BP Plc reached a settlement with the U.S. government for $4.5billion that will end all criminal charges and resolve securitiesclaims relating to the worst U.S. oil spill.

The London-based company announced a $4 billion settlement todaywith the U.S. Justice Department that includes a record $1.256billion criminal fine, which would be paid over five years. Thecompany agreed to five years' probation and also will pay $525million to settle charges with the Securities and ExchangeCommission, according to a press release.

BP said it has agreed to plead guilty to 11 felony counts ofmisconduct or neglect of ships officers related to the 11 deaths,one misdemeanor count under the Clean Water Act, one misdemeanorcount under the Migratory Bird Treaty Act and one felony count ofobstruction of justice.

“All of us at BP deeply regret the tragic loss of life caused bythe Deepwater Horizon accident as well as the impact of the spillon the Gulf coast region,” BP Chief Executive Officer Bob Dudleysaid today in a statement. “We apologize for our role in theaccident, and as today's resolution with the U.S. governmentfurther reflects, we have accepted responsibility for ouractions.”

Two of the company's employees face manslaughter charges overdeaths from the explosion of the oil well, which resulted in theworst U.S. oil spill, said a person familiar with the charges, whorequested anonymity because the charges haven't been madepublic.

U.S. Attorney General Eric Holder is scheduled to attend a newsconference today in New Orleans on the settlement.

The criminal penalty part of the settlement is the largest inU.S. history, eclipsing the $1.195 billion paid by Pfizer Inc. formarketing fraud in 2009.

Along with the criminal fine, the resolution with the JusticeDepartment includes a total of $2.4 billion that will be paid tothe National Fish & Wildlife Foundation over a period of fiveyears. Another $350 million will be paid to the National Academy ofSciences over that same period.

Peter Hutton, an analyst at RBC Capital Markets, said thesettlement was “positive” because the total was at the “low tomidpoint of expectations.”

BP faces a maximum possible fine of $17.6 billion for civilenvironmental violations alone if the company is found grosslynegligent by the federal judge overseeing lawsuits stemming fromthe spill.

The company said in its release that it will “continue tovigorously defend itself against all remaining civil claims and tocontest allegations of gross negligence in those cases.”

Kurt Mix, a former BP engineer, has been charged with destroyingevidence in the probe of the spill.

11 Killed

The April 2010 the company's Macondo well blowout and theexplosion that followed killed 11 workers and set off the worstoffshore oil spill in U.S. history. The sinking of TransoceanLtd.'s Deepwater Horizon drilling rig and the spill led to hundredsof lawsuits against BP and its partners and contractors.

The Justice Department sued BP in December 2010, alleging thecompany failed to prevent or contain the spill and seeking finesfor each barrel of oil discharged.

The government estimated that more than 4 million barrels of oilwere spilled. If BP is found to be grossly negligent, a legalstandard the government would have to prove showing the accidentresulted from a conscious BP act or omission, it could be fined asmuch as much as $4,300 per barrel.

BP set aside $3.5 billion to pay potential Clean Water Actfines, using its own estimate of 3.2 million barrels and a maximumfine of $1,100 per barrel without gross negligence.

BP reached a settlement with most non-government plaintiffs inMarch, agreeing to pay an estimated $7.8 billion. That settlementaverted a trial scheduled to determine liability for thedisaster.

BP agreed to pay most claims for economic loss, property damageand injuries from businesses, property owners and othernon-government victims of the spill. BP also established amedical-monitoring program to handle claims from people who contendthey are suffering medical problems from the oil or chemicals usedto clean it up.

BP and lawyers representing non-government victims of the spillwon preliminary court approval of the proposed settlement agreementin May and argued for final approval at a hearing on Nov. 8. Adecision is pending.

The government case is U.S. v. BP Exploration & ProductionInc., 2:10-cv-04536, U.S. District Court, Eastern District ofLouisiana (New Orleans). The lawsuit is part of In Re Oil Spill bythe Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20,2010, MDL-2179, U.S. District Court, Eastern District of Louisiana(New Orleans).

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