Deepwater Horizon: BP reaches $4.5bn settlement with US
16 Nov 2012
London - BP is to pay fines of $4.5 billion and plead guilty to criminal charges in a deal with the US government to resolve all regulatory claims and charge relating to the Deepwater Horizon disaster. The agreement is, however, still subject to court approval.
To resolve criminal claims with the US government, BP is to pay $4 billion, including $1.256 billion in criminal fines, in instalments over five years, as well as a term of five years’ probation.
Around $2.4 billion of the fines will go to to the US national fish & wildlife foundation (NFWF), while another $350 million will be paid to the country’s national academy of sciences.
The company has also agreed to a civil penalty of $525 million to the the US SEC (securities exchange commission’s) relating to its oil flow rate estimates provided by BP to the SEC in the first 14 days after the accident.
BP must also take steps to enhance the safety of drilling operations in the Gulf of Mexico, via processes, such as third-party auditing and verification, training, and well-control equipment and processes such as blowout preventers and cementing. It will also advance new safer deepwater-drilling technologies.
A process safety monitor will review, evaluate and recommend improvements to BP’s process safety and risk management procedures in the Gulf of Mexico. An ethics monitor will review and provide recommendations for the improvement of BP’s Code of Conduct and its implementation and enforcement.
“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.”
For the settlement, BP agreed to plead guilty to offences relating to the loss of 11 lives and the environmental damage caused by the accident. This includes 13 criminal charges based on the “negligent misinterpretation” of the negative pressure test conducted on board the Deepwater Horizon.
Another criminal count pertains to two BP communications made to a member of the US congress during the spill response about flow rate estimates.
“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.”
BP said it would continue to “vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases.”
Remaining claims include: federal civil claims, including those arising under the Clean Water Act; federal and state Natural Resource Damages claims; private civil claims; state economic loss claims; and miscellaneous private civil claims pending in other federal and state courts.
BP emphasised that the agreement was consistent with its legal position “that it was not grossly negligent” and that “the pleas related to the accident itself are based on no more than negligent conduct.”
“From the outset, we made a commitment to clean up the spill and pay legitimate claims - and we’ve been fulfilling that commitment ever since,” said Dudley. “As we move forward, we are preparing to defend ourselves in court on the remaining claims. We are open to settlements, but only on reasonable terms.”
