Federal Government Announces Criminal Investigation Into The BP Blowout

U.S. Attorney General Eric Holder announced on June 1, 2010 that the federal government is opening a criminal investigation into the BP oil spill in the Gulf of Mexico.  Attorney General Holder did not name any specific targets of the investigation, but it’s not hard to figure out who they may be.  Holder named the Clean Water Act, the Oil Pollution Act of 1990, the Migratory Bird Treaty Act and the Endangered Species Act as federal laws that might have been violated.  I understand that the Department of Justice (DOJ) has been working on this matter since very shortly after the spill occurred. 

We’ve seen this play before.  In the aftermath of the Exxon Valdez oil spill, Exxon Shipping Company pleaded guilty to violating the Clean Water Act, the Refuse Act, and the Migratory Bird Treaty Act.  Exxon Corporation pleaded guilty to violating the Migratory Bird Treaty Act.  The two corporations also paid a $100 million criminal fine.  No Exxon employee went to jail, except for the one night Captain Hazelwood spent in the slammer until his bail was reduced.  Captain Hazelwood, by the way, was tried and acquitted of being drunk when the Exxon Valdez hit Bligh Reef, but was convicted of a misdemeanor for negligent discharge of oil; he was fined $50,000 and ordered to perform 1,000 hours of community service.    

Indeed, we’ve seen this play with BP in a leading role.  After the 2005 explosion and fire at BP’s Texas City facility in which 15 people died and 170 others were injured, BP pleaded guilty to criminal charges, paid $50 million and was sentenced to three years of probation.  After a 2006 oil spill from the Trans-Alaska pipeline, BP pleaded guilty to violation of the Clean Water Act and paid a $12 million fine.  BP was also placed on 3 years probation.  According to BP’s website, it admitted in its plea agreement that “the company's approach to monitoring and managing corrosion in Prudhoe Bay oil transit lines failed to properly consider the risks posed by changing operating conditions in the field and that, as a result, BPXA failed to take necessary actions to prevent the March 2006 pipeline spill.”    

It now seems likely that BP “failed to properly consider the risks” posed by a blowout from a deepwater well in the Gulf of Mexico.  Here is a copy of BP’s Exploration Plan for the well that blew out on April 20, 2010; judge for yourself.  

Two additional theories of criminal liability that the federal prosecutors may be looking into are making false statements to the Minerals Management Service (MMS) and obstructing justice by destroying or failing to produce evidence to investigators.  To remind you, Scooter Libby was convicted of making false statements to federal investigators, among other crimes, and sentenced to prison (his sentence was commuted by President Bush).  The accounting firm Arthur Anderson was convicted of obstruction of justice for shredding records concerning its audit of Enron.  Its conviction was later overturned, but not in time to keep the firm from essentially going out of business.  Attorney General Holder has reportedly told BP not to destroy documents that could be relevant in an investigation. 

I think that DOJ is doing the right thing.  While there may be some chill in the relationship between BP and the federal government given the now-public criminal investigation, increased pressure on BP to get this problem fixed is a good idea.  DOJ’s actions may also make other oil companies rethink the claims or promises they are making to the Minerals Management Service or other federal agencies. 

At the end of the day, if BP or another corporate actor is charged with a federal crime and convicted, I hope that any fine imposed or conditions of probation would be commensurate with the BP Deepwater Horizon oil spill’s status as the worst environmental disaster in United States history.