The Oil Spill: Will BP Face Criminal Charges?

Private lawsuits under the Racketeering Influenced & Corrupt Organizations Act may foreshadow federal prosecution

By Paul M. Barrett and Justin Blum

Legal experts agree it's almost a foregone conclusion that the federal investigation of the Gulf of Mexico oil spill will produce criminal charges. After all, mere negligence leading to serious oil pollution constitutes a misdemeanor under the Clean Water Act. Whether BP (BP) or any individual will face felony charges—or even prison time—is a more complicated question. One hint of what a broader indictment might look like comes from an unlikely source: private civil-racketeering lawsuits that have been brought on behalf of property and business owners in Alabama, Florida, and Louisiana.

One of the suits, filed on June 12 in federal district court in Pensacola, Fla., by the plaintiffs' firm, Levin Papantonio Thomas Mitchell Echsner Rafferty & Proctor, not only accuses BP and Chief Executive Officer Tony Hayward of discrete instances of pollution; it also alleges the company engaged in an illegal "enterprise" to mislead regulators over a period of years.

Included in this 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 (Tex.) refinery, which killed 15 workers, and an oil leak in 2006 from a BP pipeline in Alaska are among the episodes 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 & Corrupt Organizations 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, including junk-bond impresario Michael Milken in 1989. 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 hands of a bold prosecutor, the facts and theory that underpin the Levin Papantonio firm's civil suit could add up to 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, an outspoken liberal who appears frequently on cable-TV talk shows. "This is not a case of a mistake. This is an intentional effort to subvert the law."

In his suit, Papantonio asserts that filings BP made from 2000 to 2009 with the Interior Dept.'s Minerals Management Service misrepresented the company's preparations for a potential deepwater disaster and dishonestly minimized risks. One BP document, an "Initial Exploration Plan" submitted to MMS in February 2009, claimed that the company had "the capability to respond, to the maximum extent practicable, to a worst-case discharge or a substantial threat of a discharge," the suit states.

Contrary to such written assertions that BP was capable of remedying a major oil spill, the company and its executives have conceded since the Apr. 20 rig explosion that they weren't prepared, the suit claims. CEO Hayward told the Financial Times in a June 3 article: "What is undoubtedly true is that we did not have the tools you would want in your tool kit." He added that it was "an entirely fair criticism" to say the company had not been ready for a deepwater oil leak.

The Florida suit argues that BP knew all along that its tool kit was deficient and assured the government otherwise. 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.

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