Governor Robert Bentley announced onJuly 2 that the State of Alabama had reached an agreement in principle with BP to settle the state’s case. This settlement is for damages Alabama incurred as a result of the massive oil spill in 2010. The historic agreement, which is considered by many legal scholars to be the most significant litigation to ever have affected Alabama, is comprised of two key elements: $1 billion in compensation for economic damages in the form of lost revenues, taxes and incurred costs, and an estimated $1.3 billion in compensation for environmental restoration, fines and penalties. In total, the agreement in principle for Alabama is valued at $2.3 billion.
While the imposition of federal Clean Water Act (CWA) fines was most certainly a significant threat to BP, the good progress Alabama was making in its case was weighing heavily on the corporate giant. Alabama was the first state to file suit and was the first state case to be set for trial. Based on how things were developing, our legal team was moving rapidly through discovery and the witnesses were doing even better than expected. Considering the fact that the case would be a jury trial, most likely back in Alabama, with punitive damages a possibility, BP was on a collision course with justice.
The State of Alabama’s settlement is part of a larger settlement, which includes the federal government, the five Gulf Coast states and local government entities. The total settlement is valued at $18,732 billion. The settlement, when it becomes final, will be the largest environmental settlement in United States history. This is the breakdown of the settlement:
Governor Robert Bentley and Attorney General Luther Strange deserve a great deal of credit for this agreement and should be commended for their dedication for aggressively pursuing a just cause. Their cooperation in the unified effort throughout the handling of the case is the primary reason Alabama’s case was the first state case set for trial and ultimately settled. In addition, one cannot say enough about the hard work that Magistrate Judge Sally Sushan put in during the negotiations that resulted in a great settlement for all of the entities mentioned above. This was a monumental effort with numerous political entities involved. Judge Shushan did an amazing job of keeping the parties focused and working hard to resolve the most significant environmental litigation in United States history. Judge Carl Barbier had done a tremendous job in keeping this massive and complicated litigation on track. When the negotiations came about, he kept everybody who was involved focused and he never let anything or anybody hinder the progress that was being made. The fact that a settlement could be reached in record time is a tribute to the efforts of Judge Barbier and Judge Sunshan.
There are still some matters that must be resolved before the agreement in principle becomes a formal settlement, including the entry of a consent decree — which must be finalized by the Court. We are most confident, however, that the agreement will be approved and will become a formal resolution. These funds could not be coming to the State of Alabama at a better time. Alabama’s General Fund budget is in shambles, and the State is faced with many challenges. Importantly, these funds are a one-time occurrence. The Legislature should be extremely careful when determining how to spend this money. These funds represent an incredible opportunity for the State and one that cannot be squandered.
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