BP SETTLEMENT:
Company agrees to pay record $18.7B in claims after deadly Deepwater oil spill.
BP reached a record $18.7 billion agreement to settle all federal and state claims from the 2010 Deepwater Horizon oil spill after an abrupt strategy shift in May to re-open talks, according to three people close to the matter.
The company had been committed to fighting the claims in court after negotiations fell apart in 2013. But falling oil prices and a federal judge’s recent rulings putting a potential $13.7 billion price tag on Clean Water Act violations helped motivate BP to change tactics, said the people, asking not to be identified because negotiations were private.
“BP was staring down a gun barrel and had to find some way to settle this,” said David Berg, a Houston trial lawyer who tracked the spill litigation but isn’t involved in it. “The total amounts are staggering.”
The agreement, while preliminary, specifies the payments will be spaced out over up to 18 years. A record $5.5 billion will cover federal penalties under the Clean Water Act, topping the previous high of $1 billion. Louisiana, Mississippi, Alabama, Florida and Texas will also receive payouts for harm from the disaster, which claimed 11 lives and caused the worst offshore spill in U.S. history.
“This agreement will resolve the largest liabilities remaining from the tragic accident,” BP Chief Executive Officer Bob Dudley said in a Thursday statement. “For the United States and the Gulf in particular, this agreement will deliver a significant income stream over many years for further restoration of natural resources and for losses related to the spill.”
The accord will cost BP more than $20 billion when other payments for natural-resource damages and other state and federal claims are factored in. It also comes on top of billions already spent on response, clean up and compensation, pushing BP to raise its budget to pay for the spill to $53.8 billion. That may not be enough.
“It is realistic to price BP’s total cost, including all remaining claims that haven’t been covered by settlements, at $70 billion — all in,” Berg said.
The agreement is the “largest settlement with a single entity in American history,” U.S. Attorney General Loretta E. Lynch said.
Corporations are turning to the nation’s biggest business lobby to help fend off activist investors such as Dan Loeb and Bill Ackman.
The U.S. Chamber of Commerce is forming a coalition to make sure “long-term value creation” drives public companies’ decisions, according to a letter it sent Thursday to U.S. Securities and Exchange Commission Chairwoman Mary Jo White. The group plans to weigh in on regulations that affect corporate governance, the letter said.
“Our members have experienced an exponential rise in the frequency of special-interest activism of all types,” said the letter, which was signed by trade groups including those for fuel manufacturers, insurers, real estate investment trusts and whole saler distributors. “These campaigns often involve idiosyncratic agendas that