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Finding the balance in BP’s punishment

A record-breaking environmental accident has produced a record-breaking criminal fine. The oil company BP agreed last week to pay $4.5 billion to settle a series of criminal claims regarding the 2010 Deepwater Horizon spill.

The settlement doesn’t settle as much as you might think. The Justice Department is also pursuing civil claims against BP under the Clean Water Act and other statutes, which some say could lead to a much larger payout. Garret Graves, Louisiana’s coastal environment chief, speculated to Bloomberg News that those fines could “easily be in the tens of billions of dollars.” That would come on top of some $20 billion to $30 billion the company has already paid or committed to pay for things such as spill cleanup and compensation for economic damages. Louisiana wants to use its share of the potential pot to fund a 50-year coastal restoration strategy.

Talk is now turning to the possibility of a settlement that resolves all of the government’s outstanding claims. The government should seek a balance: BP should be on the hook for any damage it caused, but the government should not try to impose an overly punitive punishment.

Every company that wants to extract energy resources on or off America’s shores should know that taxpayers will not pay to clean up its messes. In BP’s case, the total environmental cost might not be known for years. Environmentalists worry about the long-term effects on food chains in a complicated and incredibly productive Gulf of Mexico ecosystem. They also cite research suggesting that oil might speed the erosion of critical wetlands, which protect people and wildlife alike against a range of natural hazards.

Yet a quick settlement would be in the Gulf Coast’s interest. Though it will take years to ascertain the spill’s full effect, the gulf states should not have to wait that long to plan and execute restoration projects in a degrading ecological zone.

Gulf states and the country as a whole also have an interest in a fair settlement process that encourages companies to be appropriately cautious without unduly discouraging them from investing in U.S. energy production. BP’s performance leading up to the blowout was irresponsible. But justice does not lie in sucking every last penny out of the company, regardless of what it has done since the spill. Nor does it lie in sending a message that firms that more responsibly manage the risks inherent in the energy business nevertheless face the prospect of severe punishment.

A settlement that respects all of these principles should be within the government and BP’s reach. Both sides should get on with it, instead of allowing the wrangling over the Deepwater Horizon spill to continue for another two years, or two more after that.