BP agrees $4.5bn penalty in Deepwater Horizon settlement with US government
16 November 2012
BP announced on November 14 that it has come to an agreement with the US government to resolve all federal criminal charges and all Securities and Exchange Commission claims connected to the Deepwater Horizon disaster in April 2010.
The deal with the US government brings BP's total liabilities to date to $42bn
In a statement, BP said that all 14 criminal claims with the Department of Justice would be resolved with $4 billion of payments to be made over a period of five years. It will also resolve all securities claims with the SEC by paying $525 million over three years.
BP said that by eliminating the possibility of any further Federal criminal charges against the company based on the accident, it has taken "another significant step forward in removing legal uncertainty and can now focus more fully on defending itself against all remaining civil claims".
As part of the deal, BP has agreed to plead guilty to 11 felony counts of "misconduct or neglect of ships officers" relating to the loss of the lives of 11 people as a result of the accident. It will also plead guilty to one misdemeanor count under the Clean Water Act, one misdemeanour count under the Migratory Bird Treaty Act and one felony count of obstruction of Congress.
However, BP also pointed out that the proposed resolutions are not expected to cover federal civil claims, including Clean Water Act civil claims and Federal and state Natural Resources Damages claims; nor would it cover private civil claims that were not covered by the Plaintiff's Steering Committee settlement in April, private securities claims or state economic loss claims.
The largest single outstanding element could still be penalties under the Clean Water Act (CWA), which is not included in the current discussions. BP has provisioned $3.5 billion for CWA penalties, but the maximum possible CWA fine under a finding of gross negligence could top $20 billion.
The Deepwater Horizon explosion on April 20, 2010 resulted in the largest offshore spill in U.S. history. So far, the company has set aside $38.1bn to settle claims and fines related to the disaster.
Three BP officials were also charged, in addition to the charges against the company. Donald Vidrine and Robert Kaluza, the two senior managers aboard the Deepwater Horizon, face charges of manslaughter and of negligence in supervising the pressure tests on the well.
David Rainey, BP's former vice-president for exploration in the Gulf of Mexico, was charged with obstruction of Congress and lying about how much oil was gushing from the well.
BP chairman Carl-Henric Svanberg said BP believed the settlement was in the company's best interests. "We believe this resolution is in the best interest of BP and its shareholders," he said. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."
BP Group Chief Executive Bob Dudley said in a statement:
"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. 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 US government further reflects, we have accepted responsibility for our actions."
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