BP to Pay Largest Fine in U.S. History, Admit Guilt in Gulf Oil Spill Settlement
Two years after a rig operated by British Petroleum exploded, spilling oil into the Gulf of Mexico, the company agreed to plead guilty to felony charges and is expected to pay $4.5 billion in fines. Jeffrey Brown talks to ProPublica's Abrahm Lustgarten and John Young, president of Jefferson Parish, La., for their reactions.
JEFFREY BROWN: And we turn to a major development in a story that grabbed the nation's attention for months in 2010, as oil giant BP reached a settlement today in one part of its ongoing dispute with the federal government over the GulfCoast spill.
It's been 2.5 years since the record oil spill that fouled the Gulf of Mexico for months and soiled miles of marshes and beaches. Today, BP agreed to pay $4.5 billion in a settlement of criminal charges brought by the U.S. government.
U.S. Attorney General Eric Holder announced the deal in New Orleans.
ATTORNEY GENERAL ERIC HOLDER: I hope that this sends a clear message to those who would engage in this kind of reckless and wanton conduct that there will be a significant penalty to pay and that individuals in companies who are engaged in these kinds of activities will themselves be held responsible. This is simply not a corporate plea. Individuals -- individuals have been charged.
JEFFREY BROWN: Under the settlement, BP will pay $1.25 billion in fines, the largest criminal penalty in U.S. history.
Another $2.4 billion will go for wildlife and coastal restoration. And the oil company will pay $500 million for misleading investors by underestimating the size of the spill. BP also agreed to plead guilty to manslaughter charges for the 11 workers who died when the Deepwater Horizon rig exploded in April of 2010.
Assistant Attorney General Lanny Breuer:
LANNY BREUER, Department of Justice Criminal Division: Perhaps the greatest tragedy is that the deaths of the 11 men on board the Deepwater Horizon could have been avoided.
We hope that today's acknowledgement by BP of its misconduct through its agreement to plead guilty to 11 counts of felony manslaughter brings some measure of justice to the family members of the people who died on the rig.
JEFFREY BROWN: Breuer said the criminal investigation continues. And two BP well site leaders were indicted on charges of negligence leading up to the explosion. A separate indictment charged BP vice president David Rainey with obstructing Congress and lying about how he calculated the rate of the spill.
BP executives didn't appear publicly today, but the company chairman said the settlement was in the best interest of BP and its stockholders.
Chief executive Bob Dudley issued a statement, saying: "We apologize for our role in the accident, and as today's resolution with the U.S. government further reflects, we have accepted responsibility for our actions."
BP already agreed last March to pay an estimated $7.8 billion for property, economic and medical damages to some 100,000 individuals and businesses. A federal judge is still reviewing that agreement.
And the company is facing other civil charges, which Attorney General Holder emphasized today will continue. The largest of those involve violations of the federal Clean Water Act and could end up in fines totaling $21 billion.
And, for more, we're joined by John Young, president of Jefferson Parish, Louisiana, an area seriously impacted by the spill, and Abrahm Lustgarten, a reporter at ProPublica and author of "Run to Failure: BP and the Making of the Deepwater Horizon Disaster."
We asked both the Department of Justice and BP to join us. They declined our invitation.
So, John Young, I would like to start with you. An initial reaction to today's settlement?
JOHN YOUNG, Jefferson Parish, La.: Well, it's the first major step, and let's not forget the 11 workers who lost their lives and their family members who lost loved ones.
But the fact that it's the largest criminal fine in U.S. history I think is appropriate, in light of the fact that the BP oil disaster was the largest environmental disaster in U.S. history.
But, again, it's just a first step. There are civil awards and damages that need to be assessed against BP, so that we're made whole down here in Louisiana and in the entire GulfCoast.
JEFFREY BROWN: All right, we will come back to that.
But let me ask Abrahm Lustgarten about the significant of the criminal indictments in particular of the company, as well as several individuals.
ABRAHM LUSTGARTEN, ProPublica: Yes, I mean, I have to agree. I think this is a very significant step.
And most significant, in my opinion, is the indictment of three senior BP managers. BP's had a number of accidents in the past. And in both the Gulf disaster and those past accidents, what you hadn't seen until now is an individual held responsible. And that's something that can help create a culture of responsibility and consequence inside the organization.
So, without a doubt, today's indictments of those three individuals sends a message, not only to the public, but I think to BP's employees that they are responsible for the decisions that they make in BP's operations around the world.
JEFFREY BROWN: Let me just stay with you for a moment. How do you see the calculation of the company in this? Because they made clear in their statement that they wanted to end some of the uncertainty surrounding the litigation, but they also said that they intend to continue fighting on some of these -- the other civil charges.
ABRAHM LUSTGARTEN: Sure.
Well, naturally, BP wanted to put this behind them, and today's settlement is a huge step in that direction. I had heard from sources for a long time that criminal charges, the prosecution was held up by BP's desire to reach some kind of global settlement that could essentially erase as many of these issues off the board in one fell swoop as possible.
