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U.S. announces criminal inquiry in oil spill disaster

Justice Department lawyers are investigating the origins of the rig explosion and whether BP and Transocean Ltd. violated federal statutes. A new plan to stop the flow proceeds.

June 02, 2010|By James Oliphant, Peter Nicholas and Nicole Santa Cruz

Reporting from Washington and New Orleans — — Striking an increasingly aggressive posture as the Deepwater Horizon disaster enters its second month, the Obama administration said Tuesday it would launch a criminal investigation into the origins of the Gulf of Mexico rig explosion that killed 11 people and caused the largest oil spill in U.S. history.

"If we find evidence of illegal behavior, we will be extremely forceful in our response," Atty. Gen. Eric H. Holder Jr. said in New Orleans after viewing spill damage, which he described as "heartbreaking to see."

Holder said he thought there was "sufficient evidence" for a criminal investigation into the spill, which has halted fishing in nearly a third of the gulf's federal waters, tainted shorelines and spread across a 200-mile radius of the gulf.

Justice Department lawyers are investigating whether the companies that owned and operated the Deepwater rig, which include BP and Transocean Ltd., violated an array of federal statutes that contain criminal and civil penalties, including the Clean Water Act and the Endangered Species Act.

"There are a wide range of possible violations under these statutes, and we will closely examine the actions of those involved with the spill," said Holder, who did not identify the companies targeted by the inquiry and did not speculate about the range of criminal penalties they might face.

BP Chief Operating Officer Doug Suttles later told CNN that the company "will fully cooperate" with the federal inquiry. "Clearly everyone wants this to be fully investigated from every dimension," he said.

As Holder toured the oil-stained Louisiana coast, President Obama at the White House pledged to bring those responsible for the spill to justice.

The president met with members of a commission he formed to recommend steps to prevent a similar disaster. He appeared in the Rose Garden with the panel's co-chairmen, former Sen. Bob Graham (D-Fla.) and William K. Reilly, who headed the Environmental Protection Agency under President George H.W. Bush.

Obama said he expected a report from them in six months.

"We have an obligation to investigate what went wrong and to determine what reforms are needed so that we never have to experience a crisis like this again," Obama said.

After abandoning its "top kill" effort to plug the well, BP moved ahead Tuesday with its next plan to capture the flow of crude, which has been pouring into the gulf at a rate of more than 500,000 gallons a day since the April 20 rig explosion.

In the new effort, underwater robots will saw off the leaking riser pipe that is connected to the failed blowout preventer atop the well head. A containment cap will then be placed over the shorn end to funnel most of the oil flow into a pipe leading to a drilling ship.

"We're not talking about capping the well anymore. We're talking about containing the well," said Coast Guard Adm. Thad Allen, the spill's national incident commander.

The cut-and-cap procedure is expected to take several days and may, while underway, temporarily accelerate the leak flow by as much as 20%. The move comes as oil washes ashore in western Mississippi Sound and more tar balls mar the ecologically sensitive Dauphin Island, Ala.

BP spokesman John Curry said that starting in a couple of weeks, BP also hoped to start drawing oil through the hoses that were feeding drilling mud into the well as part of the top kill procedure.

As a precaution against storm damage in the hurricane season, a flexible riser pipe that can be easily connected and disconnected will also later be attached to the cap system.

Curry said plans to install a second blowout preventer over the damaged one were now on the back burner. And it is not until August, when two relief wells should be finished, that the well may finally be brought under control.

News of the criminal inquiry sent BP stock tumbling again Tuesday. Shares fell almost 15% to $36.52 on the New York Stock Exchange. The company has lost about $67 billion in market value since the explosion, while BP's cleanup costs are nearing $1 billion.

Phil Flynn, an analyst with PFGBest Research in Chicago, said BP's reputation among traders was "dog meat. The market had been hopeful that something they were trying might work, but it hasn't. They are probably looking at the loss of a year's profits on the cleanup costs alone."

Louisiana Gov. Bobby Jindal on Tuesday called for BP to pay for his ambitious plan to build sand berms on the state's barrier islands to protect the coast from the massive slick.

The U.S. Army Corp of Engineers approved a modified permit for the state to go ahead with a test project that entails dredging sand from the gulf and erecting 6-foot barriers.

Allen is expected to reach a decision by Wednesday on whether to approve more expansive construction.

joliphant@latimes.com

peter.nicholas@latimes.com

nicole.santacruz@latimes.com

Oliphant and Nicholas reported from Washington and Santa Cruz from Los Angeles. Times staff writers Bettina Boxall and Ron White in Los Angeles contributed to this report.

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