Environmental Protection

BP Settles Criminal Claims for $4 Billion

Subject to court approval, the company's agreement will settle all criminal claims from the Deepwater Horizon explosion and oil spill with the U.S. Department of Justice and all securities claims with the Securities and Exchange Commission.

BP announced Nov. 15 it has reached an agreement with the federal government, subject to court approval, and will pay $4 billion over five years to resolve all federal criminal charges and $525 million over three years to resolve all claims by the Securities and Exchange Commission, all of them arising from the Deepwater Horizon explosion, oil spill, and response.

The company has agreed to plead guilty to 11 felony counts of Misconduct or Neglect of Ships Officers relating to the 11 workers who died in the April 2010 explosion; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and a felony count of obstruction of Congress that is related to testimony about how much oil was leaking per day from the wellhead during the three months before the well was successfully capped.

"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 Bob Dudley, BP's group chief executive. "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."

The agreement does not resolve civil claims, and BP's announcement said the company "is prepared to vigorously defend itself against remaining civil claims." BP will increase its existing $38.1 billion charge against income by about $3.85 billion, the announcement says.

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

The company said 13 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. BP acknowledged this misinterpretation more than two years ago when it released its internal investigation report. Today's agreement is consistent with BP's position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations. The remaining criminal count pertains to two BP communications made to a member of Congress during the spill response about flow rate estimates. 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 agreement with DOJ specifies that $2.394 billion will be paid to the National Fish & Wildlife Foundation and $350 million will be paid to the National Academy of Sciences.

"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," its announcement states. It says the SEC claims are premised on oil flow rate estimates contained in three reports provided by BP to the SEC from April 29 to May 4, 2010, within the first 14 days after the accident.

"Since the spill, we have worked hard to rebuild confidence in the company," said Dudley. "We take seriously not only our commitment to safety and operational excellence but also our communications with stakeholders, including the public, the government, and our investors." Svanberg said, "We are committed to building a safer, stronger BP. This work did not begin with the Deepwater Horizon accident and will not end with today's resolution."

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