BP plc and the Obama administration on Monday finalized a $20.8 billion settlement over the Macondo well blowout five years ago, which gives the producer "certainty with respect to its financial obligations," a spokesman said.

The settlement announced by the Justice, Interior, Commerce and Agriculture departments incorporates funds that BP already has spent on restoration following the tragedy in the deepwater Gulf of Mexico. A consent decree has been filed in U.S. District Court in New Orleans outlining the terms. When tentative terms were announced in July, BP put the total price tag at $18.7 billion; the final agreement resolves discrepancies (see Daily GPIJuly 2).

The "historic resolution" is a "strong and fitting response to the worst environmental disaster in U.S. history," said Attorney General Loretta Lynch. BP "is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region."

BP spokesman Geoff Morrell told NGI the agreement puts the company "another step closer to finalizing the settlement we announced on July 2, fulfilling our commitment to help restore the Gulf economy and environment. The filing of the consent decree does not reflect a new settlement or any new money. It covers the same payments -- and same amounts -- disclosed by BP when we announced this agreement in July.

"The government has announced a number that includes amounts previously spent or disclosed by BP,” he said. “As BP said in July, this settlement resolves the largest litigation liabilities remaining from the tragic accident, providing BP certainty with respect to its financial obligations and allowing us to focus on safely delivering the energy the world needs."

BP agreed to spend $5.5 billion to settle civil claims under the Clean Water Act and $7.1 billion for environmental restoration work. It also agreed to set aside $700 million for possible damages not yet tallied. Almost $5 million is being paid to Alabama, Florida, Louisiana, Mississippi and Texas, while local communities would divide another $1 billion in compensation.

Lynch noted that BP ultimately could have faced a Clean Water Act penalty of more than $13 billion, but it would have required court action that could have taken much longer to settle.

"This is still the largest environmental penalty under the Clean Water Act and Oil Pollution Act, ever," she said. "The steep penalty should inspire BP and its peers to take every measure necessary to ensure that nothing like this can ever happen again.”