BP reached an agreement with the U.S. government to plead guilty to federal felony charges and pay $4.5 billion in penalties for its role in the Deepwater Horizon disaster that killed 11 workers and caused the worst oil spill in U.S. history.
BP will pay $4 billion in installments over five years, including $1.26 billion in criminal fees, as part of its resolution of all claims with the Department of Justice. BP will pay another $525 million in installments over three years to the U.S. Securities and Exchange Commission.
BP agreed to plead guilty to 11 felony counts of misconduct or neglect of ship 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. The settlement is subject to U.S. federal court approval.
BP isn't free and clear, just yet. The criminal settlement doesn't cover what could be the largest penalty: up to $21 billion in Clean Water Act violations (if the company is found grossly negligent).
A clause added to the Clean Water Act after the Exxon Valdez spill allows the government to pursue civil penalties for every drop of oil spilled in U.S. federal waters. The clause, as I've reported before, is special because it's not limited by a finite cap, unlike the Oil Pollution Act of 1990, which caps economic damages at $75 million.
Fines begin a $1,110 per barrel and can jump to $4,300 per barrel if the EPA decides--and a federal court agrees--the spill was caused by gross negligence. By the time the gushing wellhead of BP's Macondo well was capped in July 2010, 4.9 million barrels of crude oil had been released. That means BP could face fines up to $21 billion.
The British-based energy company said in a statement today it's "prepared to vigorously defend itself against remaining civil claims and to contest allegations of gross negligence in those cases."
Photo: Flickr user Deepwater Horizon Response