LITTLE ROCK — British oil company BP said Thursday that it would pay $4.5 billion in fines and other payments and plead guilty to 14 criminal charges in connection with a drilling rig explosion and giant oil spill in the Gulf of Mexico two years ago.
The settlement with the U.S. Department of Justice includes a record $1.26 billion criminal fine, to be paid over five years. The company agreed to five years’ probation.
The settlement came 21/2 years after the April 20, 2010, fiery explosion that killed 11 workers, destroyed the huge Deepwater Horizon drilling rig and set off the biggest oil spill in U.S. history.
“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,” BP Chief Executive Officer Bob Dudley said in a statement. “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.”
Much of the money from BP will be used to restore the Gulf Coast, U.S. Attorney General Eric Holder said at a news conference in New Orleans announcing the agreement.
The settlement with BP “marks the largest single criminal fine and the largest total criminal resolution in the history of the United States,” Holder said.
BP said it has agreed to plead guilty to 11 felony counts of misconduct or neglect related to the 11 deaths that occurred when the Deepwater Horizon exploded, one misdemeanor count under the Clean Water Act, one misdemeanor count under the Migratory Bird Treaty Act and one felony count of obstruction of justice.
“Perhaps the greatest tragedy is the BP disaster could have been avoided,” Assistant Attorney General Lanny A. Breuer said at the news conference.
BP also underestimated the size of the spill to the public and Congress to make it seem as if “less damage was being done to the environment than in fact was really occurring,” Breuer said.
Two BP employees who supervised testing on the Deepwater Horizon were separately charged, according to court filings. Robert Kaluza and Donald Vidrine were charged with involuntary manslaughter and Clean Water Act violations. The men were aware the well was not secure and “failed to maintain control,” the U.S. said in the filing in the criminal case against BP in federal court in New Orleans.
“It is almost inconceivable that any fair-minded person would blame this hard-working and diligent man for one of the most catastrophic events in the history of the oil business,” Robert Habans, a lawyer for Vidrine, said in a statement. “Don Vidrine is innocent of these charges and it is a failure of justice to blame this event on him.”
Shaun Clarke and David Gerger, attorneys for Kaluza, said in a statement that he is innocent.
“After nearly three years and tens of millions of dollars in investigation, the government needs a scapegoat,” they said. “Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day.”
Former BP executive David Rainey, the company’s vice president of exploration for the Gulf of Mexico, was also separately charged, the U.S. said. Rainey, charged with obstruction of Congress and false statements, was responsible for estimates on the size of the spill.
The settlement, which is subject to approval by a federal judge, includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission. The SEC accused BP of misleading investors by lowballing the amount of crude that was spilling.
The settlement appears to be well within BP’s means, considering the oil giant made a record $25.8 billion in profits last year. It doesn’t resolve separate civil claims by the U.S. alleging violations of federal pollution laws, Holder said.
“We have been in negotiations with BP” to resolve the civil claims, Holder said. “We have not reached a number that I consider satisfactory.”
Those claims are to be heard in a nonjury trial to begin Feb. 25 in federal court in New Orleans.
Greenpeace denounced the settlement as a slap on the wrist.
“This fine amounts to a rounding error for a corporation the size of BP,” the environmental group said.
Nick McGregor, an oil analyst at Redmayne-Bentley Stockbrokers, said the settlement would be seen as “an expensive positive.”
“This scale of bill is unpleasant,” he said. But “the worstcase scenario for BP would be an Exxon Valdez-style decade of litigation. I think that is the outcome they are trying to avoid.”
The cost of the spill far surpassed that of the Exxon Valdez disaster in 1989. Exxon ultimately settled with the government for $1 billion, which would be about $1.8 billion today.
The Deepwater Horizon rig blew up 50 miles off Louisiana in an explosion that investigators blamed on time-saving and cost-cutting decisions by BP and its drilling partners in cementing the well shaft.
Following several failed attempts that introduced the American public to such industry terms as “top kill” and “junk shot,” BP finally capped the well on the seafloor after more than 85 days.
By then, the well had spewed an estimated 172 million gallons of crude into the ocean, fouling marshes and beaches, killing wildlife and closing vast areas to fishing.
Nelda Winslette’s grandson Adam Weise of Yorktown, Texas, was killed in the blast. She said somebody needs to be held accountable.
“It just bothers me so bad when I see the commercials on TV and they brag about how the Gulf is back, but they never say anything about the 11 lives that were lost. They want us to forget about it, but they don’t know what they’ve done to the families that lost someone,” she said.
Sherri Revette, who lost her husband of 26 years, Dewey Revette, of State Line, Miss., said the indictments against the employees brought mixed emotions.
“I’m saddened, but I’m also happy at the same time that they will be prosecuted. I feel for them, of course. You never know what impact your actions will have on others,” she said.
Frank Parker, a shrimper from Biloxi, Miss., said: “I just hope the money gets down to the people who need it.”
Scientists warn that the spill’s full effect on the Gulf food chain may not be known for years. But they have reported that oil-coated coral reefs that were dying and fish have been showing up in nets with lesions and illnesses that biologists fear could be oil-related. Oil churned up by storms could be washing up for years.
BP reached a settlement with most nongovernment plaintiffs in March, agreeing to pay an estimated $7.8 billion. That settlement averted a trial scheduled to determine liability for the disaster.
U.S. District Judge Carl Barbier in New Orleans, who’s overseeing much of the spill litigation, has set Feb. 25 for a new nonjury trial to apportion fault and decide whether BP is liable for gross negligence.
In its proposed settlement in March, BP agreed to pay most claims for economic loss, property damage and injuries from businesses, property owners and other nongovernment victims of the spill. BP also established a medical-monitoring program to handle claims from people who contend they are suffering medical problems from the oil or chemicals used to clean it up.
Information for this article was contributed by Phil Mattingly and Margaret Cronin Fisk of Bloomberg News, Michael Kunzelman, Pete Yost, Kevin McGill, and Holbrook Mohr of Bloomberg News and Clifford Krauss and Stanley Reed of The New York Times.
Front Section, Pages 1 on 11/16/2012