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Class Action History: BP Gulf Spill

In April of 2010, the Deepwater Horizon drilling rig triggered one of the largest environmental disasters to ever take place began. The BP-owned Macondo Prospect was the site of the incident, which saw an explosion in the Deepwater Horizon initiate a massive oil spill in the Gulf of Mexico. In 2016, a New Orleans judge finalized approval for a $20 billion settlement to be paid by BP for their negligence in the incident.

BP Gulf Spill Class Action

Background

The Macondo Prospect, located off the coast of Louisiana in the Gulf of Mexico, is a BP-owned oil prospect that is now known in infamy. On April 20th, 2010, the Deepwater Horizon oil rig was drilling in the Macondo Well, roughly 40 miles away from Louisiana.  An explosion occurred in the well at 9:45 CDT as a result of a high-pressure cloud of methane gas expanding the well. Eleven workers were likely killed in the explosion, and another ninety-four were rescued from the rig.

The resulting spill wasn’t fully sealed until September 19th, 2010; however, even after this, some independent reports showed that the site was still leaking some volumes of oil. In the intervening months, the site leaked over 210 million gallons of oil into the Gulf, resulting in massive damage to the local wildlife and tanking commercial fishing and tourism in the region.

The Settlement

BP faced nearly immediate charges from the federal government for their role in the disaster. In 2016, a federal judge located in New Orleans granted the final approval for a $20 billion settlement in order to cover the environmental damage from the spill. Most of this money went to cover penalties, fees and fines from the federal government.

Around $5 billion of this settlement went to cover payments to state and local governments due to their lost revenue from tourism and commercial fishing taking a huge hit. However, the settlement has been criticized by some legal commentators for letting BP claim a $15 billion tax write-off as a result of the payments from the settlement. This essentially allowed for BP to soften the blow to their bottom line despite being found partly responsible for the largest oil spill in history