Court accepts BP's Deepwater Horizon plea deal

deepwater horizon uscg photoJANUARY 29, 2013 — BP today announced that the U.S. District Court for the Eastern District of Louisiana has accepted the company's plea resolving all federal criminal charges against the company stemming from the Deepwater Horizon accident, oil spill, and response. The company offered its plea to the Court and was sentenced in connection with the agreement BP reached with the Department of Justice (DOJ) on November 15, 2012 (see earlier story).

As previously announced, BP will pay $4 billion over a period of five years and will serve a term of five years' probation. Pursuant to the terms of the plea agreement, the Court also ordered certain equitable relief, including additional actions related to BP's risk management processes as well as several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety. In addition, as outlined in the company's November 2012 agreement with the DOJ, BP will appoint a process safety monitor and an ethics monitor, both with a term of four years, and an independent auditor will report annually on BP's compliance with the remedial terms of probation.

At the hearing today, Luke Keller, a Vice President of BP America Inc., addressed the Court, the families of the deceased, and other victims of the Deepwater Horizon tragedy and reiterated the company's deep regret and apology for its role in the Deepwater Horizon accident.

DEBARMENT

The charges to which BP pled guilty included one misdemeanor count under the Clean Water Act, which triggers a debarment following today's sentencing. By operation of law, conviction of a misdemeanor or felony under the Clean Water Act triggers a statutory debarment, also referred to as mandatory debarment. Mandatory debarment prevents a company from entering into new contracts or new leases with the U.S. government that would be performed at the facility where the Clean Water Act violation occurred. A mandatory debarment does not affect any existing contracts or leases a company has with the U.S. government.

BP's says that the mandatory debarment applies following sentencing and is not an indication of any change in the status of discussions with the EPA. BP has been in discussions with the EPA for some time now regarding BP's present responsibility and eligibility for new federal contract and lease awards from the U.S. government, and BP continues to work with the EPA in preparing an administrative agreement that will resolve suspension and debarment issues.

The EPA announced a temporary suspension of numerous BP entities in November 2012 following BP's entry into the plea agreement with DOJ. That temporary suspension prevents these entities from entering into new government contracts, grants and other covered transactions with the U.S. government. BP says that following today's court action, this temporary suspension may be maintained or converted into a proposed discretionary debarment of these entities (in addition to mandatory debarment of the violating facility itself), to preserve the status quo and continue the ineligibility of those entities while negotiations with the EPA continue. The process for resolving both mandatory and discretionary debarment is essentially the same as for resolving the temporary suspension.

While BP's discussions with the EPA have been taking place in parallel to the Court proceedings on the criminal plea, the company says that its work toward reaching an administrative agreement with the EPA is a separate process, and it may take some time to resolve issues relating to such an agreement.

BP's guilty plea was accepted, and the sentence was imposed, by U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana.  During the guilty plea and sentencing proceeding, Judge Vance found, among other things, that the consequential fines imposed under the plea agreement far exceed any imposed in U.S. history, and are structured so that BP will feel the full brunt of the penalties.  She also noted that the agreement provides just punishment and significant deterrence, requiring detailed drilling safeguards, monitors and other stringent, special conditions of probation so that BP's future conduct will be closely watched.

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