U.S. Justice Staff Said to Urge Subpoenas for BP Managers

U.S. Justice Department attorneys conducting a criminal probe of the BP Plc well explosion in the Gulf of Mexico have recommended that a grand jury be convened and BP managers subpoenaed to determine if any laws were broken, a person familiar with the investigation said.

The subpoenas also would target employees of rig operator Transocean Ltd., said the person, who was briefed by the attorneys and asked not to be identified. London-based BP is the majority owner of the well that exploded on April 20, killing 11 workers and triggering the worst oil spill in U.S. history.

Offshore drilling regulators from the Interior Department agency formerly known as the Minerals Management Service would be summoned to testify about the process under which BP received permits to drill the well about 40 miles (64 kilometers) off the Louisiana coast, and whether any improper relationships existed between agency employees and the company, the person said.

Contractors that worked for BP and Transocean aboard the rig also might be compelled to testify, according to the person.

Senior Justice Department officials still have to approve a grand jury, which would be a special panel or one that sits regularly. The recommendations were made by department attorneys in Washington and New Orleans, the person said. The panel would probably meet in New Orleans, the person said.

Hannah August, a Justice Department spokeswoman, and Kathy English, a spokeswoman for U.S. Attorney Jim Letten of the Eastern District of Louisiana, declined to comment.

BP’s Cooperation

“We continue to cooperate with all government investigations,” said BP spokesman Daren Beaudo, who said he couldn’t confirm or comment on possible recommendations within the Justice Department. Transocean spokesman Guy Cantwell said he had no immediate comment.

The subpoenas could be issued before an investigative panel composed of U.S. Coast Guard and Interior Department officials meets for its next round of public hearings on the catastrophe on Aug. 23 in Houston, the person said.

The Justice Department is investigating whether criminal or civil laws were broken, Attorney General Eric Holder said at a news conference on June 1.

The government has been reviewing whether there were violations of the Clean Water Act, which carries civil and criminal penalties, and the Oil Pollution Act of 1990, which can be used to hold companies liable for cleanup costs.

Also under review is whether there were violations of the Migratory Bird Treaty Act and Endangered Species Act, which provide penalties for injuries to wildlife, and other criminal laws.

Well-Site Leader

Some of the decision-makers on the drilling of the well that failed, including BP’s well-site leader Donald Vidrine, have hired criminal defense attorneys. Seven individuals and nine corporations have been designated parties of interest by the joint Coast Guard-Interior Department investigative panel, which means they could be targets.

Vidrine, one of the senior BP managers in charge of the well on the night of the disaster, has declined twice to answer questions from the joint panel, citing poor health. Vidrine’s co-equal on the rig, Robert Kaluza, also has refused to testify, invoking his constitutional right against self-incrimination.

The investigation is sure to lead to criminal charges against BP and record fines in the billions of dollars, said David M. Uhlmann, a professor at the University of Michigan Law School in Ann Arbor.

BP won’t fight the case and will seek a reasonable payment schedule and a guilty plea to a crime of “negligence,” as opposed to a “knowing” violation, said Uhlmann, a former chief of the Justice Department’s environmental crimes section, in an interview. That would allow BP to pursue its own civil claim against other companies involved in the spill, he said.

Targeting Managers

The Justice Department would have a harder time bringing criminal cases based on the Clean Water Act or other statutes against individual BP employees. Uhlmann said he expects the Justice Department to target managers, either on the rig or in Houston, who made substantive decisions that contributed to the spill. That will take investigators deep into the company’s decision-making process in a probe that may last as long as a year, he said.

“Very in-depth, very intensive,” Uhlmann said in a telephone interview today. Prosecutors will ask whether there was “an exercise of managerial discretion” in deciding whom to charge, he said.

Another issue for investigators will be whether BP misled the government in the weeks immediately before or after the spill. “Nobody gets a pass on misleading the government,” Uhlmann said.

Compensation Payments

Noah Hall, a law professor at Wayne State University in Detroit and a former attorney with the National Wildlife Federation, said civil fines and compensation payments of as much as $50 billion would be more likely to convince BP to change its way of operating than would a criminal case. He said he’s seen nothing to suggest that Chief Executive Officer Tony Hayward or other top executives are guilty of criminal wrongdoing.

“The focus on criminal prosecution is at some level political, giving the public a false sense of justice,” Hall said in a telephone interview today. “If the federal government wanted, it could use civil and criminal law to wipe out the company. But I don’t think they want to.”

To contact the reporter on this story: Joe Carroll in New Orleans at jcarroll8@bloomberg.net.

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