Alabama Announces Largest Environmental Settlement in History

Graybama finalThe State of Alabama today joins the states of Florida, Louisiana, Mississippi, and Texas and the United States in announcing a settlement to resolve civil claims against BP arising from the April 20, 2010, Macondo well blowout and the massive oil spill that followed in the Gulf of Mexico.

This global settlement resolves the natural resource damage claims under the Oil Pollution Act, civil claims under the Clean Water Act, and the remaining economic damage claims of the five Gulf states and municipalities. Taken together this global resolution of civil claims is worth more than $20 billion.

The settlement for the natural resource damage claims is $8.1 billion (this includes $1 billion BP already committed to pay for early restoration) for joint use by the federal and state trustees in restoring injured resources. BP will also pay up to an additional $700 million (some of which is in the form of accrued interest) specifically to address any later-discovered natural resource injuries that were unknown at the time of the agreement and to assist in adaptive management needs. Pursuant to the Oil Pollution Act, theDeepwater Horizon Trustee Council, made up of representatives of the five Gulf states and four federal agencies have published the Deepwater Horizon Oil Spill Draft Programmatic Damage Assessment and Restoration Plan (PDARP) and Draft Environmental Impact Statement (PEIS), which includes a comprehensive assessment of natural resource damages resulting from the oil spill and establishes a plan to restore habitat, improve water quality, replenish and protect coastal and marine resources, and enhance recreational opportunities, among other important goals and specific restoration approaches.

Alabama will receive approximately $296 million for its natural resource damages claims to fund restoration projects in Alabama, with the ability to seek additional funding from nearly $1.6 billion being set aside for Gulf regionwide and open ocean restoration.

The federal Clean Water Act settlement is $5.5 billion (plus interest), 80 percent of which will go to restoration efforts in the Gulf region pursuant to the Resources and Ecosystems Sustainability, Tourist Opportunities and Revived Economies of the Gulf Coast States (RESTORE) Act. This is the largest civil penalty in the history of environmental law. From this fund, Alabama will receive approximately $308 million under the Direct Component and approximately $269 million under the Spill Impact Component, as well as $22 million under the Center of Excellence Component. In addition, Alabama will receive a portion of $1.32 billion for projects to be determined by the Gulf Coast Ecosystem Restoration Council.

“Although we believe that the natural resources of our state are priceless, we are pleased with the outcome of this settlement,” said N. Gunter Guy, Jr., Commissioner of the Alabama Department of Conservation and Natural Resources. “Rather than expending additional time and resources preparing for trial and various appeals which could take many years, we are able to avoid the uncertainties of litigation and begin using this money now to continue restoring our Gulf coast ecosystems and economies. We are proud to be a part of this historic, Gulf-wide settlement – the largest environmental settlement in both Alabama and the United States as a whole.”

Finally, the State of Alabama will recover $1 billion in damages for the economic losses suffered by the State as a result of the oil spill. When added to the criminal penalty claims awarded to Alabama through the National Fish and Wildlife Foundation from plea agreements with BP and Transocean, the total value recovered by the state for the Deepwater Horizon oil spill will top $2.3 billion.

The payments for the settlement will be made over time and are backed by parent company guarantees from BP Corporation North America Inc. as the primary guarantor and BP p.l.c. as the secondary guarantor.

A consent decree has been lodged in federal court in New Orleans outlining the terms of the natural resource damages and Clean Water Act civil penalty settlement. Notice of both the consent decree and the Draft Programmatic Damage Assessment and Restoration Plan (PDARP) are published in the federal register. Both will be available for public comment for 60 days. The materials and instructions for commenting on the consent decree can be found at http://www.justice.gov. The materials and instructions for commenting on the draft PDARP can be found at http://www.gulfspillrestoration.noaa.gov.

On April 10, 2010, about 50 miles at sea off the coast of Louisiana, the Macondo well suffered a catastrophic blowout. The ensuing explosion and fire destroyed the Deepwater Horizon drilling rig, killing 11 men aboard, and sending more than 3 million barrels of oil into the Gulf of Mexico over a period of nearly three months. Oil flowed within deep ocean water currents hundreds of miles away from the blown-out well, resulting in oil slicks that extended across more than 43,000 square miles, affecting water quality and exposing aquatic plants and wildlife to harmful chemicals.Oil was deposited onto at least 400 square miles of the sea floor and washed up onto more than 1,300 miles of shoreline from Texas to Florida.

The spill damaged and temporarily closed fisheries vital to the Gulf economy, oiled hundreds of miles of beaches, coastal wetlands, and marshes, and killed thousands of birds and other marine wildlife, among other economic and natural resource injuries.

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