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BP Will Pay $4.5 Billion to Settle Deepwater Horizon Criminal Charges

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In an historic settlement announced Nov. 15, BP agreed to plead guilty to felony manslaughter, environmental crimes and obstruction of justice and to pay more than $4 billion in criminal fines and penalties for its conduct leading to the devastating Deepwater Horizon disaster in 2010.

The settlement, the largest of its kind in U.S. history, should give the cleanup and restoration effort in the Gulf of Mexico a boost: A significant portion of the fines will go directly toward Gulf restoration and cleanup, Justice Dept. officials said at a Nov. 15 press conference in New Orleans.

According to officials, $2.4 billion of the $4 billion to settle the DOJ criminal claims is expected to head to Gulf Coast states. Half of that amount will go toward protecting and preserving coastal environments in Florida, Alabama, Mississippi and Texas. The other $1.2 billion will go toward coastal restoration efforts in Louisiana.

In New Orleans, Attorney General Eric Holder said that federal officials used the RESTORE Act, signed into law by President Obama this summer, as a model for financial distribution. Under the RESTORE Act, 80% of the Clean Water Act civil penalties will go toward Gulf Coast restoration.

“We specifically structured this resolution to ensure that more than half of the proceeds directly benefit the Gulf Coast region so that residents can continue to recover and rebuild,” Holder said.  

Under the settlement, BP also agreed to pay $525 million to the Securities and Exchange Commission for misleading stockholders about the extent of the damage from the spill.

Eleven people died as a result of the April 20, 2010 explosion at the Macondo well site, and the subsequent oil spill is considered the worst in the nation’s history.

As part of the settlement, BP will plead guilty to 11 felony counts relating to the deaths of 11 people; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treat Act; and one felony county for lying to Congress about the extent of the spill and the damage it caused.

“The explosion of the rig was a disaster that resulted from BP’s culture of privilege and profit over prudence,” said Assistant Attorney General Lanny A. Breuer of the Justice Dept.’s criminal division.

In addition to the resolution of charges against BP, Justice Dept. officials announced that a grand jury had indicted three individuals with criminal charges.

The two highest-ranking BP supervisors onboard the Deepwater Horizon on the night of the explosion face 23 counts of alleged violations of federal involuntary manslaughter and seaman’s manslaughter laws as well as the Clean Water Act.

David I. Rainey, of Houston, a former BP executive who served as a Deputy Incident Commander and BP’s second-highest ranking representative at the Unified Command during the spill response—is charged with obstruction of Congress and making false statements to law enforcement officials.

Holder noted that the criminal investigation continues, and that Justice Dept. officials are preparing for the February 2013 civil trial, where Clean Water Act penalties would apply. If the court finds BP to be “grossly negligent,” the firm could be required to pay an additional $21 billion in Clean Water Act penalties.

In a statement, Bob Dudley, BP’s Group Chief Executive, said, “We apologize for our role in the accident, and as [the] resolution with the U.S. government further reflects, we have accepted responsibility for our actions.” But BP also said it planned to “vigorously” defend itself against pending civil claims.

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