By Mike Nixon
A settlement reached between BP and the U.S. Justice Department on Thursday had Louisianans wondering if their state would benefit as promised with the Restore Act of 2012 and other legislation.
In a record-setting measure, BP agreed to plead guilty and pay the U.S. government $4.5 billion to cover damages resulting from the April 20, 2010 Deepwater Horizon disaster that killed 11 men and caused the Macondo well release of an estimated 206 million gallons of crude oil.
Damages included billions of dollars in losses to the Gulf Coast economy in addition to damaging tidal estuaries, marshlands and beaches. The incident was also blamed for killing wildlife, shutting-down commercial fishing and causing illnesses among humans.
As part of the settlement, BP officials agreed to pay approximately $1.3 billion compensation for crimes related to deaths and on charges that company spokesmen lied to the U.S. Congress and government officers. An obstruction charge was made against the petroleum company for lying to Congress about how much oil escaped from the ruptured well.
According to the Associated Press, two unidentified BP employees will face manslaughter charges for deaths related to the Deepwater Horizon explosion.
The Houston law firm Gerger and Clarke did identify BP rig worker Bob Kaluza as being indicted by the Justice Department, but maintained his innocence in the case.
"After nearly three years and tens of millions of dollars in investigation, the government needs a scapegoat," law partners Shaun Clarke and David Gerger said in a joint statement. "Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day. No one should take any satisfaction in this indictment of an innocent man. This is not justice."
Kaluza has more than 44 years experience in the oilfields. He began his career in 1968 as an 18-year-old roughneck in Montana. His work positions range from driller and tool pusher to field superintendent. He has been a well site leader for both offshore and on land operations. Kaluza joined BP in September 1997 and worked on the Deepwater Horizon April 16 to April 20, 2010.
"With these unprecedented criminal penalties assured, I urge the Obama administration to be equally aggressive in securing civil monies that can help save our Louisiana coast through the Restore Act and [the Natural Resource Damage Assessment]," Sen. David Vitter (R-La.) said in a printed statement. "I certainly hope they don't trade any of those monies away just to nail this criminal scalp to the wall."
"This is the first of what I hope is a series of settlements that will help bring justice and resolution for a horrific incident that occurred off the coast of Louisiana two and a half years ago," Sen. Mary Landrieu (D-La.) said in a printed statement. "This is a tough and robust penalty that is more than three times larger than any other past settlement, and is structured in a unique way to leverage private funds, maximizing the settlement dollars."
The BP settlement includes payments of approximately $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.
"It is a good first step," Lafourche Parish President Charlotte Randolph said of the settlement. "This money will be dispensed by the National Fish and Wildlife Federation, so certainly we will be applying to any grants that are available through this in order to recreate some of the habitat that has been lost. In turn, these projects will also serve the dual purpose of protecting us."
The Justice Department's legal agreement includes BP pleading guilty to 11 felony counts of misconduct or neglect by ships officers, one felony count of obstruction of Congress and one misdemeanor count each under the Migratory Bird Treaty Act and the Clean Water Act. The 11 counts related to the workers' deaths are under provision of the Seaman's Manslaughter Act.
"The bigger number is going to be civil penalties related to the Restore Act and resource damage assessment, EPA fines and actual NRDA money," Motivatit Seafood CEO Mike Voisin said. "I hope that gets settled before going to court so we can move forward with rehabilitating the natural resources and coast."
Voisin said he was concerned regarding criminal charges against BP. He maintains that BP acted responsibly in responding to the situation. "It is a little surprising that there was potential criminal activity relating to it," he said.
"I am encouraged that the Justice Department is respecting the spirit of the Restore Act by sending nearly $2.4 billion of the fine money to the Gulf Coast and $1.2 billion specifically to Louisiana," Landrieu said. "Three individuals will also stand trial for felony charges related to the accident."
In January 2011, a presidential commission faulted the spill on time-saving, cost-cutting decisions by BP, Halliburton and Transocean that created unacceptable risk. No blame was placed on any specific individual. Mistakes were said to have been caused by "systemic problems."
During September 2011, however, U.S. Coast Guard officials and federal regulators issued a report that assigned ultimate responsibility to BP. That report said BP violated federal regulations, ignored crucial warnings and made bad decisions while cementing the Moncando well.
BP has repeatedly said it accepts some responsibility for the spill and will pay what it owes. It also has urged other companies to pay their share.
