse of the Deepwater Horizon rig in the Gulf of Mexico.

Earlier this week, the U.S. Court of Appeals for the Fifth Circuit, in Louisiana, granted a new trial for a former BP engineer, Kurt Mix, on grounds of jury exposure to external evidence.

Mix was charged with determining the amount of oil leaking from the Macondo well after Deepwater Horizon collapsed in 2010 as a result of a cascading series of failures beneath the rig. He was prosecuted and later convicted of obstruction of justice for deleting text messages and other correspondence related to those calculations.

The defense team for Mix argued most of the deleted messages were not germane to the spill, which showed there was no cover-up attempt.

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