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BP guilty of criminal misconduct, negligence in gulf oil spill

November 15, 2012|By Michael Muskal

Oil company BP has agreed to plead guilty to misconduct and negligence charges and pay a record $4.5-billion fine in connection with the massive Gulf of Mexico oil spill, one of the nation’s worst environmental disasters.

In an announcement Thursday morning from its London headquarters, BP confirmed that it had reached an agreement with the U.S. Justice Department to resolve all federal criminal charges and all claims by the Securities and Exchange Commission against the company stemming from the 2010 Deepwater Horizon rig explosion, the subsequent oil spill and the response.

As part of the agreement, BP said it has agreed to plead guilty to 11 felony counts of misconduct or neglect in connection with the 11 people who died in the explosion. In all, the company agreed to plead guilty to 14 criminal charges including one count of obstruction of Congress.

The agreement is subject to U.S. federal court approval. Atty. Gen. Eric Holder will hold a news conference in New Orleans on Thursday afternoon to announce matters concerning “a major environmental case,” according to the DOJ announcement.

PHOTOS: Deepwater Horizon disaster in hi-res

“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,” Bob Dudley, BP’s group chief executive, said in a statement. “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 U.S. government further reflects, we have accepted responsibility for our actions.”

According to the company, the agreement means that no further federal criminal charges can be filed in connection with the incident, enabling the  company to concentrate on defending itself against future civil claims. Under pressure from the government, BP established a $20-billion fund to cover claims and has been paying out billions of dollars since the accidents.

The tragedy began with a fire and explosion on the Deepwater Horizon rig in April 2010. At the time, the rig was drilling into the company’s Macondo well, about 50 miles off of the coast of Louisiana and about a mile below the water’s surface.

Gulf Oil Spill: One Year Later

Once the rig sank, the well ruptured and poured more than 200 million gallons of crude into the waters before it was plugged on July 15. For some 85 days, the nation watched live online video from underwater cameras showing oil gushing into the ocean.

The crude washed ashore on the beaches of five states, imperiling the environment, shutting down commercial fishing for months and dealing a blow to the key tourism industry in Gulf Coast states. 

The spill set the stage for one of the nation’s largest cleanups and for months of battles over responsibility. The response to the spill also became a political problem for the Obama administration and prompted an overhaul of federal agencies that regulate offshore oil drilling.

Tony Hayward, the BP president at the time, was forced to step down, in part for commenting that "I'd like my life back" during the frenetic cleanup period when oil was washing ashore in Louisiana and many livelihoods were in ruins.

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

Thirteen of the 14 criminal charges pertain to the accident itself and are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon, the company said.

“BP acknowledged this misinterpretation more than two years ago when it released its internal investigation report,” the company noted. “As part of its resolution of criminal claims with the U.S. government, BP will pay $4 billion, including $1.256 billion in criminal fines, in installments over a period of five years. BP has also agreed to a term of five years’ probation,” the company said.

The total cost of the package will exceed $4.5 billion and includes a civil penalty of $525 million to be paid in three installments to the Securities and Exchange Commission for alleged securities violation in connection with oil flow estimates in the early days after the accident. The package also includes an extra $350 million to the National Academy of Sciences to be paid over five years, the company said.

The agreement also provides for the appointment of two monitors, each to serve for four years. One will monitor safety and the other ethics issues, the company said.

Prior to the settlement, the only person facing charges so far in the case was former BP engineer Kurt Mix, who was arrested in Texas in April on obstruction of justice charges.

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michael.muskal@latimes.com

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