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BP to pay $4-billion criminal fine in Deepwater Horizon spill

Two supervisors for the oil company have been charged with manslaughter in the rig explosion that killed 11 workers. The firm could pay still more in civil claims.

November 15, 2012|By Bettina Boxall and Ronald D. White, Los Angeles Times

In the third quarter alone, BP raked in sales of more than $93 billion and had a net profit of more than $5.2 billion. That shows that "BP has made the most remarkable comeback from the most costly industrial accident in history," Fadel Gheit, senior energy analyst at Oppenheimer & Co., said in a note to investors.

In addition, BP has raised $35 billion from asset sales, including a $2.5-billion proposal to sell its Carson refinery and other assets.

BP's recent business performance has been so strong that some critics said the fine wasn't punishment enough.

"This settlement is pathetic," said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group. "The point of the criminal justice system is twofold: to punish and to deter. This does neither. It is a weak-tea punishment that provides zero deterrence to BP or other companies."

What remains unclear is how the settlement will affect BP's business in the U.S., particularly in the Gulf of Mexico. The company has seven rigs drilling in the gulf and plans to add an eighth and possibly a ninth next year.

BP appeared to acknowledge the uncertainty in a statement: "Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. BP has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement. BP will continue to work cooperatively with the debarment authority."

The size of the spill was vehemently disputed early in the disaster. Environmentalists accused BP of greatly underestimating the rush of oil into the gulf, and the federal government also came under fire for releasing low flow estimates that were revised upward several times during the spill.

The spill volume was not just a matter of gauging environmental harm, it also had financial implications: The more oil released, the greater the civil penalties BP faced under federal environmental law.

"BP lied to me," Rep. Edward J. Markey (D-Mass.) said Thursday at a Capitol Hill news conference. "And they lied to all Americans.

"They were deliberately low-balling the number because their liability is directly tied to the number of barrels of oil that flow into the ocean. They deserve this record-breaking penalty."

Sen. Bill Nelson (D-Fla.) said in a statement that he was pleased that the Justice Department "brought the hammer down on BP.… Now that this is worked out, it's time to move on to the civil side of things and get Gulf Coast residents every cent they deserve."

Congress held a spate of high-profile hearings after the spill. Rainey, BP's vice president of exploration in the gulf, met with congressional investigators at a May 2010 briefing held by Markey, then chairman of a House subcommittee on energy and the environment.

"Rainey allegedly cherry-picked pages from documents, withheld other documents altogether and lied to Congress and others to make this spill appear less catastrophic than it was," Assistant Atty. Gen. Breuer said.

David Uhlmann, former head of the environmental crimes section at the Justice Department, characterized the fine, although unprecedented, as "on the low end of the acceptable range."

"When you look at $4.5 billion alongside the tens of billions of dollars of harm that was caused by the gulf oil spill and the tragic loss of life on the Deepwater Horizon, it's hard to escape the conclusion that today's settlement is a relatively modest financial penalty for BP," Uhlmann said.

Uhlmann, a professor at the University of Michigan Law School, said he found the manslaughter charges against the BP rig supervisors "troubling" and predicted the case could face a stiff challenge in court.

"The question in my mind is whether a criminal charge would have been better reserved for those at least a few rungs higher up the ladder, not a team leader on a drill rig 70 miles in the Gulf of Mexico," Uhlmann said. "They were not the ones responsible for BP's terrible corporate culture for compliance and safety issues."

Some conservation groups also called the fine insufficient.

"We feel that this is a slap on the wrist, an insult to people of the gulf, rig workers and others who are trying to rebuild their lives," said Jill Mastrototaro, the Gulf Coast director for the Sierra Club. "Here on the ground, we still have lingering health concerns, oil is still washing up on shore, there is still a sheen at the well site."

Times staff writers Julie Cart, John Glionna, Rong-Gong Lin II, Michael Muskal, Louis Sahagun and Richard Simon contributed to this report.

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