The government is deep into its criminal investigation of BP, Transocean and Halliburton for the worst environmental disaster in U.S. history – the oil spill in the Gulf of Mexico.
If anyone outside the Environmental Crimes Section at the Justice Department knows what to expect – it’s David Uhlmann.
Uhlmann served in the section for 17 years – and headed it for seven – before becoming a professor at the University of Michigan Law School in July 2007.
He has recently authored an article – “After the Spill Is Gone: The Gulf Of Mexico, Environmental Crime, And the Criminal Law” – that will be published this spring in the Michigan Law Review.
In the article, Uhlmann flat out predicts that the Justice Department will bring criminal charges against BP, Transocean, and in all likelihood Halliburton.
The charges will include criminal violations of the Clean Water Act and the Migratory Bird Act – two of the environmental crimes charged in the Exxon Valdez oil spill case.
But Uhlmann says that the case will also include federal manslaughter charges for the deaths of the eleven workers who died when the Deepwater Horizon well exploded in April 2010.
In an interview last week with Corporate Crime Reporter, Uhlmann said “there is no question that there will be a criminal prosecution of BP and the other companies involved in the Gulf oil spill.”
“Under the Clean Water Act, it is a crime to negligently discharge oil into the exclusive economic zone of the United States or in connection with drilling activities under the Outer Continental Shelf Lands Act.”
“Both provisions apply here.”
“There is ample evidence that BP, Transocean, and Halliburton were negligent, and that their negligence made the spill possible.”
“Under those circumstances, the Justice Department has no choice about whether to bring criminal charges.”
“The President has described the Gulf oil spill as the worst environmental disaster in U.S. history.”
“The precedent for bringing criminal charges was set more than 20 years ago when the Justice Department prosecuted Exxon for the Valdez oil spill in Prince William Sound.”
“So, it is simply a matter of time before criminal charges are filed, because the law authorizes them, the case warrants prosecution, and the precedent has been set for many years.”
What about the Seaman’s Manslaughter Statute – the law under which Uhlmann says the manslaughter charges will be brought?
“It’s a very old statute, which predates the environmental laws that were violated in this case,” Uhlmann says.
“Under the Seaman’s Manslaughter Statute, it is a crime if a worker dies aboard a vessel because of negligence or inattention to duties by the master of the vessel or the owner of the vessel.”
“It’s a felony violation that could result in up to ten years in prison and significant fines.”
“The worker deaths are an important part of the Gulf oil spill case that should not be forgotten.”
“As terrible as the ecological harm was to the Gulf, this tragedy began with eleven people losing their lives.”
“We should not lose sight of that.”
“I expect the Justice Department to include criminal charges under the Seaman’s Manslaughter Statute in any indictment.”
“Prosecutors will want to address the misconduct that caused those workers to die, and the Seaman’s Manslaughter Statute allows them to do so,” Uhlmann said. “I would be very surprised if charges are not brought based on the worker deaths.”
Uhlmann said that under both the Clean Water Act and the Seaman’s Manslaughter Statute, criminal charges may be brought based on negligence.
But violations of the Seaman’s Manslaughter Statute are felonies. The Clean Water Act negligence charges are misdemeanors.
“The government wants this to be a felony case, which is another reason why I expect the government to charge violations of the Seaman’s Manslaughter Statute,” Uhlmann says.
Uhlmann rejects the idea of a deferred prosecution agreement for the Gulf oil spill case.
“Deferred prosecution would be completely inappropriate after a tragedy like the Gulf oil spill,” Uhlmann says.
“Eleven people died. A fragile ecosystem was irreparably damaged. Communities along the Gulf suffered billions in economic losses.”
“If the companies that caused such terrible damage do not deserve criminal prosecution, it is hard to imagine when criminal prosecution would be warranted.”
“Congress provided three remedies to the government for addressing environmental violations – criminal prosecution, civil enforcement, or administrative penalties.”
“A deferred prosecution is not a fourth remedy. A deferred prosecution is an agreement not to seek criminal charges in exchange for the functional equivalent of civil penalties.”
“It is one thing when a first-time offender commits a minor drug offense and is told by prosecutors that she will not face criminal charges if she performs community service and does not commit any future violations.”
“It is an entirely different matter when a large corporation is allowed to avoid criminal prosecution, by agreeing to pay millions – or billions – in civil penalties.”
“Apart from the ethical questions deferred prosecutions raise, they send a terrible message – if corporations agree to pay the government enough money, they can avoid criminal charges.”
“We would never allow a wealthy individual to avoid criminal charges by paying the government large sums of money, and we should not allow large corporations to do so either.”
“The Gulf oil spill is a clear cut criminal violation of the Clean Water Act, the Seaman’s Manslaughter Statute, and the Migratory Bird Treaty Act.”
“If the outcome of the Gulf oil spill case is a deferred prosecution, the Justice Department will have a lot of explaining to do.”
What about the fines?
“We will see a record criminal fine paid by BP – the largest criminal fine ever paid in the United States,” Uhlmann says.
“To date, the largest criminal fine paid by a corporation was the $1.3 billion paid by Pfizer in the fall of 2009 for illegal marketing of Bextra.”
“The fine paid by BP will dwarf the fine paid by Pfizer. Under the Alternative Fines Act, the government can seek up to twice the losses associated with the Gulf oil spill, which puts the maximum fine well into the tens of billions of dollars.”
“I don’t think we will see a $30 billion or a $40 billion fine, but a criminal sentence of $10 billion would be appropriate, along with an equal amount in civil penalties.”
“At a minimum, we will see a multi-billion criminal fine for BP.”
“Transocean and Halliburton are smaller companies with a smaller role in causing this tragedy.”
“I would expect their fines to be substantially less, but each is likely to pay significantly more than the $125 million paid by Exxon for the Valdez tragedy, which until now was the largest fine ever paid for environmental crime.”
What about individual responsibility?
“The Justice Department is going to look long and hard at the role of individuals in causing the spill,” Uhlmann says.
“There is no question that the Department will want to prosecute individuals.”
“The possibility that culpable individuals will go to jail is one of the most significant features of criminal enforcement under the environmental laws and provides a significant deterrent effect.”
“But the government is going to struggle to identify individuals high enough up in the chain of command at BP, Transocean and Halliburton to warrant criminal prosecution.”
“There were supervisors on the rig and shore side personnel involved in the decisions about how to conduct this drilling operation.”
“Those individuals could be charged with criminal violations. But if this is a case of corporate mismanagement, poor risk assessment, and inadequate training and supervision, it is hard to blame relatively low-level individuals.”
“Indeed, it may not be fair to charge those individuals, since they had no control over the broader corporate policies that made this tragedy possible.”
[For a complete transcript of the Interview with David Uhlmann, see 25 Corporate Crime Reporter 8 (10), February 21, 2011, print edition only.]