BP Pleads Guilty, Pays $4.5bn in Gulf Spill Settlement

by | Nov 16, 2012

BP has pleaded guilty to federal felony charges and agreed to pay $4.5 billion in fines for the Deepwater Horizon disaster, which killed 11 workers and caused the worst offshore oil spill in US history.

BP will pay $4 billion in installments over five years as part of its resolution with the Department of Justice. The settlement with the DOJ includes $1.256 billion in criminal fines, which supplant Pfizer’s $1.195 billion settlement in 2009 to become the largest such levy in US history.

BP will pay another $525 million in installments over three years to the US Securities and Exchange Commission.

The company agreed to plead guilty to 11 felony counts of misconduct or neglect relating to the loss of 11 lives; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress.

US attorney general Eric Holder said the settlement did not end the criminal investigation of the 2010 Gulf oil spill, Reuters reported. The British-based energy company still faces other, potentially much larger penalties, such as fines levied under the Clean Water Act.

BP said in a statement that it is “prepared to vigorously defend itself against remaining civil claims and to contest allegations of gross negligence in those cases.”

The company has already paid out billions related to the Deepwater Horizon disaster, which released 4.9 million barrels of oil from BP’s Macondo well before it was capped in July 2010.

In March, BP announced it had reached a $7.8 billion settlement proposal with the individual and business plaintiffs represented by the Plaintiffs’ Steering Committee (PSC), to resolve economic loss and medical claims stemming from the Deepwater Horizon accident and oil spill.

As of the end of September 2012, BP’s financial statement recorded a charge taken against pre-tax income related to the rig explosion and oil spill of $38.1 billion. The charge includes the $525 million paid to the SEC. The resolution with the DOJ is expected to add $3.85 billion to the $38.1 billion charge, BP said.

The DOJ’s first criminal charges related to the Gulf oil spill date back to April of this year. A former BP engineer was arrested and charged with two counts of obstruction of justice for allegedly destroying evidence.

Last month, the US Coast Guard confirmed that oil from a sheen spotted on the Gulf of Mexico near the site of the sunken Deepwater Horizon offshore rig matches samples from BP’s Macondo well. The Coast Guard notified BP and Transocean that either party or both may be held accountable for any cost associated with operations related to the sheen. The sheen is thought to be from the wreckage, as the well was capped with cement in September 2010.

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