• BP to pay $4.5 billion, plead guilty to manslaughter in Gulf of Mexico oil spill

    BP agreed to pay the largest criminal fine ever brought against a single corporation; the U.S. government in turn agrees not to press more charges against the oil company responsible for the 2006 oil spill. NBC's Pete Williams reports.

    By Ian Johnston and James Eng, NBC News

    Updated at 2:45 p.m. ET: BP will pay approximately $4.5 billion and plead guilty to manslaughter and other 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 and federal officials said Thursday.


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

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

    At an afternoon news conference in New Orleans, U.S. Attorney General Eric Holder called the wide-ranging settlement "the latest step forward in our ongoing efforts to achieve justice for those whose lives and whose livelihoods were impacted by the largest environmental disaster in the history of the United States."

    He said the settlement amounts mark "both the largest single criminal fine … and the largest total criminal resolution" in U.S. history.

    BP has agreed to plead guilty to 11 counts of felony manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migratory Bird Treaty Acts, Holder said.

    The agreement, subject to court approval, resolves all federal criminal charges and all claims by the Securities and Exchange Commission against the company stemming from the explosion and leak, the largest accidental marine oil spill in history.

    “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 group chief executive, said in a statement announcing the settlement.

    Lee Celano / Reuters, file

    A hard hat from an oil worker lies in oil from the Deepwater Horizon oil spill on East Grand Terre Island, Louisiana in this June 8, 2010 photo.

    “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. 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.”

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

    In addition, a federal indictment unsealed Thursday charges David Rainey, who was BP's vice president of exploration for the Gulf of Mexico, with obstruction of Congress and making false statements. 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.

    Two BP well site leaders, Robert Kaluza and Donald Vidrine, were indicted on manslaughter and involuntary charges, accused of disregarding abnormal high-pressure readings that should have glaring indications of trouble just before the deadly blowout.

    Rainey's lawyer said his client did "absolutely nothing wrong." And attorneys for the two rig workers accused the Justice Department of making scapegoats out of them.   

    "Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day," Kaluza attorneys Shaun Clarke and David Gerger said in a statement, The Associated Press reported. "No one should take any satisfaction in this indictment of an innocent man. This is not justice."

    Before Thursday, the only person charged in the disaster was a former BP engineer who was arrested in April on obstruction of justice charges, according to AP. He was accused of deleting text messages about the company's response to the spill.

    The Deepwater Horizon rig, 50 miles off the Louisiana coast, sank after the fiery explosion. The well on the sea floor spewed an estimated 206 million gallons of crude oil, soiling sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing.

    On the docks in Louisiana, fishermen and oystermen say the effects of the BP oil spill remain today. NBC's Anne Thompson has more.

    After several attempts failed, engineers finally managed to cap the gushing well on July 15, 2010, halting the flow of oil into the Gulf after more than 85 days.

    The spill exposed lax government oversight and led to a temporary ban on deepwater drilling while officials and the oil industry studied the risks, worked to make it safer and developed better disaster plans.

    Thirteen of the 14 criminal charges to which BP plans to plead guilty pertain to the accident itself and stem from the negligent misinterpretation of a negative pressure test conducted on board the Deepwater Horizon, BP said. The company said it acknowledged this misinterpretation more than two years ago when it released its internal investigation report.

    The remaining criminal count of obstruction pertains to allegations that company officials lied to Congress about how much oil was pouring out of the ruptured well during the spill response.

    As part of its resolution of criminal claims with the U.S. government, BP will pay $4 billion in installments over five years and has also agreed to five years’ probation.

    The amount includes about $1.25 billion in criminal fines, nearly $2.4 billion to be paid to the National Fish & Wildlife Foundation and $350 million to be paid to the National Academy of Sciences.

    BP said it will also pay the SEC $525 million over three years to settle all securities claims.

    The $1.25 criminal penalty is the largest in U.S. history, eclipsing the nearly $1.2 billion paid by Pfizer Inc. for marketing fraud related to its Bextra pain medicine in 2009, according to Bloomberg and AP.

    BP has also agreed to take more steps to boost safety of drilling operations in the Gulf of Mexico, including third-party auditing and verification, training and well control equipment and processes such as blowout preventers and cementing.

    Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. BP says it has not been told of any intent by government agencies to suspend or debar the company in connection with the plea agreement.

    Still pending is a separate civil court action in which the federal government contends BP was grossly negligent in causing the spill. “We’ve been in negotiations with BP. We have not reached a number that I consider satisfactory to resolve those claims that we have,” Holder said.

    The criminal deal announced Thursday with the Justice Department is also separate from a March settlement in which BP agreed to pay $7.8 billion to more than 100,000 businesses and individuals who say they were harmed by the spill.

    The Associated Press contributed to this report.

    PhotoBlog: Cat Island pelicans see habitat shrinking 2 years after Gulf spill

     

    Archival video: The people of the Gulf Coast have survived hurricanes, but 128 days after the BP oil spill disaster, they're struggling to see a way forward. NBC's Anne Thompson reports.

