Wednesday, July 7, 2010

Criminal cases filed against BP under federal RICO law

According to a story in the July 5 Bloomberg Businessweek by Paul M. Barrett and Justin Blum, “It’s almost a foregone conclusion… that the federal investigation of the Gulf of Mexico oil spill will produce criminal charges.”
Prosecutors “are very likely to bring criminal charges against BP and other companies involved,” says David M. Uhlmann, a former chief of the Justice Department’s environmental crimes section who now teaches at the University of Michigan Law School, Bloomberg Businessweek reported.
Whether BP or any individuals will face felony charges - or even prison time - is a more complicated question.
In the past, the U.S. Department of Justice has usually based criminal charges in oil spill cases on violation of the Clean Water Act, under which the party responsible for the spill can be fined up to $4,300 per barrel spilled if willful negligence is proved.
However, in the case of the Deepwater Horizon explosion and related Macondo well blowout, Justice may opt to charge BP under the federal RICO statute.
One hint of what a broader indictment might look like comes from private civil-racketeering lawsuits that have been brought on behalf of property and business owners in Alabama, Louisiana, and Florida.
One of the suits, filed on June 12 in federal district court in Pensacola, Fla., accuses BP and Chief Executive Officer Tony Hayward not only of instances of pollution, but also alleges the company engaged in an illegal “enterprise” to mislead regulators over a period of years.
Included in the alleged pattern of wrongdoing was BP’s failure to improve its safety practices in response to past incidents, resulting in criminal fines, the suit says. An explosion in 2005 at BP’s Texas City refinery, which killed 15 workers, and an oil leak in 2006 from a BP pipeline in Alaska are among the past BP criminal actions cited in the suit.
Taken together with the Deepwater Horizon disaster, the Florida suit alleges, these events show that BP engaged in a scheme that violated the civil provisions of the Racketeer Influenced and Corrupt Organizations (RICO) Act.
The RICO law was enacted in 1970 to help prosecutors put Mafiosi behind bars. It has been used more broadly against corporations and high-profile individuals. It allows prosecution of people who operate or oversee an illegal enterprise, even if they did not commit the main criminal acts in question. The maximum prison term is 20 years for each count.
In the right hands, the Pensacola civil suit could evolve into something more: a criminal indictment.
“I would be amazed if the U.S. government didn’t use this as a road map to some sort of criminal case,” says attorney J. Michael Papantonio, whose firm filed the Pensacola suit.
In his suit, Papantonio asserts that filings BP made from 2000 to 2009 with the Interior Department’s Minerals Management Service misrepresented the company’s preparations for a potential deepwater disaster and dishonestly minimized risks.
Contrary to BP’s written assertions that it was capable of remedying a major oil spill, the company and its executives have conceded since the April 20 rig explosion that they weren’t prepared, the suit claims.
A separate civil racketeering suit filed in Louisiana on June 21 makes similar allegations. The one in Alabama is narrower and targets BP’s conduct in responding to damage claims since the spill.
The RICO approach could allow BP’s antagonists - in either a civil or criminal context - to argue that cost-cutting steps in 2010 contributed to the blowout that killed 11 workers and led to the environmental crisis.

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