The Associated Press reported that BP said its settlement with the Justice Department did not include civil claims filed under the Clean Water Act or other legislation related to state claims of economic loss.
"We believe this resolution is in the best interest of BP and its shareholders," BP Chairman Carl-Henric Svanberg said in a prepared statement. "It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."
The BP spill exposed lax government oversight of the oil industry. It also led to a temporary ban on deepwater drilling and drastic reductions in exploration permits.
The Deepwater Horizon rig was owned by Transocean Ltd. and Halliburton. A federal judge reportedly said BP had attempted place blame on those companies working the well it owned.
After the explosion and oil release, it took crews more than 85 days before they were able to cap the well on July 15, 2010.
Additional litigation against BP is pending and includes claims involving financial institutions, tourism and entertainment venues, insurance companies, and local governments. None of those cases are covered by BP's proposed settlement with private lawyers.
BP waived a $75 million cap on its liability for certain economic damage claims under the 1990 Oil Pollution Act, though it denied any gross negligence.
"BP continues to work its way through the maze of legal problems as a result of the Deepwater Horizon explosion," Terrebonne Parish President Michel Claudet said. "Each resolution provides more opportunity for them to focus on resolving the claims with our residents. We are hopeful that all just claims will be resolved in the very near future."
"The criminal agreement announced today is an important first step in holding BP accountable for the tragic loss of 11 lives in the Deepwater Horizon explosion and spill. The largest criminal fine in history is certainly fitting for the inexcusable negligence that led to this disaster.
"The Department of Justice must continue to stand shoulder-to-shoulder with Louisiana to aggressively fight for the full recovery of the Gulf. The impacts of this spill continue to accrue on a daily basis in our state. In Louisiana, our fishermen are experiencing extraordinary impacts. Shrimp, crabs, oysters and other seafood are in decline. The majority of BP's liability remains outstanding and we will hold them fully accountable."
Louisiana Gov. Bobby Jindal said the settlement shifts a focus to addressing Gulf coast restoration. "This critical resource is the top source of seafood, maritime commerce and energy in the nation," he said in a prepared statement. "[This means] addressing the impacts of the explosion and spill through the Natural Resources Damage Assessment process and civil penalties associated with the Clean Water Act will ensure our long-term recovery."
Costs associated to BP's oil release surpassed the Exxon Valdez spill of March 24, 1989. Exxon ultimately reached a $1 billion settlement with the U.S. government.
Before BP, the largest corporate criminal penalty assessed by the Justice Department was a $1.2 billion fine imposed in 2009 on drug maker Pfizer.
"The people of the Gulf of Mexico have yet to be served a meaningful justice," Sierra Club Executive Director Michael Brune said in a statement provided by the organization's New Orleans office. "The criminal settlement ... lets BP off with a slap on the wrist after causing the largest oil disaster in American history."
The Sierra Club is working to impose Clean Water Act and Oil Pollution Act lawsuits with penalties that could top $60 billion. "We urge the Department of Justice to pursue the remaining legal charges vigorously, and bring BP to justice to their crimes against Gulf families and businesses," Brune said.
"Although this is a large settlement, no amount of money can compensate for the economic and environmental destruction that this spill caused," Rep. Bill Cassidy (R-Baton Rouge) said in an email statement. "While this settlement closes one chapter, we must still focus on holding BP and the other responsible parties accountable and returning the families, businesses and ecosystems of the Gulf coast to health and prosperity."
"This settlement contains $1.2 billion for coastal restoration in Louisiana," Claudet said. "Included in the projects will be barrier island work in Terrebonne Parish which is very much needed."
While dealing with fines and settlements related to the Deepwater Horizon disaster, BP posted a $5.5 billion profit during the third quarter of 2012.
"It is still a sad day because people lost their lives," Randolph said. "But it is an opportunity to focus on the projects that will help save lives in the future."
"This was an accident and it is sad," Voisin said. "Getting all of this behind us will eventually lead to a better place. It will be safer to operate offshore and there will be better enforcement mechanisms in place to make sure this doesn't happen again."
Voisin said that contrary to media implications there is a respectful relationship between the seafood industry and the oil and gas industry of Louisiana. "They harvest below the water line and we harvest above the water line," he said. "Overall there has been a good synergy between the two groups and we need to work together. This all needs to get behind us so we can move forward in a positive light."