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  • Is BP on the hook for fish's sullied reputation?

    By Kari Huus, msnbc.com senior reporter

    After a major oil spill, there are birds to be washed, tarballs to be retrieved and tarnished reputations to be repaired. For seafood from the Gulf of Mexico, promoters say that will likely be a long and expensive road — a cost they expect BP to bear.

    “We’re going to need marketing dollars to get out of this hole,” said Ewell Smith, executive director of the Louisiana Seafood Promotion Board, a state entity that markets everything from oysters to tuna caught off state shores. “Our brand has been damaged badly. It may take up to five years to restore our brand. That’s a multimillion dollar, multiyear program to rebuild brand and consumer confidence.”

    Photo by Alex Ogle/AFP/Getty Images

    A seafood restaurant's sign lights up in New Orleans on July 23, 2010.

    BP gave the marketing group $2 million shortly after the Deepwater Horizon accident on April 20, but Ewell said he considered that “a sort of deposit.” The money has been used for crisis communication, seeking to assure the public that seafood from Gulf fishing areas that remained open was just fine.

    But restoring the Louisiana seafood brand long term will cost $20 million to $40 million, he estimates – and maybe more. In addition to marketing, the state government wants BP to pay for 20 years of seafood monitoring and other costs associated with winning back consumer confidence. In an April 29 letter, state officials requested a total of $457 million from BP to set the seafood industry right.

    “Public confidence in our industry is eroding,” said the letter, addressed to BP CEO Tony Hayward. This is evidenced by a recent USA Today poll, where 13 percent of those polled said they would not eat gulf seafood. This poll was taken before the images of coastal impact were seen on television, and we can only assume the damage is even worse today.“

    “We still haven’t had any action on it,” communications director for Lousiana's disaster recovery unit Christina Stephens said of the request.

    BP press officer Mark Proegler confirmed the company had received the request and said the company “is in dialogue with state officials on this matter.” He went on to note that ongoing testing has shown Louisiana seafood to be safe. “Also, we're also pleased to see the reopening of fishing areas,” Proegler added in his email response, referring to the state’s decision to reopen some of Louisiana’s commercial fishing waters. That’s a start to reviving the state’s commercial and recreational fishing industries, which collectively generate about $4 billion a year.

    What the Seafood Promotion Board is seeking, however, is the means to change the public perception that fish from the Gulf is contaminated, which history suggests can be big chore.

    The 1989 Exxon Valdez spill — which only affected Prince William Sound, a small portion of Alaska’s total commercial fishing area—nonetheless tainted the reputation of products from the whole state according to Ray Riutta, executive director at the Alaska Seafood Marketing Institute.

    The state marketing organization spent $10 million a year for several years after the spill and brought in a public relations firm that specializes in crisis management to market Alaska seafood, he said. In addition, the state ran a rigorous testing program, said Riutta.

    But surveys of consumers in other states showed that it took three to five years to rebuild confidence in the safety of Alaska’s fish, Riutta said.

    “The impression (outside the state) was that all the fish in Alaska had oil on them,” he said. “The whole image of the state was tarnished by that and it took years to fix.”

    Smith, executive director of the Louisiana seafood board, said the pattern is similar now: People outside the state have the image of thick oozing oil etched into their minds, and don’t realize that many fishing areas were untouched by the slick.

    He wants to bring in some big guns to help change that perception.

    “We will work with celebrity chefs across the nation, and they will help us get the news out,” he said

    But long term, the job is more likely to involve relentless traditional marketing, said Smith.

    “We need to bore the consumer out of their minds with good news,” he said.

  • Tim Sloan / AFP - Getty Images

    Kenneth Feinberg, administrator of the BP Oil Spill Victim Compensation Fund, testifies Wednesday before the House Judiciary Committee.

    Feinberg: Tough 'judgment calls' await on spill claims

    Kenneth Feinberg, the man charged with administering damage claims arising from the BP oil spill in the Gulf, told a House committee on Wednesday that the most difficult task facing him will be making “judgment calls” on claims filed by merchants and workers who haven’t been directly hurt by the environmental disaster.

    “It’s easy if you are a beachfront restaurant with oil or a fisherman with oil (who) can’t harvest,” he said. “… It’s the tough case -- ‘I own a motel 20 miles from the beach; I’ve lost 30 percent of my guests.’ Is that a legitimate claim?”

    Feinberg, 64, also cited real estate agents and T-shirt manufacturers as examples of businesses that have suffered secondary harm from the spill.

    “At some point, it’s a judgment call,” he told members of the House Judiciary Committee of the “tough decisions” that lay ahead. “This side of the line, eligible; this side of the line, ineligible.”

    Feinberg, who said he expects to complete the transition from BP’s claims process to his independent operation by next month, explained that Gulf residents and companies would be able to receive an emergency payment equal to six months of wages or income without waiving the right to sue. But those who accept a second, final payment would agree not to litigate.

    He also said that there would be a three-year limit for filing claims.

