June 2, 2010 in Nation/World

Federal officials launch probe of oil spill

Investigators will search for evidence of illegal behavior
James Oliphant, Peter Nicholas And Nicole Santa Cruz Los Angeles Times
 

WASHINGTON – Striking an increasingly aggressive posture as the Deepwater Horizon disaster enters its second month, the Obama administration said Tuesday it would launch a criminal probe into the origins of the 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,” Attorney General Eric H. Holder Jr. said in New Orleans after viewing spill damage, which he described as “heartbreaking to see.”

Holder said he believes there is “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 of Mexico.

Justice Department lawyers are investigating whether the companies that owned and operated the Deepwater Horizon rig, which include BP and Transocean Ltd., violated an array of federal statutes that carry 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.

News of the criminal probe sent BP stock tumbling again Tuesday. Shares fell almost 15 percent to $36.52 on the New York Stock Exchange. The decline sent other energy stocks tumbling, ultimately causing the Dow Jones industrial average to fall 112 points.

BP 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.”

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

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

The president met Tuesday 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 Democratic Sen. Bob Graham of Florida and William K. Reilly, who headed the Environmental Protection Agency under President George H.W. Bush.

Obama said he expects 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 under way, temporarily accelerate the leak flow by as much as 20 percent.

Interactive graphics

BP tries to stop massive gusher

A look at the companies and industries affected

From the Associated Press

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