Judge okays BP plea, $4 billion penalty in Gulf oil spill

Tue Jan 29, 2013 3:57pm EST

1 of 2. Smoke billows from a controlled burn of spilled oil off the Louisiana coast in the Gulf of Mexico coast line in this file photo taken June 13, 2010.

Credit: Reuters/Sean Gardner/Files

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(Reuters) - A U.S. judge accepted an agreement by BP Plc to plead guilty for its role in the Deepwater Horizon disaster and pay a record $4 billion in criminal penalties for the worst offshore oil spill in U.S. history.

The company said it pleaded guilty to 11 felony counts related to workers' deaths, a felony related to obstruction of Congress and two misdemeanors. It faces five years' probation and the imposition of two monitors who will oversee its safety and ethics for the next four years.

After the April 2010 explosion on the Transocean rig in the Gulf of Mexico, 4.9 million barrels of oil spewed into the Gulf over 87 days. Shorelines from Texas to Florida were fouled before responders could cap the mile-deep well.

BP has struggled with political, financial and legal fallout ever since. Even after settling federal criminal charges, the company faces civil penalties of up to $21 billion and separate state claims due to be heard at a trial starting in New Orleans on February 25.

Alabama's attorney general, Luther Strange, said the BP sentence was welcome for setting some federal money aside to restore the Gulf coast, but he planned to press ahead with his state's own claims for economic and natural resource damages.

"I look forward to presenting Alabama's case that BP was grossly negligent when we have our day in court next month," Strange said in a statement.

Transocean, owner of the doomed Deepwater Horizon rig, agreed this month to pay $1.4 billion to settle U.S. government charges over the disaster.

Halliburton Co, the oilfield services company that performed cementing work on the Macondo well and is being sued in the civil litigation along with BP, said on Friday it was working on its defense ahead of the trial next month.

BP, with its federal plea agreement now approved, has 60 days to send a remedial plan to the Department of Justice (DOJ) and the Environmental Protection Agency laying out how it plans to meet all its stipulations. The plan could go back and forth among the three parties before it is agreed to by all sides.

The judge who imposed the sentence on BP, U.S. District Judge Sarah Vance of the Eastern District of Louisiana, found the fines far exceeded any in U.S. history, and were structured so BP will feel the "full brunt" of them, the DOJ said.

BP's total of $4.5 billion in federal penalties includes $2.4 billion for the National Fish and Wildlife Foundation, a $1.256 billion criminal fine and $350 million for the National Academy of Sciences -- all payable over five years -- and a $525 million civil penalty to the Securities and Exchange Commission.

"Our guilty plea makes clear, BP understands and acknowledges its role in that tragedy, and we apologize - BP apologizes - to all those injured and especially to the families of the lost loved ones," Luke Keller, a vice president of BP America Inc, told the court, according to a BP statement.

BP now aims to settle the civil claims, for which negligence is a key issue. A gross negligence finding could quadruple civil damages owed by BP under the Clean Water Act to $21 billion.

The British company has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost $7.8 billion to resolve. The litigation was brought by more than 100,000 individuals and businesses claiming economic and medical damages from the spill.

BP believes it can handle it all after selling off $35 billion worth of assets. As of November, when it agreed to the plea, BP had paid $23 billion in clean-up costs and claims.

The U.S. government banned BP from new federal contracts over its "lack of business integrity" in the spill, which could threaten its role as a leading U.S. offshore oil and gas producer.

But BP said on Tuesday that its mandatory debarment under the settlement did not affect any existing contracts or leases.

"The government has awarded BP over 50 federal leases since the Deepwater Horizon accident," said BP, which is the largest investor and deepwater leaseholder in the Gulf of Mexico with interests in 700 blocks and seven rigs now operating there.

The criminal case is "USA v. BP Exploration and Production Inc," case no. 2:12-CR-00292, in U.S. District Court for the Eastern District of Louisiana in New Orleans.

(Reporting by Braden Reddall in San Francisco and Timothy Gardner in Washington; Editing by Gerald E. McCormick, Nick Zieminski, Alden Bentley and David Gregorio)

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Comments (3)
Harry079 wrote:
Are workers lives of so little value that a Corporation can plead guilty to multible felonies by causing their deaths and walk away by just paying a fine and jumping through some hoops?

Jan 29, 2013 2:57pm EST  --  Report as abuse
Gigimoderate wrote:
Yes Harry…oil companies, coal companies CEO’s all side step safety regulations in the name of profit. They get fined and life goes on. The public turns a blind eye because of their own Glutton ways.

Jan 29, 2013 4:30pm EST  --  Report as abuse
Priets33 wrote:
Comparing this to the Samsung Apple lawsuit and you can see how stupid this is. Samsung owes Apple 1.1 Trillion dollars for using there rounded rectangle, and the gulf oil disaster only cost BP 4 Billion or less than 4% of the for mentioned lawsuit. It would be funny if they hadn’t screwed over so many people.

Jan 29, 2013 4:58pm EST  --  Report as abuse
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