Criminal probe of Gulf oil spill seen inevitable

WASHINGTON Tue May 25, 2010 9:26am EDT

WASHINGTON (Reuters) - With a BP well spilling oil into the Gulf of Mexico for a fifth week and President Barack Obama under pressure to act, legal experts say it is only a matter of time before his administration begins a criminal investigation into the disaster.

The Justice Department can consider a variety of charges as it has in past cases like the Exxon Valdez spill in Alaska, including violations of the Clean Water Act and the Endangered Species Act. There could also be charges for failing to abide by drilling regulations, the experts said.

"There's no question that there will be a criminal investigation and it's also a virtual certainty that there will be a criminal prosecution of at least some of the companies involved," said David Uhlmann, a University of Michigan Law School professor and former head of the Justice Department's environmental crimes section.

The liability could extend well beyond BP Plc. Transocean Ltd operated the Deepwater Horizon rig drilling the well, Halliburton Co. did cementing for the well, and Cameron International Corp provided the blowout preventer that is designed to stop an uncontrolled flow of oil and gas.

As the Obama administration grows increasingly frustrated with BP over the information it is releasing about the spill, that could create an adversarial scenario which could make reaching a settlement more difficult.

So far, U.S. Attorney General Eric Holder has said only that the Justice Department is monitoring the situation to ensure that BP lives up to its pledge to pay for the damage to wildlife, the economy and the coastline.

Lawyers who previously worked in the department said Holder was likely waiting for BP to cap the well before proceeding with an investigation to ensure cooperation in that effort. Justice Department officials declined to comment.

The attorneys also noted it may be difficult to assign blame because the companies have been blaming each other.

One lawyer who previously worked at the Justice Department and declined to be identified said he expected the case would mostly focus on civil rather than criminal violations because the latter required proving intent to commit the violations.

Several lawyers refused to be quoted on the record or speak at all because their firms either worked for the companies involved or could be hired by them.

LENGTHY LITIGATION LIKELY

Another law professor said the Justice Department would take its time to build a case to hold those responsible for the oil spill. It would have to be prepared for the companies to defend themselves by arguing that federal regulators' actions contributed to the accident.

"This litigation is going to take a long time," said Hope Babcock, a Georgetown University Law School professor. "The federal government, they're going to be much more tempered in how they proceed, they're carefully gathering up evidence."

Prosecutors will have to "sort out how much of the behavior on the platform was basically allowed to happen by the federal government," she said.

In 1991 after the Alaska oil spill, Exxon paid just over $1 billion in penalties and damages to settle criminal and civil charges the Justice Department brought against the oil giant.

At the time, the $125 million in criminal penalties Exxon paid was the largest of its kind in history and the charges included violations of the Clean Water Act, the Refuse Act and the Migratory Bird Treaty Act.

The bulk of the damages, $900 million, went to reimburse federal and state governments for responding to the spill and later restoration projects.

If the government does pursue a case against BP and others and can negotiate a plea deal and settlement agreement, the penalties would almost certainly exceed those in the Exxon Valdez case.

"If BP is one of the defendants, and they certainly are a likely defendant, BP has a significant history of violations that Exxon did not, and that's going to run the numbers higher," said Uhlmann, referring to past BP accidents.

A fire at a BP refinery in Texas in 2005 killed 15 workers and injured 180. The company settled with the Justice Department, paying a $50 million criminal penalty for violating the Clean Air Act, but that deal is still being litigated.

Even if the companies settled, like in the Exxon spill, a provision could be included in any agreement that would enable the government to reopen negotiations for additional funding should the costs for cleanup or other requirements be needed.

Fifteen years after the Exxon Valdez tanker ran aground and spilled some 10.8 million gallons of oil off the fragile coast of Alaska, the Justice Department and Alaska officials in 2006 went back to the oil company to demand $92 million more for restoration projects.

That request still has not been resolved.

(Editing by David Alexander and Chris Wilson)

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Comments (4)
5280hi wrote:
Can the orange jumpsuits be made to match the new orange color of the Gulf of Mexico? OR maybe brown for the beaches? How about special CEO scented fabric softeners that smell like dead animals and rotting marshes?

May 25, 2010 12:05pm EDT  --  Report as abuse
imagecpr wrote:
We help the world meet its growing need for heat, light and mobility. And we strive to do that by producing energy that is affordable, secure and doesn’t damage the environment.” —The very first paragraph from The BP brand, bp.com.

The month–long oil spill in the Gulf is growing every second. Gushers deep underwater are killing wildlife and livelihoods everyday. It’s happening in slow motion, but the devastation is very real. It may soon be the worst environmental disaster in U.S. history.

BP is the largest oil and gas producer in the Gulf of Mexico, extracting 400,000 barrels of oil daily from that delicate ecosystem. And if you think dealing with an oil leak nearly a mile underwater is complicated, the company says it’s been drilling wells in 10,000 feet of water in the Gulf and more than 20,000 feet beneath the sea floor. As we’ve seen from the Deepwater Horizon leaks, BP is walking a tightrope without a safety net.

BP doesn’t have a workable crisis plan

BP has made several failed attempts to stop the underwater oil leaks — proof that the company never had a workable plan in place to prevent them. British Polluter, as some are calling it, has been winging it all along with measures that have never been tested in the deep waters of the Gulf. How was that even allowed to happen?

Read more at www.imagecpr.com

May 25, 2010 2:49pm EDT  --  Report as abuse
agitpropster wrote:
From Wikipedia, quoting from an internal BP memo:

“Interestingly, a group of BP executives were on board the platform celebrating the project’s safety record when the blowout occurred.”

“Bailiff, TAKE THEM DOWN.”

May 25, 2010 4:20pm EDT  --  Report as abuse
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