Chapter 7: Deepwater Horizon

In “Chapter 7: Deepwater Horizon,” Elizabeth Klein, at the time Deputy Director of the State Energy & Environmental Impact Center at the New York University (NYU) School of Law, focuses on the forces and considerations that shaped the $20 billion civil settlement among BP, the federal government, Gulf of Mexico (Gulf) states, and local governments following the explosion of BP’s Deepwater Horizon drilling rig in the Gulf in April 2010.

Following the disaster, thousands of cases associated with the Deepwater Horizon have been filed. Plaintiffs have included the federal government, the Gulf states impacted by the oil spill, families of the individuals who lost their lives, environmental organizations, and businesses and individuals whose economic livelihoods were shattered by both the spill’s immediate impact as well as the longer-term negative effects on industries such as tourism. With the oil spill extending over more than 43,000 square miles, the disaster damaged and temporarily closed fisheries; oiled beaches, marshes, and wetlands; and killed scores of birds and marine wildlife all along the shores of five Gulf states—Texas, Louisiana, Mississippi, Alabama, and Florida.

Multiple federal and state agencies responded to both the immediate aftermath of the explosion and the cleanup of the oil spill, and they continued to be involved in the extensive civil and criminal litigation that followed. Ultimately, BP—the company held most liable for the explosion and spill—would enter into (1) the largest civil penalty settlement agreement ever reached with the U.S. Department of Justice (DOJ); (2) the largest criminal penalty settlement with DOJ; and (3) settlements of class action lawsuits filed on behalf of the thousands of cleanup workers and coastal zone residents who were injured either physically or economically as a result of the disaster.

The chapter focuses on the $20 billion civil settlement agreement among BP, the federal government, Gulf states, and local communities. That agreement includes funds allocated for restitution of the natural resource damages caused by the spill pursuant to the Oil Pollution Act of 1990, as well as funds allocated by the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revive Economies of the Gulf Coast States Act (RESTORE Act)—a bill enacted in the wake of the disaster to dedicate administrative and civil penalties to both natural resource restoration and economic development.

About the Author

Elizabeth Klein is Deputy Director of the State Energy & Environmental Impact Center at the NYU School of Law. She was Associate Deputy Secretary at the U.S. Department of the Interior (DOI) from 2010 to 2017. She graduated summa cum laude with a degree in economics from the George Washington University and received her JD from American University’s Washington College of Law, where she was president of the Environmental Law Society and senior articles editor of the Sustainable Development Law & Policy journal, graduating summa cum laude and Order of the Coif.