Oil giant BP has entered a guilty plea to criminal charges arising from the catastrophic 2010 Gulf of Mexico oil spill and the deal requires the company to pay a fine of record magnitude.
The agreement settles all federal criminal charges against the company arising from both environmental and securities laws.
“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 officer, said in a statement released this morning. “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 London-based company, which is the fourth-largest corporation and third-largest energy enterprise in the world, will pay about $4.5 billion in fines and fees.
According to the BP statement, $4 billion of that money will go to the U.S. Department of Justice and other public and private agencies, while $525 million will be paid to the Securities and Exchange Commission to settle allegations that the company committed criminal violations of federal securities laws.
The fines and fees will be paid over several years.
BP said that the plea deal will have no effect on its determination to defend against civil claims arising from the Deepwater Horizon incident that are still outstanding.
Nevertheless, Adam Babich, a professor of law at Tulane University who specializes in environmental law matters, said that he believes the plea deal will make it more likely that BP will end up paying Clean Water Act civil penalties.
“I think as a practical matter, nobody wants to try a civil case having already been convicted or plead guilty to a related criminal matter,” Babich said. “In the real world, it increases the incentive to settle and increases the risk of trial. I don’t think BP has got much of an argument that they didn’t violate the Clean Water Act. Pretty much everyone knows that anyway, in terms of the civil case, and the question is what is an appropriate penalty.”
BP’s statement also indicated that the company was not admitting liability for damages to natural resources in the Gulf region.
Babich said that here, too, the guilty pleas will make it more likely that the company will end up paying such damages.
“I don’t think anyone who knows about this stuff would take seriously an argument that they are not liable for natural resources damages,” he said. “We know there’s going to be some liability. The real question is, what is the amount of those natural resources damages?”
The company agreed to plead guilty to one misdemeanor violation of the Clean Water Act, one misdemeanor violation of the Migratory Bird Treaty Act, one felony count of obstruction of Congress, and 11 felony manslaughter counts.
In addition to paying the fines, BP will serve five years of probation. Attorney general Eric Holder said at a news conference today that the company also agreed to hire a monitor to oversee its Gulf of Mexico deep-water drilling operations and an independent auditor to assure compliance with the plea agreement.
Of the total proceeds to be paid by BP, $2.4 billion will go to the National Fish & Wildlife Foundation. The National Academy of Sciences will receive $350 million to advance research on oil spill prevention and response technology, while the remaining $1.26 billion will be considered a criminal fine. More than $1 billion of those funds will go to the U.S. Coast Guard’s trust fund to pay for oil spill cleanups, according to a statement posted on the U.S. Department of Justice website.
“This marks both the single largest criminal fine – more than $1.25 billion – and the single largest total criminal resolution – $4 billion – in the history of the United States,” attorney general Eric Holder said at a press conference in New Orleans.
The 2010 accident in the Gulf of Mexico killed 11 people and injured 17 others. It was the largest marine oil spill event in history, causing the release of as many as 4.9 million barrels of oil into an area near the Mississippi River delta.
Two BP employees were separately indicted Thursday for felonies relating to the deaths, while a third was indicted for obstruction of Congress and lying to law enforcement officers.
Robert M. Kaluza, 62, and Donald J. Vidrine, 65, are charged with 11 violations of the federal negligent homicide statute, 11 violations of a federal statute relating to the death of seamen, and one violation of the Clean Water Act. The men, who were BP’s highest-ranking officials aboard the Deepwater Horizon drilling rig on the day it exploded, could face a maximum sentence of 199 years in a federal penitentiary if convicted on all counts.
David I. Rainey, 58, is a former BP executive who was the company’s second highest-ranking officer present during the response to the oil spill. He could face 10 years in federal prison if convicted on both counts of the indictment against him.
The U.S. government’s civil case under the Clean Water Act is scheduled to begin in February.