BP Plc reached a settlement with the U.S. government for $4.5 billion that will end all criminal charges and resolve securities claims relating to the worst U.S. oil spill.
The London-based company announced a $4 billion settlement today with the U.S. Justice Department that includes a record $1.256 billion criminal fine, which would be paid over five years. The company agreed to five years' probation and also will pay $525 million to settle charges with the Securities and Exchange Commission, according to a press release.
BP said it has agreed to plead guilty to 11 felony counts of misconduct or neglect of ships officers related to the 11 deaths, one misdemeanor count under the Clean Water Act, one misdemeanor count under the Migratory Bird Treaty Act and one felony count of obstruction of justice.
“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,” BP Chief Executive Officer Bob Dudley said today in a statement. “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.”
Two of the company's employees face manslaughter charges over deaths from the explosion of the oil well, which resulted in the worst U.S. oil spill, said a person familiar with the charges, who requested anonymity because the charges haven't been made public.
U.S. Attorney General Eric Holder is scheduled to attend a news conference today in New Orleans on the settlement.
The criminal penalty part of the settlement is the largest in U.S. history, eclipsing the $1.195 billion paid by Pfizer Inc. for marketing fraud in 2009.
Along with the criminal fine, the resolution with the Justice Department includes a total of $2.4 billion that will be paid to the National Fish & Wildlife Foundation over a period of five years. Another $350 million will be paid to the National Academy of Sciences over that same period.
Peter Hutton, an analyst at RBC Capital Markets, said the settlement was “positive” because the total was at the “low to midpoint of expectations.”
BP faces a maximum possible fine of $17.6 billion for civil environmental violations alone if the company is found grossly negligent by the federal judge overseeing lawsuits stemming from the spill.
The company said in its release that it will “continue to vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases.”
Kurt Mix, a former BP engineer, has been charged with destroying evidence in the probe of the spill.
11 Killed
The April 2010 the company's Macondo well blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The sinking of Transocean Ltd.'s Deepwater Horizon drilling rig and the spill led to hundreds of lawsuits against BP and its partners and contractors.
The Justice Department sued BP in December 2010, alleging the company failed to prevent or contain the spill and seeking fines for each barrel of oil discharged.
The government estimated that more than 4 million barrels of oil were spilled. If BP is found to be grossly negligent, a legal standard the government would have to prove showing the accident resulted from a conscious BP act or omission, it could be fined as much as much as $4,300 per barrel.
BP set aside $3.5 billion to pay potential Clean Water Act fines, using its own estimate of 3.2 million barrels and a maximum fine of $1,100 per barrel without gross negligence.
BP reached a settlement with most non-government plaintiffs in March, agreeing to pay an estimated $7.8 billion. That settlement averted a trial scheduled to determine liability for the disaster.
BP agreed to pay most claims for economic loss, property damage and injuries from businesses, property owners and other non-government victims of the spill. BP also established a medical-monitoring program to handle claims from people who contend they are suffering medical problems from the oil or chemicals used to clean it up.
BP and lawyers representing non-government victims of the spill won preliminary court approval of the proposed settlement agreement in May and argued for final approval at a hearing on Nov. 8. A decision is pending.
The government case is U.S. v. BP Exploration & Production Inc., 2:10-cv-04536, U.S. District Court, Eastern District of Louisiana (New Orleans). The lawsuit is part of In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
Bloomberg News
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