The Oil Spill: Will BP Face Criminal Charges?

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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. Two days after Papantonio filed his suit, Representatives Henry A. Waxman (D-Calif.) and Bart Stupak (D-Mich.) of the House Energy & Commerce Committee outlined in a 14-page letter to BP five decisions the company made that allegedly sacrificed safety for cost savings.

One example involved a "cement bond log," in which acoustics are used to determine whether the cement around the well had formed a tight bond or whether the cement job was imperfect, in which case gas could leak out. BP had hired the energy services contractor Schlumberger to conduct the cement bond test but sent the Schlumberger (SLB) crew back to shore the morning of the Apr. 20 explosion. The Waxman-Stupak letter suggests that BP canceled the test to save itself $128,000 and an additional 9 to 12 hours for a job that was already way over budget and behind schedule. Gordon Aaker Jr., an engineering consultant hired to advise the House committee, called the failure to test the cement bond "horribly negligent."

BP spokesman Scott Dean declined to comment, saying the company isn't talking about pending litigation.

Andrew Ames, a Justice Dept. spokesman, also declined to comment beyond referring to Attorney General Eric Holder's June 1 statement, in which he said prosecutors would look into potential civil and criminal infractions under a range of environmental and other federal statutes.

U.S. courts have narrowed the potential applicability of RICO in recent years. Winning a criminal racketeering verdict requires meeting a stiffer standard of proof than the one that applies in a civil case. Still, the filing of a criminal racketeering indictment against BP or its employees could have catastrophic effects for the company. Such charges likely would result in further reductions to BP's credit rating and increased chances of a Chapter 11 bankruptcy filing. Financial instability could endanger the $20 billion escrow fund BP has agreed to create to pay claims related to the spill.

For that reason alone, the Obama Administration would think long and hard before going the RICO route. On June 16, President Barack Obama said "BP is a strong and viable company, and it is in all our interests that it remains so."

On the other hand, if oil continues to spew all summer, and the slick spreads around the Florida Keys and up the East Coast, demands for punitive government action could grow.

The bottom line: A civil racketeering suit in Florida could provide a road map for prosecutors looking to bring felony charges against BP.

Barrett is an assistant managing editor at Bloomberg Businessweek. Blum is a reporter for Bloomberg News.

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