BP Will Pay Record Settlement to Louisiana

The Justice Department has announced a $4.5 billion dollar settlement in the BP oil spill that includes a number of very interesting things. This includes criminal indictments against two BP workers.

Two BP employees have been indicted on manslaughter charges in the 2010 Gulf oil spill disaster.

The federal indictment unsealed Thursday in New Orleans names BP well site leaders Robert Kaluza and Donald Vidrine. The indictment claims they acted negligently in their supervision of key safety tests performed on the Deepwater Horizon drilling rig before an explosion killed 11 workers in April 2010.

The indictment says Kaluza and Vidrine failed to phone engineers onshore to alert them of problems in the drilling operation.

The charges come on the same day that BP announced that it has agreed to pay $4.5 billion in a settlement with the U.S. government to plead guilty to felony counts related to the deaths of 11 workers and lying to Congress.

Also Thursday, BP said it will pay $4.5 billion in a settlement with the U.S. government over the the spill.

BP has also pleaded guilty to other criminal charges.

BP will pay approximately $4.5 billion and plead guilty to criminal charges as part of a settlement with the U.S. government over the deadly Deepwater Horizon rig explosion and massive oil spill in the Gulf of Mexico in 2010, the London-based oil giant said Thursday.

The settlement total, to be paid out over five years, includes $1.25 billion in criminal fines — the largest such penalty ever.

In addition, a BP executive has been indicted on charges he lied to authorities about his work estimating the Gulf spill rate and two BP employees have been indicted on manslaughter charges, The Associated Press reported.

U.S. Attorney General Eric Holder and other federal officials were expected to comment on the wide-ranging settlement later Thursday at a news conference in New Orleans.

BP said it would plead guilty to 11 felony counts of misconduct or neglect relating to the death of 11 workers, 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 indictment is the one I find most interesting.

Separately, a federal indictment unsealed Thursday charges David Rainey, who was BP’s vice president of exploration for the Gulf of Mexico, on charges of obstruction of Congress and false statements, the AP reported. He is accused of lying to federal investigators when they asked him how he calculated a flow rate estimate for BP’s blown-out well in the days after the disaster.

This obstruction charge has to do with the way they calculated the gusher rate.  This is a separate settlement from the suit settled in March that had to do with individuals impacted by the oil spill. This is a huge settlement.  None of these fines will be tax deductible.

The day of reckoning comes more than two years after the nation’s worst offshore oil spill. The figure includes nearly $1.3 billion in criminal fines – the biggest criminal penalty in U.S. history – along with payments to certain government entities.

“We believe this resolution is in the best interest of BP and its shareholders,” said Carl-Henric Svanberg, BP chairman. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

The settlement, which is subject to approval by a federal judge, includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission. The SEC accused BP of misleading investors by lowballing the amount of crude spewing from the ruptured well.

London-based BP said in a statement that the settlement would not cover any civil penalties the U.S. government might seek under the Clean Water Act and other laws. Nor does it cover billions of dollars in claims brought by states, businesses and individuals, including fishermen, restaurants and property owners.

A federal judge in New Orleans is weighing a separate, proposed $7.8 billion settlement between BP and more than 100,000 businesses and individuals who say they were harmed by the spill.

This settlement ought to go a long way to boost the economy of coastal Louisiana and to restore the ecosystems.  It’s about time.   However, this doesn’t end things.

Stuart Smith, a Louisiana lawyer representing some of the businesses affected by the accident, told the BBC the deal was far from over.

“They have not settled with the state of Louisiana for the natural damages… they haven’t settled with Florida, Alabama [or] Mississippi yet.”

He added that there were other significant claims still to be settled, including offshore oil and gas industry damages as a result of the moratorium on deepwater drilling put in place after the accident, casino losses, fisheries, financial institutions and real estate developers.

“So I think they’re still looking at billions of dollars in exposure even with this settlement,” he said.

I hope the long term effects of the spill continue to siphon money from BP.  We have yet to see the biggest health effects and there are still many issues remaining at the bottom of the gulf impacting our wildlife and the entire set of plants and sealife that support the many many birds, animals, fish and reptiles that call the gulf home.  I still haven’t put a toe in the Gulf and I’m very cautious about eating Gulf Seafood.  This has really changed every one’s life down here and they should pay and pay and pay and pay …