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BP to pay $4.5 billion in fines for Gulf oil spill. Is legal saga over?

A deal on federal criminal charges helps bring legal action over the Gulf oil spill nearer a conclusion. But many more claims remain – totaling perhaps tens of billions of dollars.

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Corporate felonies typically bar companies from contracting with the federal government. But in its statement, BP says the company “has not been advised of the intention of any federal agency to suspend or debar” it from making or continuing contracts. 

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As a part of the deal, BP is required to work with regulators to develop new technologies involved in drilling safety. Also, two monitors – one for safety and one for ethics – will be tasked to work with and evaluate the company.  

The company is still vulnerable to federal civil claims under the Clean Water Act, which could reach $21 billion. A federal trial in New Orleans is scheduled to address those claims in February 2013.  

“On the criminal side we’re done, but in terms of BP paying out more, there’s the civil issue. This could go on for years still to come,” says Montré Carodine, a professor at the University of Alabama School of Law in Tuscaloosa. 

Sen. David Vitter (R) of Louisiana released a statement Thursday asking President Obama “to be equally aggressive in securing civil monies.” “I certainly hope they didn’t trade any of those monies away just to nail this criminal scalp to the wall,” he said. 

In its statement, BP said it will “continue to vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases.” The company insists that Thursday’s guilty plea is based only on ordinarily negligent conduct. Gross negligence implies criminal intent, which can result in much stiffer penalties, Professor Carodine says. 

In April, the company announced it would spend an estimated $7.8 billion to settle class-action litigation brought by more than 100,000 individuals and businesses with claims related to economic loss and medical hardship. The company also faces other lawsuits from financial institutions, casinos, and local governments for losses related to the moratorium following the disaster that halted drilling operations for six months.  

For those hardest hit by the oil spill, the criminal settlement is not necessarily a sign of relief. 

“I don’t know who is going to take the fall. Is it a working stiff or it one of the hot shots up top who set the policy and procedures” that led to the spill? says Tony Kennon, mayor of Orange Beach, Ala., a coastal town where the population swells to 100,000 during the summer tourist season. “Who was really responsible? There are just so many questions, it’s hard to know what the answers are and what the ramifications are going forward.” 

As for the $4.5 billion penalty, Mayor Kennon says it’s not enough.  

“I wanted to see a real slap aside the head to get [BP’s] attention, so it never happens again,” he says. 

The unprecedented scope of the disaster makes determining fines difficult, acknowledges Carodine. 

“We’ve never seen anything like this, with all the lives lost and also the harm done to the Gulf Coast region,” she says. “I would think that they looked at the fines in the past and compared it to what happened and came up with the numbers.”  

BP reported in October that its third-quarter earnings rose 41 percent to $5.2 billion, compared with $3.7 billion in the previous quarter.

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