From NOLA.com: BP settles oil spill criminal charges for $4.5 billion, including $1.2 billion for Louisiana restoration
BP has entered into a settlement with the U.S. Justice Department of all criminal claims involving the Deepwater Horizon oil spill
for $4 billion, to be paid in installments over five years, and a
settlement with the Securities and Exchange Commission that will include
the payment of $525 million over three years. The company also pleaded
guilty in U.S. District Court in New Orleans to 11 felony counts of
misconduct or neglect of ships' officers relating to the loss of 11
lives in the explosion in April 2010.
The settlement is likely to prove a boon for Louisiana, with $1.2
billion to be used to rebuild barrier islands and build a Mississippi
River freshwater and sediment diversion.
During a news conference in New Orleans on Thursday afternoon, a
cadre of federal officials took BP to task because of the explosion and
spill, citing a culture of profit and privilege at the company,
including instances when BP purposely downplayed the amount of oil
flowing into the Gulf.
U.S. Attorney Eric Holder said the government's action against the
company is "to hold accountable those who bore responsibility for this
tragedy.'' Holder said the government also is looking forward to the
civil trial, now scheduled for Feb. 25, "in which we intend to prove
that BP was grossly negligent in causing the oil spill."
Joining Holder at the podium, Lanny Breur, assistant attorney general
for the criminal division, said the explosion of the rig "was a
disaster that resulted from BP's culture of privileging profit over
prudence; and we allege that BP's most senior decision makers onboard
the Deepwater Horizon negligently caused the explosion."
Breuer said the government hopes BP's acknowledgement of its
misconduct, through its agreement to plead guilty to 11 counts of felony
manslaughter, "brings some measure of justice to the family members of
the people who died onboard the rig."
In an earlier news release that BP filed with the SEC, the
company said it would "vigorously defend itself against remaining civil
"All of us at BP deeply regret the tragic loss of life caused by the
Deepwater Horizon accident as well as the impact of the spill on the
Gulf coast region," said Bob Dudley, BP's Group Chief Executive. "From
the outset, we stepped up by responding to the spill, paying legitimate
claims and funding restoration efforts in the Gulf. We apologize for our
role in the accident, and as today's resolution with the U.S.
government further reflects, we have accepted responsibility for our
Louisiana is scheduled to receive half of the $2.4 billion of the
fine money that is set aside for environmental projects, including money
for restoration of barrier islands and a diversion of water and
sediment from the Mississippi River to rebuild wetlands, Holder said.
Louisiana Gov. Bobby Jindal praised the settlement as "an important
first step in holding BP accountable for the tragic loss of 11 lives in
the Deepwater Horizon tragedy."
"The largest criminal fine in history is certainly fitting for the
inexcusable negligence that led to this disaster," Jindal said, adding
that the spill's impacts continue to acrue in the state on a daily
"In Louisiana, our fishermen are experiencing extraordinary impacts,"
he said. "Shrimp, crabs, oysters and other seafood are in decline. The
majority of BP's liability remains outstanding and we will hold them
Under the plea agreement, BP will plead guilty to 11 felony counts of
misconduct or neglect of ships' officers relating to the loss of 11
lives; one misdemeanor count under the Clean Water Act; one misdemeanor
count under the Migratory Bird Treaty Act; and one felony count of
obstruction of Congress. The agreement must still be approved by U.S.
District Judge Carl Barbier, who is also overseeing the civil claims
"Thirteen of the 14 criminal charges pertain to the accident itself
and are based on the negligent misinterpretation of the negative
pressure test conducted on board the Deepwater Horizon," said the BP
news release announcing the settlement. The test was aimed at
determining whether drilling fluids had enough pressure to block the
flow of gas to the surface, which is believed to be the cause of the
explosion that killed 11 workers and injured many others.
"BP acknowledged this misinterpretation more than two years ago when
it released its internal investigation report," the news release said.
"Today's agreement is consistent with BP's position in the ongoing civil
litigation that this was an accident resulting from multiple causes,
involving multiple parties, as found by other official investigations."
The last criminal count involves two BP communications made to a
member of Congress during the spill response about flow rate estimates.
The member of Congress was not named.
BP has also agreed to a term of five years' probation.
The agreement calls for $2.394 billion of the settlement money to be
paid to the National Fish & Wildlife Foundation and $350 million to
be paid to the National Academy of Sciences, both over five years.
The National Fish & Wildlife Foundation often works closely with
the U.S. Fish & Wildlife Service on environmental restoration issues
involving national parks and refuges, and it is likely that some of
that money will be used for restoration projects in Louisiana.
David Uhlmann, the former head of the Justice Department's
Environmental Crimes Section and a law professor at the University of
Michigan, said BP is likely to pay even more in natural resource damage
claims as well as civil penalties under the Clean Water Act.
"The criminal fine is a record amount, but it pales in comparison to
the $30-to-$40 billion that BP faced under the Clean Water Act," Uhlmann
said in an e-mail Thursday.
BP said that under the plea agreement, the company also will take
additional actions, enforceable by the federal court, to enhance safety
of drilling operations in the Gulf of Mexico.
"These requirements relate to BP's risk management processes, such as
third-party auditing and verification, training, and well control
equipment, and processes such as blowout preventers and cementing.
The agreement also requires the appointment of two monitors -- both
to serve for four years -- to keep track of process safety and risk
management procedures concerning deepwater drilling in the Gulf, and to
monitor ethics, including a review and recommendations for improvement
of the company's code of conduct and its implementation and enforcement.
BP said it hasn't been advised by any federal agency of plans to
suspend or debar the company in connection with the plea agreement.
Under federal law, companies convicted of certain criminal acts can be
debarred from contracting with federal agencies.
The SEC resolution includes an injunction prohibiting BP from
violating certain U.S. security laws and regulations. The SEC claims are
premised on flow rate estimates contained in three reports provided by
BP to the SEC on April 29 and 30 and May 4, 2010, which was within the
first 14 days of the accident. The SEC resolution is still subject to
federal court approval.
BP said it already had recorded charges against its pre-tax income
through September 2012 for $38.1 billion related to the Deepwater
Horizon accident and spill, which included the $525 million for the SEC
settlement. The criminal charge settlement will add $3.85 billion to
those charges on its books, and will be reflected in the company's
December 2012 financial statement, as well as any other adjustments
needed during the fourth quarter.
Robert Khuzami, director of enforcement for the SEC, said the $525 million fine is the third largest.