US nears Deepwater Horizon settlement with BP


The Justice Department is drawing closer to civil and criminal settlements with BP and Transocean over the Deepwater Horizon disaster, deals that will likely include billions of dollars in fines and penalties.

Settlement discussions have picked up speed in recent weeks, according to people familiar with the process, although details of the agreements being discussed remain unclear.

Barring a deal, legal experts estimate that BP could face tens of billions of dollars in civil and criminal penalties stemming from its role in the 2010 oil-well accident, which killed 11 workers and led to the largest oil spill in the history of the US Gulf of Mexico.

Based on government estimates of 4.9 million bbl of oil spilled - a figure that BP disputes - civil fines for violating the Clean Water Act could range from $5.4 billion to $21 billion.

The company could face another $28 billion in fines if the US alleges criminal violations of the Clean Water Act or other laws.

Under a settlement, the fines would most likely be much less, said Thomas Claps, a former trial attorney who does legal analysis for Susquehanna Financial Group.

He estimated that BP faces between $7 billion and $10 billion in civil Clean Water Act fines and between $5 billion and $10 billion in criminal penalties.

Mr. Claps estimates that Transocean could face $700 million to $1.2 billion in fines.

A law dedicating 80% of Clean Water Act fines from the accident to Gulf Coast environmental and economic restoration was added to a transportation-funding bill on Thursday.

BP, Transocean and the Justice Department declined to comment.

BP has taken a $37.2 billion charge for what it estimates will be its maximum spill-related costs. So far, it has spent about $22 billion on cleanup and payments to individuals and businesses affected by the spill, and reached a civil settlement that could cost it another $7.8 billion.

Transocean has set aside $1 billion for spill-related costs.

Even if the government reaches settlements with the companies, it could still pursue criminal charges against individuals for their actions before and after the spill.

Prosecutors have already charged former BP engineer Kurt Mix for allegedly obstructing justice by deleting text messages that the blown-out well was spewing more oil than the company disclosed publicly. Mr. Mix has pleaded not guilty.

Several employees who worked on the doomed well are cooperating with the government, but in recent weeks prosecutors have told others they are considering filing charges against them, according to people familiar with the proceedings.

Investigators have considered bringing criminal charges against BP and current and former employees of the company for allegedly filing false information with regulators about drilling operations on the Deepwater Horizon and another Transocean rig, the Marianas.

The government is also exploring whether BP officials made false statements to members of Congress about the rate at which oil was escaping from the well and whether workers tried to withhold from the government details of efforts to plug the well.

The Wall Street Journal (via Dow Jones Newswires)

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