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BP agrees to pay $1 billion to begin Gulf clean-up

Last week, spokespeople from BP, five states and the federal government announced that BP has agreed to pay $1 billion to sponsor restoration efforts in the Gulf of Mexico. This is the largest amount any oil company has ever agreed to pay in the wake of an oil spill, the New York Times reported. However, it will not even begin to satisfy the civil fines, penalties and legal claims, and possible criminal charges BP faces, the Times said.

The agreement between BP, the federal government and the states, including Alabama, Florida, Louisiana, Mississippi and Texas, was made on April 20, 2011, the one year anniversary of the oil-well explosion and disaster that killed 11 drilling vessel workers and sent almost five billion barrels of oil into the ocean.

But this amount is small compared to the $21 billion that it is estimate BP could be forced to pay in fines and penalties alone for the worst offshore drilling accident in history, the Times said. This initial amount is merely to kick of restoration efforts and will count toward the grand total amount owed after a natural resource damage assessment is completed, the Times said.

It was reported that each of the five states will receive $100 million and along with the Department of the Interior and the National Oceanic and Atmospheric Administration. The leftover $300 million will then be set aside for special projects proposed by the states and chosen by the federal agencies.

This first bundle of money will allow states and the two federal agencies overseeing the projects to get a head start on restoring coastal marshes, cleaning up beaches and islands that were damaged and replenishing ocean life, the Times said.

It is important that this agreement was reached so that work can begin on the clean-up before all of the investigating is complete and the fines, penalties and damage awards are decided upon. Because, as with all huge accidents involving thousands of people and a vast area, figuring out who is entitled to what will take a long time.

What is already known, though, is that BP will be the one responsible for all of the costs as it was the leaseholder on the well that exploded and was responsible for the spill, the Times reported. However, according to the Times, BP brought lawsuits against its three drilling partners last week, trying to place the blame on them and seeking billions in damages.

Source: The New York Times, "BP Agrees to Pay $1 Billion for Start of Gulf Restoration," John M. Broder, 4/21/2011.

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