November 15, 2012

BP agrees to pay $4.5B for Gulf spill; three employees charged

The settlement and indictments came 2½ years after a rig explosion that killed 11 workers and set off the biggest offshore oil spill in U.S. history.

The Associated Press

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FILE - In this April 21, 2010 file image provided by the U.S. Coast Guard, fire boat response crews battle the blazing remnants of the off shore oil rig Deepwater Horizon. British oil company BP said Thursday Nov. 15, 2012 it is in advanced talks with U.S. agencies about settling criminal and other claims from the Gulf of Mexico well blowout two years ago. In a statement, BP said "no final agreement has yet been reached" and that any such deal would still be subject to court approvals. (AP Photo/US Coast Guard, File)

AP

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FILE - In this Jan. 10, 2011 photo, claimants listen to BP oil spill fund administrator Kenneth Feinberg, center, as he speaks at a town hall meeting in Grand Isle, La. In court filings late Monday, Oct. 22, 2012, the oil giant BP asked a federal judge to disregard objections from a fraction of claimants and give final approval to a proposed multibillion-dollar settlement for economic damages from the Gulf spill. (AP Photo/Patrick Semansky, File)

AP

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Also, a federal judge in New Orleans is deciding whether to approve an estimated $7.8 billion settlement between BP and more than 100,000 businesses and individuals who say they were harmed by the spill. They include fishermen, charter boat captains, restaurants, hotels and property owners.

Under the settlement with the U.S. government, BP will plead guilty to 11 felony counts of misconduct or neglect of a vessel's officers, one felony count of obstruction of Congress and one misdemeanor count each under the Migratory Bird Treaty Act and the Clean Water Act. The workers' deaths were prosecuted under a federal law that protects seamen.

The largest previous corporate criminal penalty assessed by the Justice Department was a $1.2 billion fine against drug maker Pfizer in 2009.

Greenpeace blasted the settlement as a slap on the wrist.

"This fine amounts to a rounding error for a corporation the size of BP," the environmental group said.

Nick McGregor, an oil analyst at Redmayne-Bentley Stockbrokers, said the settlement would be seen as "an expensive positive."

"This scale of bill is unpleasant," he said. But "the worst-case scenario for BP would be an Exxon Valdez-style decade of litigation. I think that is the outcome they are trying to avoid."

The Deepwater Horizon rig blew up 50 miles off Louisiana on April 20, 2010, in an explosion that investigators blamed on time-saving, cost-cutting decisions by BP and its drilling partners in cementing the well shaft.

Following several failed attempts that introduced the American public to such industry terms as "top kill" and "junk shot," BP finally capped the well on the sea floor after more than 85 days.

By then, the well had spewed an estimated 172 million gallons of crude into the Gulf, fouling marshes and beaches, killing wildlife and closing vast areas to fishing.

Nelda Winslette's grandson Adam Weise of Yorktown, Texas, was killed in the blast. She said somebody needs to be held accountable.

"It just bothers me so bad when I see the commercials on TV and they brag about how the Gulf is back, but they never say anything about the 11 lives that were lost. They want us to forget about it, but they don't know what they've done to the families that lost someone," she said.

Sherri Revette, who lost her husband of 26 years, Dewey Revette, of State Line, Miss., said the indictments against the employees brought mixed emotions.

"I'm saddened, but I'm also happy at the same time that they will be prosecuted. I feel for them, of course. You never know what impact your actions will have on others," she said.

Frank Parker, a shrimper from Biloxi, Miss., said: "I just hope the money gets down to the people who need it."

Scientists warn that the spill's full effect on the Gulf food chain may not be known for years. But they have reported oil-coated coral reefs that were dying, and fish have been showing up in nets with lesions and illnesses that biologists fear could be oil-related. Oil churned up by storms could be washing up for years.

The spill exposed lax government oversight and led to a temporary ban on deep-water drilling while officials and the industry studied the risks and worked to make it safer. BP's environmentally friendly image was tarnished, and CEO Tony Hayward stepped down after some gaffes that included lamenting at the height of the crisis: "I'd like my life back."

The cost of the spill far surpassed that of the Exxon Valdez disaster in 1989. Exxon ultimately settled with the government for $1 billion, which would be about $1.8 billion today.

The government and plaintiffs' attorneys have also sued Transocean Ltd., the rig's owner, and cement contractor Halliburton, but a string of pretrial rulings by a federal judge undermined BP's strategy of pinning blame on them.

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Additional Photos

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FILE - In this file photo made Oct. 25, 2007, the BP (British Petroleum) logo is seen at a gas station in Washington. British oil company BP said Thursday Nov. 15, 2012 it is in advanced talks with U.S. agencies about settling criminal and other claims from the Gulf of Mexico well blowout two years ago. In a statement, BP said "no final agreement has yet been reached" and that any such deal would still be subject to court approvals. (AP Photo/Charles Dharapak, File)

AP

  


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