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Reports raise firms’ risk of criminal charges in Gulf spill

- Associated Press - Thursday, January 6, 2011

NEW ORLEANS | Months of investigation by a presidential commission and other panels have heightened the likelihood that companies involved in the Gulf oil spill will be slapped with criminal charges that could add tens of billions of dollars to the huge fines they already face, legal experts said Thursday.

The reports don't blame a single person or group for the series of mistakes. That means that in the end, no one may go to prison for the worst offshore oil spill in U.S. history.

BP, Transocean and Halliburton should survive, thanks to their financial arsenal, though charges would take another big chink out of their armor.

"The evidence of negligence is too compelling and the harm is too great," said David M. Uhlmann, former chief of environmental crimes at the Justice Department. "The Justice Department is likely to believe that BP, Transocean and Halliburton were negligent and should be criminally charged. There's no question about that."

Mr. Uhlmann, now a law professor at the University of Michigan, cited excerpts released Wednesday from the presidential oil spill commission's report, saying the report alone shows the standard for criminal charges has been met.

Among the panel's conclusions: Decisions intended to save time and money created an unreasonable amount of risk that triggered the April 20 explosion in the Gulf of Mexico and led to the spill. The panel said a similar disaster could happen again without significant reforms by industry and government.

However, the panel also concluded that the mistakes were the result of systemic problems, not necessarily the fault of any one individual.

The blast killed 11 workers on the rig Deepwater Horizon and led to more than 200 million gallons of oil spewing from BP's well a mile beneath the Gulf of Mexico, according to government estimates. BP disputes the figure but has yet to provide its own.

The rising likelihood of criminal charges would cause fines to soar.

Under the Clean Water Act, BP alone already faces up to $21 billion in civil fines. Gregory Evans, a Los Angeles lawyer who is an expert in environmental law, said that under the Alternative Fines Act, a criminal prosecution would pose the threat of a criminal fine equal to twice the aggregate financial losses caused by the offense.

A July study by Oxford Economics commissioned by the U.S. Travel Association estimated that the oil spill could cost the Gulf region $22.7 billion in travel-related economic losses over three years. That could translate into a more than $45 billion criminal fine.

The Justice Department has an ongoing criminal investigation and already has sued some of the companies involved, seeking unspecified damages. Halliburton, the cement contractor for the well that blew out, was not named in the Justice Department lawsuit.

"We continue to aggressively investigate the causes of the spill and will examine all evidence and facts that may be relevant to that investigation and all parties potentially responsible for the spill," Justice spokesman Wyn Hornbuckle said.

The companies pointed fingers at each other — again — in statements after the presidential panel's conclusions.

BP PLC said the accident was the result of many causes, involving multiple companies. Transocean Ltd., which owned the rig being leased by BP to perform the drilling, said that "the procedures being conducted in the final hours were crafted and directed by BP engineers and approved in advance by federal regulators." Halliburton Co. also said it acted at the direction of BP and was "fully indemnified by BP."

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