US judge okays BP plea, RM12.3b penalty in oil spill

BP has 60 days to send a remedial plan to the Department of Justice and the Environmental Protection Agency. – Reuters picBP has 60 days to send a remedial plan to the Department of Justice and the Environmental Protection Agency. – Reuters pic

NEW YORK, Jan 30 – A US judge accepted an agreement by BP Plc to plead guilty for its role in the Deepwater Horizon disaster and pay a record US$4 billion (RM12.3 billion) in criminal penalties for the worst offshore oil spill in US history.

The company said it pleaded guilty to 11 felony counts related to workers’ deaths, a felony related to obstruction of Congress and two misdemeanours. It faces five years’ probation and the imposition of two monitors who will oversee its safety and ethics for the next four years.

After the April 2010 explosion on the Transocean rig in the Gulf of Mexico, 4.9 million barrels of oil spewed into the Gulf over 87 days. Shorelines from Texas to Florida were fouled before responders could cap the 1.6km-deep well.

BP has struggled with political, financial and legal fallout ever since. Even after settling federal criminal charges, the company faces civil penalties of up to US$21 billion and separate state claims due to be heard at a trial starting in New Orleans on Feb 25.

Alabama’s attorney general, Luther Strange, said the BP sentence was welcome for setting some federal money aside to restore the Gulf coast, but he planned to press ahead with his state’s own claims for economic and natural resource damages.

“I look forward to presenting Alabama’s case that BP was grossly negligent when we have our day in court next month,” Strange said in a statement.

Transocean, owner of the doomed Deepwater Horizon rig, agreed this month to pay US$1.4 billion to settle US government charges over the disaster.

Halliburton Co, the oilfield services company that performed cementing work on the Macondo well and is being sued in the civil litigation along with BP, said on Friday it was working on its defence ahead of the trial next month.

BP, with its federal plea agreement now approved, has 60 days to send a remedial plan to the Department of Justice (DOJ) and the Environmental Protection Agency laying out how it plans to meet all its stipulations. The plan could go back and forth among the three parties before it is agreed to by all sides.

The judge who imposed the sentence on BP, US District Judge Sarah Vance of the Eastern District of Louisiana, found the fines far exceeded any in US history, and were structured so BP will feel the “full brunt” of them, the DOJ said.

BP’s total of US$4.5 billion in federal penalties includes US$2.4 billion for the National Fish and Wildlife Foundation, a US$1.256 billion criminal fine and US$350 million for the National Academy of Sciences—all payable over five years—and a US$525 million civil penalty to the Securities and Exchange Commission.

“Our guilty plea makes clear, BP understands and acknowledges its role in that tragedy, and we apologize - BP apologizes - to all those injured and especially to the families of the lost loved ones,” Luke Keller, a vice president of BP America Inc, told the court, according to a BP statement.

BP now aims to settle the civil claims, for which negligence is a key issue. A gross negligence finding could quadruple civil damages owed by BP under the Clean Water Act to US$21 billion.

The British company has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost US$7.8 billion to resolve. The litigation was brought by more than 100,000 individuals and businesses claiming economic and medical damages from the spill.

BP believes it can handle it all after selling off US$35 billion worth of assets. As of November, when it agreed to the plea, BP had paid US$23 billion in clean-up costs and claims.

The US government banned BP from new federal contracts over its “lack of business integrity” in the spill, which could threaten its role as a leading US offshore oil and gas producer.

But BP said yesterday that its mandatory debarment under the settlement did not affect any existing contracts or leases.

“The government has awarded BP over 50 federal leases since the Deepwater Horizon accident,” said BP, which is the largest investor and deepwater leaseholder in the Gulf of Mexico with interests in 700 blocks and seven rigs now operating there. – Reuters


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