Sunday, November 18, 2012

BP settles oil spill criminal charges for $4.5 billion, including $1.2 billion for Louisiana restoration

From  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."
Holder announces BP settlement
Enlarge Attorney General Eric Holder addresses a press conference announcing BP's $4.5 billion settlement of criminal charges stemming from the 2010 Deepwater Horizon disaster. Photographed on Thursday, November 15, 2012. (Photo by Michael DeMocker, | The Times-Picayune) Attorney General Eric Holder announces $4.5B BP settlement gallery (9 photos)
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 claims."
"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 actions."
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 basis.
"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 fully accountable."
Attorney General Eric Holder outlines BP settlement Attorney General Eric Holder outlines BP settlement Attorney General Eric Holder outlines charges in BP's $4.5 billion settlement of criminal charges stemming from the 2010 Deepwater Horizon disaster. Watch video
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 against BP.
"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.
Charges against BP employees outlined Charges against BP employees outlined Assistant Attorney General for the criminal division Lanny Breuer outlines criminal charges brought against BP employees stemming from the 2010 Deepwater Horizon disaster. Watch video
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.

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