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BP settles criminal charges for $4 billion in spill; supervisors indicted on manslaughter

By Steven Mufson,November 15, 2012

View Photo Gallery - : Oil spills throughout history: The Deepwater Horizon oil spill has…

BP has agreed to plead guilty to 14 criminal counts, including manslaughter, and will pay $4 billion over five years in a settlement with the Justice Department over the April 20, 2010, drilling disaster in the Gulf of Mexico that killed 11 people and unleashed the worst offshore oil spill in U.S. history, officials announced Thursday.

The fine is the largest criminal payment in U.S. history, Justice Department officials said, but BP still faces even bigger penalties from federal civil charges, including those under the Clean Water Act.

The Justice Department also sought to attach faces to the disaster, filing manslaughter charges against two BP rig supervisors and obstruction charges against a BP executive who allegedly lied to Congress. The three are not covered by the BP settlement.

“I hope this sends a clear message to those who would engage in this wanton misconduct that there will be a penalty paid,” Attorney General Eric H. Holder Jr. said during a news conference in New Orleans on Thursday.

The two top-ranking BP supervisors on the Deepwater Horizon drilling rig — Robert M. Kaluza, 62, of Henderson, Nev., and Donald J. Vidrine, 65, of Lafayette, La. — were indicted on 23 counts, including involuntary and seaman’s manslaughter, for allegedly ignoring warning signs of the blowout that set fire to the rig, which later sank.

A separate indictment accused David Rainey, a former BP vice president, of hiding information from Congress and lying to law enforcement officials by understating the rate at which oil was gushing into the Gulf of Mexico. Rainey, 58, was BP’s deputy incident commander and BP’s second-highest-ranking representative at the Coast Guard’s unified command for the spill response.

“Make no mistake: While the company is guilty, individuals committed these crimes,” said Assistant Attorney General Lanny A. Breuer, head of the criminal division. Of the two rig supervisors, Breuer said, “In the face of glaring red flags indicating that the well was not secure, both men allegedly failed to take appropriate action to prevent the blowout.”

Attorneys for the men said they will fight the charges.

Separately, the London-based oil giant will pay $525 million over three years to settle claims with the Securities and Exchange Commission, which said the firm concealed information from investors. The settlement is subject to U.S. federal court approval.

BP said it would increase its existing $38.1 billion charge against earnings for the spill by $3.85 billion.

BP and the Justice Department failed to agree on a separate settlement of federal civil claims, including federal and state claims of damages to natural resources. BP said it is “prepared to vigorously defend itself against remaining civil claims.” Clean Water Act fines alone could total $5 billion to nearly $20 billion, depending on whether BP is found to be guilty of gross negligence or willful misconduct.

But the settlement resolves all criminal charges. BP agreed to plead guilty to 11 felony counts of “misconduct or neglect of ships’ officers.” Jane Barrett, an environmental law professor at the University of Maryland, said the seaman’s manslaughter statute, first passed in 1838 in response to steamboat accidents, has a lower threshold for guilt including “misconduct, negligence or inattention to duties.”

BP also agreed to plead guilty to 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 last of those was for lying to Congress. Rainey allegedly said that BP’s out-of-control Macondo well was leaking at a rate of 5,000 barrels a day when he had an e-mail from one of BP’s own experts contradicting that. Later it became clear that the well was leaking at more than 10 times the rate Rainey gave lawmakers. Rainey also concealed his own higher estimates, derived from calculating methods he found by surfing the Internet, the indictment said.

“David Rainey is a man of high integrity and moral character who has done absolutely nothing wrong,” said Brian Heberlig, a partner at Steptoe & Johnson, in a statement. “We are profoundly disappointed that the Department of Justice is attempting to turn a tragic accident and its tumultuous aftermath into criminal activity. We are even more disappointed that BP has succumbed to the pressure and agreed to this extortionate settlement.”

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” Bob Dudley, BP’s chief executive, said in a statement before Holder’s announcement. “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.”