Offshore staff
LONDON– BP has reached agreement with the US government, subject to court approval, to resolve all federal criminal charges and all claims by the Securities and Exchange Commission (SEC) against the company from the Deepwater Horizon accident, oil spill, and response.
In eliminating the possibility of any further federal criminal charges against the company based on the accident, BP has taken another significant step forward in removing legal uncertainty and can now focus more fully on defending itself against all remaining civil claims.
As part of the resolution, BP has agreed to plead guilty to 11 felony counts of misconduct or neglect of ships officers relating to the loss of 11 lives; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress. This resolution is subject to U.S. federal court approval.
Thirteen 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 theDeepwater Horizon. The company acknowledged this misinterpretation more than two years ago when it released its internal investigation report.
The company says today’s agreement is consistent with its 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, BP will pay $4 billion, including $1.256 billion in criminal fines, in installments over five years. The company has also agreed to a five-year probation term.
Under the resolution with the Department of Justice, $2.394 billion will be paid to the National Fish & Wildlife Foundation over a five-year period. In addition, $350 million will be paid to the National Academy of Sciences over a five-year period.
BP has also agreed to take additional actions, enforceable by the court, to further enhance the safety ofdrilling operations in the Gulf of Mexico. These requirements relate to BP’s risk management processes, such as third-party auditing and verification, training, and well control equipment and processes such as BOPs and cementing. In addition, BP has agreed to several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.
The resolution also provides for the appointment of two monitors, both with four-year terms. A process safety monitor will review, evaluate, and provide recommendations for the improvement of the company’s process safety and risk management procedures concerning deepwater drilling in the Gulf of Mexico. An ethics monitor will review and provide recommendations for the improvement of the company’s code of conduct and its implementation and enforcement.
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. The company says it will continue to work cooperatively with the debarment authority.
In its resolution with the SEC, BP has resolved the commission’sDeepwater Horizon-related claims against the company under Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and the associated rules. BP has agreed to a civil penalty of $525 million, payable in three installments over a three-year period, and has consented to the entry of an injunction prohibiting it from violating certain US securities laws and regulations.
The SEC’s claims are premised on oil flow rate estimates contained in three reports provided by BP to the SEC during a one-week period (on April 29 and 30 and May 4, 2010), within the first 14 days after the accident. This resolution is subject to U.S. federal court approval.
The aggregate amount of the resolution is approximately $4.5 billion, with payments scheduled over a six-year period.
“All of us at BP deeply regret thetragic 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 CEO. “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 US government further reflects, we have accepted responsibility for our actions.”
BP says it will continue to vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases. The remaining claims include: federal civil claims, including those arising under the Clean Water Act; federal and state Natural Resource Damages claims; private civil claims pending in MDL 2179 that were not covered by the settlement with the Plaintiffs’ Steering Committee; private securities claims pending in MDL 2185; state economic loss claims; and miscellaneous private civil claims pending in other federal and state courts. BP says today’s agreement is consistent with itslegal position that it was not grossly negligent. All the pleas related to the accident itself are based on no more than negligent conduct.
11/15/2012