This is something they have done in the past. After they had an oil spill in 2006 in Alaska and a refinery explosion in 2005 in Texas City, in which 15 workers died, they saw a global settlement in those cases, announced a major press release that kind of took care of everything all at once. It's the same now.
Obviously, there are issues that remain and very costly issues, but this is -- it seems just, but it's also a huge accomplishment for BP today to put this behind it.
JEFFREY BROWN: John Young, what is your sense of the company's calculation here? And what has been your dealings, your sense of the company's behavior in the couple years afterwards?
JOHN YOUNG: Well, I have been very -- we have been very dissatisfied with the company's behavior.
BP runs commercials saying they're going to make it right or they have made it right, but they have not done that. We continue to fight with BP. For instance, Hurricane Isaac drew up a lot of oil that's been unaccounted for. And we're now having tar balls on the beaches of Grand Isle and Elmer's Island. And we're fighting with BP today and we're fighting with the Coast Guard to have the Coast Guard put pressure on BP to do what it's supposed to do under the Clean Water Act and under the NRDA act.
So we continue to fight with BP. And I think what the other guests said is, it's going to hold BP accountable. But it is certainly going to send a message, not only to BP, which has a history of this type of reckless and wanton behavior, but also to other corporations.
And I think it's important to note, as the assistance U.S. attorney general said in his opening comments, that this action didn't have to happen. But for their reckless and wanton negligence, this action wouldn't have happened. You can have drilling in the Gulf of Mexico and you can have it done in a safe manner, but BP has a history of reckless and wanton actions.
And in this is what caused this disaster. And they really have a lot more responsibility as we move forward with the assessment of damages in terms of civil liability, not only for individuals, but for governments, for property damage, natural resource damages under NRDA and under the Clean Water through the Restore Act.
So this is far from over. It's a significant step. We want to compliment the Department of Justice, but again at the end of the day, this is just one significant step in a series of events that are going to have to come down and hold BP accountable for their actions.
JEFFREY BROWN: Well, let me ask Abrahm Lustgarten.
Tell us a little bit more about that next big step, especially the potential violations of the Clean Water Act. What has to be proven? What is the state of play on that?
ABRAHM LUSTGARTEN: Well, you will see those civil suits go to trial in February of 2013.
They have been delayed until now. The federal government and the states are both still suing the company, both for general environmental damages and damages under the Oil Pollution Control Act. One of the stipulations of the Oil Pollution Control Act is that the fine for the amount of oil spilled in the Gulf is dramatically higher if gross negligence has been proven.
And I think that that's what happened today. It's not entirely clear. But BP would pay as much as $4,300 per barrel of oil spilled. And this is part of what the information delivered to Congress during the spill about the rate of flow was so significant. So, what you will see now is going into this civil settlement.
BP again will likely try to obviously settle for as little as they possibly can. They will settle for some amount, I expect, ultimately. It could be as high as $17 billion to $22 billion, depending on the how the calculations are done.
JEFFREY BROWN: John, you started to allude to it, but I just want to ask you to expand a little bit, to update us on the situation there today. In what ways is your area and areas around you still feeling the lingering effects of all this?
JOHN YOUNG: Well, you know, the Louisiana coast is not like the Florida coast, so it's easy to clean up oil and beaches, but we have marshes, wetlands and estuaries.
We have still have a lot of oil in our marshes, wetlands and estuaries. And, again, as I said, we had a U.S. Senate hearing down here about a month-and-a-half ago. And the Coast Guard admitted they can't account for a lot of oil. And that oil has been submerged in the Gulf because of the dispersants that were used. And then when Hurricane Isaac came around, it churned up that.
And now we're having oil on our beaches. And BP before Hurricane Isaac was wanting to sign out and say everything was fine. So, certainly, we continue to fight again with BP. We continue to press the Coast Guard to make sure that BP -- BP wants to say that their responsibility is over, they want to walk away from this.
But it's far from over in terms of not only cleanup, but in terms of assessing what the long-term effects are going to be as a result of this oil disaster and how it's going to affect our GulfCoast.
JEFFREY BROWN: And let me ask Mr. Lustgarten briefly here at the end.
There are other companies that were involved from the beginning. Nothing today affects them, right? Where does that stand?
ABRAHM LUSTGARTEN: No, nothing that's happened today has changed that interaction.
The courts have expressed an opinion so far tentatively that BP is the party that should be held primarily responsible for what happened in the Gulf. There are lawsuits against those other companies and disputes between them. They're going to take a long time to iron themselves out in the courts.
But I think that today's settlement, combined with the previous opinions expressed by the courts in Louisiana, make it pretty clear that BP is the primary party of responsibility.
JEFFREY BROWN: All right, Abrahm Lustgarten, John Young, thank you both.
ABRAHM LUSTGARTEN: Thanks.
JOHN YOUNG: Thank you very much. Have a good evening.
RAY SUAREZ: Find an updated timeline with all of our reporting starting in April 2010. You can still use our widget to calculate how much oil spilled into the Gulf.