    Rep. Darrell Issa, R-Calif., questioned whether Feinberg also would compensate Gulf residents and companies for losses attributable to what he called an “arbitrary moratorium” on deepwater oil drilling.

    “Not on my watch,” Feinberg responded, while acknowledging that determining whether economic impact could be traced directly to the spill – and not the moratorium – would not always be crystal clear.

    Feinberg, who also has overseen federal effort to compensate victims of the Sept. 11 terror attack and to set fair compensation for executives of companies that received federal bailout funds, also testified that he is hopeful that the $20 billion that BP has set aside to pay damage claims arising from the Deepwater Horizon accident will prove sufficient to pay “valid and legitimate claims.” But he also noted that the oil company has pledged to pay more if the fund is exhausted.

    He also took issue with a recommendation by Rep. Stephen Cohen, D-Tenn., that BP be placed into receivership, a form of bankruptcy in which a court-appointed trustee would oversee a reorganization of the company. That, he said, would hinder prompt payment of claims filed by Gulf residents and businesses.

    “I think it would be a monumental tragedy if BP was forced into bankruptcy,” he said.

    -- Additional reporting by Rich Gardella and Amna Nawaz, producers, NBC News Washington bureau.

  • BP claims fund to use feds as investigators

    Bebeto Matthews/AP file

    Kenneth Feinberg

    Kenneth Feinberg, overseer of the $20 billion fund for victims of the oil spill, says he will use federal fraud investigators to sniff out bogus claims and protect personal information because "nothing can destroy the credibility of a program quicker than allegations of fraud."

    In an interview airing Saturday on Bloomberg Television, Feinberg says his office should be processing claims within about 30 days. The next step, he says in a separate interview with The Financial Times, is to make sure state laws are consistent so all victims are treated fairly.

    "How do we deal with a restaurant in Boston that can't get shrimp for its favorite dish or the strip joint in New Orleans where business is off because the fishermen aren't coming in?" Feinberg asks. "... Would your claim be applicable under state and, in this case, maritime law? If the state would recognize it, then I will recognize it. If not, I should not."

    In a busy day of interviews and public appearances, Feinberg traveled to LaRose, La., where told an audience it was also important to make sure BP isn't destroyed in the process.

    "There is absolutely no sense at all driving BP into bankruptcy," he said, a point he expanded on three days ago in an interview on Fox News:

    That would be a horror. If BP ever were — was unable to pay valid claims because of bankruptcy, that would be a disaster for the — for BP, it would be a disaster for the people in the Gulf, it would be a disaster for the economy of the Gulf. I think that is not an option.

    And I must say, to those who criticize this fund as somehow driving BP toward the brink, I would only add that this fund is — is, in one sense, a very important lifesaver for BP. ... The alternative is to litigate against BP in court for a decade or more. You don't know if you're going to prevail. You've got to give your lawyer 40 or 40 percent contingency.

    It seems to me that this facility — independent facility — is a win for the people of the Gulf and, frankly, a win for BP, as well.

  • Lawyers slam $20 billion BP claims fund

    Lawyers involved in litigation over the oil spill say they were shocked to learn that BP is allowed to use the $20 billion fund it set up last week for purposes other than compensating people suffering economic losses, including paying litigation costs.

    "That was sold to the American public as a compensation fund. And now we have learned that they can use it for whatever the heck they want to use it for," Robert Kennedy, an environmental lawyer and activist, told Reuters at a conference today in Atlanta on litigation over the spill. "It's another subterfuge by BP, one of the many that we have discovered recently."

    Reuters quotes Perry Weitz, a prominent tort lawyer who spoke at the conference: "Imagine if BP uses a significant portion for clean-up costs. What's left for the victims?"

    Michael Rozen, a partner in the law firm administering the fund, acknowledged that the money "is available for all manner of costs," but he stressed that all legitimate claimants would be paid.

    "Twenty billion maybe isn't sufficient for the mass of stuff that's aired, in which case BP will have to add more," he said. "If that should be the case, people still have their rights and remedies under law."

  • BP can deny claims of anyone suing it, Florida warns

    The State of Florida is advising people who want to sue BP for damages from the oil spill to wait if they have a legitimate monetary claim, warning that the company can deny claims from people who have brought court action, NBC station WJHG of Panama City reports.

    State officials say claimants should try to work with BP to get their claims paid now, because they'll have three years to decide about a suit even if they're taking the company's money:

    [I]f people think they are being treated unfairly and sue BP, then the company can hold back their claims until a judge rules.

    And that could take years, according to Bob Butterworth, a former attorney general and member of the state's legal council in charge of keeping BP honest.

    "They can pay a lawyer 10, 20, or 30, or 40 percent which could also keep you tied up in court for maybe 10 years, and 20 years later, there's still claims out there."

    It's not just fishermen and business owners who are holding off on filing a claim, WJHG reports — so is the state itself. Attorney General Bill McCollum says that he hopes Florida can be reimbursed without a lawsuit but that he's keeping his options open.