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After the Spill

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BP and US Reach $4.5B Settlement for Gulf oil Spill

November 15th 2012

offshore oil rig

BP has reached a $4.5 billion settlement with the U.S. government to resolve criminal and securities claims over a 2010 well blowout that claimed 11 lives and spilled millions of barrels of oil into the Gulf of Mexico.

The British oil giant will pay $4 billion in fines and other payments, the largest criminal penalty in U.S. history, to resolve claims with the Justice Department over the accident that badly harmed Gulf ecosystems and reshaped U.S. offshore drilling policy. The company has also agreed to pay $525 million to the Securities and Exchange Commission to resolve separate 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 BP CEO Bob Dudley in a statement. U.S. Attorney General Eric Holder and other Justice Department officials have scheduled a 2 p.m. press conference in New Orleans to discuss the settlement.

The Associated Press, citing an unnamed source, reported Thursday that two BP employees will face manslaughter charges. The April 2010 blowout and explosion of the Deepwater Horizon rig altered the politics and regulation of offshore drilling in the U.S.

The White House, after the spill, backed off plans to allow oil-and-gas leasing off the Atlantic Coast, where formal bans expired in 2008. It also led to a temporary freeze on deepwater drilling in the Gulf of Mexico that faced strong GOP and industry criticism. The Interior Department overhauled its long-troubled offshore drilling branch after the spill and toughened safety regulations.

BP has agreed to plead guilty to 11 felony counts related to the deaths that resulted from the blowout, the company said. The company is also pleading guilty to a felony charge of obstruction of Congress over what BP told lawmakers about how much oil was gushing from the blown-out Macondo well, which took 87 days to bring under control.

Other pleas include one misdemeanor count each under the Clean Water Act and the Migratory Bird Treaty Act. Rep. Ed Markey (D-Mass.), a senior Democrat who during the spill expressed concern that the company was low-balling the amount of oil coming from the blown-out well, called the fines and penalties “appropriate.”

“People died, BP lied to Congress, and millions of barrels of oil poured into the Gulf. This steep cost to BP will provide the Gulf coast some of the funds needed to restore the region, and will hopefully deliver some comfort and closure to the families and businesses affected by the spill,” Markey said. The destroyed Macondo well ultimately spewed an estimated 4.9 million barrels of oil.

The $4 billion criminal settlement includes a nearly $1.3 billion fine and $2.4 billion to the National Fish and Wildlife Foundation, and further steps to boost the safety of its Gulf of Mexico drilling operations, among other provisions in the wide-ranging settlement.

The $4 billion will be paid out over five years while the SEC payments will unspool over three years, BP said. But the criminal settlement won’t be the end of the legal road for BP over the months-long spill, the largest in U.S. history.

It won’t cover federal civil claims, including Clean Water Act claims, federal and state Natural Resource Damages claims, state economic loss claims or private civil claims outside the broad, multibillion-dollar settlement agreement with private plaintiffs announced in March, BP said Thursday.

“We believe this resolution is in the best interest of BP and its shareholders,” BP Chairman Carl-Henric Svanberg said Thursday. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

Multiple probes of the 2010 disaster have shed light on a number of missteps by BP, Deepwater Horizon rig owner Transocean Ltd. and Halliburton, the oilfield services company that handled the cementing of BP’s ill-fated Macondo well.

“Better management by BP, Halliburton and Transocean would almost certainly have prevented the blowout by improving the ability of individuals involved to identify the risks they faced, and to properly evaluate, communicate and address them,” an outside commission established by the White House said in an early 2011 report.

A separate joint probe by the Interior Department and U.S. Coast Guard faulted all three companies as well in a 2011 report. It included tough words for BP, noting “cost or time saving decisions without considering contingencies and mitigation were contributing causes of the Macondo blowout.”

BP, in announcing the settlement Thursday, also sought to ensure blame is shared with other companies involved in the accident. “Today’s agreement is consistent with BP’s position in ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations,” the company said.

Ben Geman writes for The Hill, from where this article is adapted.

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