BP settles first phase of penalties for the 2010 Gulf Oil spill

One chapter of the Deepwater Horizon oil spill, which occurred back on April 20, 2010, has been closed, but not everybody is satisfied with the resolution.

On January 29th, U.S. District Judge Sarah Vance approved a November 2012 plea bargain agreement between the British oil giant BP p.l.c. and the United States Department of Justice to settle a U.S. government’s criminal probe. In the agreement, BP agreed to plead guilty to 14 counts of criminal acts and pay a record $4 billion in fines—BP still faces a civil trial with claims that can sum to billions of dollars. Under the terms of the criminal plea, BP will be on probation for five years and can pay the fines and penalties within that period.

It is important to remember the breadth of the disaster riddled BP-operated drilling rig. The mile-deep Macondo well caused an explosion which killed 11 workers more than 50 miles off the coast of Louisiana southeast of Venice and released more than 200 million gallons of crude into the Gulf of Mexico and surrounding wetlands. It also greatly affected the local communities, beaches, economies and killed birds, fish and other wildlife.

In addition, the incident led President Obama to impose a moratorium on deep- water drilling and later forced BP to agree to spend at least $7.8 billion to settle lawsuits over the incident.

Some of the specific crimes agreed to in the plea deal range from felony manslaughter to a misdemeanor plea under the Clean Water Act to a misdemeanor count under the Migratory Bird Treaty Act to obstruction of Congress.

In fact, BP employees deliberately provided false data to Congress and the Coast Guard on the amount of oil being released from the well. The company stated publicly that 5,000 barrels of oil were being released daily. However, at the same time internal estimates showed as much as 100,000 barrels were being spewed daily into the Gulf.

The Clean Water Act plea prohibits new contracts with the United States government, even though it was the Department of Defense’s top energy supplier in 2011.

Many injured rig workers and family members of those who perished do not believe the settlement is adequate for the crimes that were committed. There is the assertion that BP tried to cut costs while putting the safety of the workers at risk and the agreed upon punishment does not meet the negligent actions. Notwithstanding the record $4 billion fine, some see it as lenient—especially since BP’s estimated revenue for 2012 was $353.6 billion, according to Bloomberg.

Despite the calls to reject the deal, Judge Vance stated she was obliged to the agreement that was previously settled. Federal law does not allow a judge to dictate the terms of such an agreement. She can only approve it, or reject it, and a rejection would allow BP to change its plea to not guilty and face a jury trial.

According to a BP statement, Luke Keller, a vice president of BP America stated, “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,” he said.

More than half of the financial penalty, $2.4 billion, will be transferred to the National Fish and Wildlife Foundation (NFWF), a congressionally chartered non-profit organization. Louisiana will receive about half of the payments and the balance will be divided according to a formula among Alabama, Florida, Mississippi and Texas. The chairman of the board of NFWF Don McGrath said after the decision, “Our primary responsibility is to ensure these funds are applied to projects that demonstrably benefit the Gulf’s natural resources. We are going to be diligent in making certain the funds are used effectively, efficiently and transparently.”

This chapter transitions to the next, the civil trial, which will be structured in two sections. The first section will start at the end of February and focus on how the incident occurred and the second phase will focus on many aspects of the response to the incident.

On the heels of Judge Vance’s decision and in preparation  for the upcoming civil trial, the Department of Justice has now requested for BP to share its records, and flow-rate data, detailing how it formulated their misleading figures to Congress and the Coast Guard in regards to the amount of oil being spewed out of the blown well. DOJ hopes to prove gross negligence during the civil trial to increase its fines from the Clean Water Act.

Under the Clean Water Act now, the parties responsible for the well blowout can be subject to a $1,000 for each barrel of oil that flowed into the Gulf. However, if gross negligence is proved during the civil trial, the penalty can escalate greatly to $4,300 per barrel, obviously raising the overall fine by billions of dollars.

The RESTORE Act, signed by President Obama in July 2012, directs 80 percent of any Clean Water Act penalties to the coastal areas directly impacted by the spill.

The senior senator from Louisiana Mary Landrieu (D) summed up the current proceedings stating, “The approval of BP’s manslaughter plea and an unprecedented $4 billion in criminal penalties is a tremendous step toward justice for the men who lost their lives in the Deepwater Horizon explosion and the entire Gulf Coast.” Senator Landrieu continued, “We must continue to hold BP accountable for what I believe was gross negligence leading up to the Deepwater Horizon disaster, especially as February’s civil trial approaches.”