BP, US reach $4.5B settlement for Gulf spill

BP has reached a $4.5 billion settlement with the U.S. government to resolve criminal and securities claims over the 2010 well blowout and explosion that claimed 11 lives and touched off what became the biggest spill in U.S. history.

The British oil giant will pay $4 billion in fines and other payments, the largest criminal penalty in U.S. history, to resolve claims with the Justice Department over the accident that badly harmed Gulf ecosystems and reshaped U.S. offshore drilling policy. The Justice Department's civil case against BP over the spill, however, remains ongoing.

The company will pay $525 million to the Securities and Exchange Commission to resolve separate claims. 

BP also agreed to plead guilty to 11 counts of felony manslaughter and several other charges, the Justice Department announced.

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“There can be no question that this historic announcement represents a critical step forward and underscores the Justice Department’s determination to stand with Gulf Coast communities,” said Attorney General Eric Holder, noting that the deal includes $2.4 billion for Gulf Coast environmental restoration and conservation efforts.

Assistant Attorney General Lanny Breuer said that he hopes BP’s guilty plea to the manslaughter charges “brings some measure of justice to the family members of the people who died onboard the rig.”

Beyond BP’s criminal plea, the Justice Department announced that it is charging the two highest-ranking BP supervisors on the Deepwater Horizon rig with multiple counts of manslaughter.

BP chief executive Bob Dudley said the company accepts responsibility for its actions. “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,” he said in a statement.

The April 2010 blowout of the Deepwater Horizon rig altered the politics and regulation of offshore drilling in the U.S.

The White House, after the spill, backed off plans to allow oil-and-gas leasing off the Atlantic Coast, where formal bans expired in 2008.

It also led to a temporary freeze on deepwater drilling in the Gulf of Mexico that faced strong GOP and industry criticism.


The Interior Department also overhauled its long-troubled offshore drilling branch after the spill and toughened safety regulations.

In addition to the plea on manslaughter charges, BP is also pleading guilty to a felony charge of obstruction of Congress over what BP told lawmakers about how much oil was gushing from the blown-out Macondo well, which took 87 days to bring under control.

Other pleas include one misdemeanor count each under the Clean Water Act and the Migratory Bird Treaty Act.

Rep. Edward Markey (Mass.), a senior Democrat who during the spill expressed concern that the company was low-balling the amount of oil coming from the blown-out well, called the fines and penalties “appropriate.”

“People died, BP lied to Congress, and millions of barrels of oil poured into the Gulf. This steep cost to BP will provide the Gulf Coast some of the funds needed to restore the region, and will hopefully deliver some comfort and closure to the families and businesses affected by the spill,” Markey said.

The Justice Department on Thursday also announced the indictment of a former BP executive, David Rainey, for allegedly obstructing a congressional investigation and making false statements to law enforcement officials.

“The indictment alleges that Rainey, on behalf of BP, intentionally underestimated the amount of oil flowing from the Macondo well,” Breuer said.

The destroyed Macondo well ultimately spewed an estimated 4.9 million barrels of oil.

The $4 billion criminal settlement includes a nearly $1.3 billion fine, $2.4 billion to the National Fish and Wildlife Foundation and further steps to boost the safety of its Gulf of Mexico drilling operations, among other provisions.

The $4 billion will be paid out over five years, while the SEC payments will unspool over three years, BP said.

But the criminal settlement won’t be the end of the legal road for BP over the months-long spill.


It won’t cover federal civil claims, including Clean Water Act claims, federal and state Natural Resource Damages claims, state economic loss claims or private civil claims outside the broad, multibillion-dollar settlement agreement with private plaintiffs announced in March, BP said Thursday.

Holder emphasized that the Obama administration’s actions against BP are “far from over.”

He noted BP could face billions of dollars in additional fines from an ongoing civil case in which the government is seeking to show that BP was “grossly negligent” in causing the spill.

“In that lawsuit, we are seeking civil penalties and a judgment that BP and others are liable for removal costs and natural resource damages – exposure that could amount to billions of dollars,” Holder said during a press conference announcing the criminal settlement in New Orleans.

But BP Chairman Carl-Henric Svanberg said Thursday that BP will “vigorously defend the company against the remaining civil claims.”

Multiple probes of the disaster have shed light on a number of missteps by BP, Deepwater Horizon rig owner Transocean Ltd. and Halliburton, the oilfield services company that handled the cementing of BP’s ill-fated Macondo well.



“Better management by BP, Halliburton and Transocean would almost certainly have prevented the blowout by improving the ability of individuals involved to identify the risks they faced, and to properly evaluate, communicate and address them,” an outside commission established by the White House said in an early 2011 report. 



A separate joint probe by the Interior Department and U.S. Coast Guard faulted also all three companies in a 2011 report. It included tough words for BP, noting “cost or time saving decisions without considering contingencies and mitigation were contributing causes of the Macondo blowout.”

BP, in announcing the settlement Thursday, also sought to ensure blame is shared with other companies involved in the accident.

“Today’s agreement is consistent with BP’s position in ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations,” the company said.

—This report was originally posted at 11:40 a.m. and last updated 4:34 p.m.