OIL SPILL LEGAL NEWS, Vol. 2, Companies with Ties to the Gulf Oil Spill Should Take Heed of Government's Recently Announced Criminal and Civil Investigations


Oil Spill Legal News – Update No. 2, June 7, 2010

On June 1, 2010, Attorney General Eric Holder announced the initiation of a criminal investigation into the massive Gulf oil spill, promising that those ultimately found responsible for the spill would be “held accountable” to the American people. Attorney General Holder pledged the Justice Department’s resources to conduct the investigation and vowed to “ensure that every cent of taxpayer money will be repaid and damages to the environment and wildlife will be reimbursed.” This announcement came on the same day that the White House heralded the formation of a National Commission tasked with providing a “full and vigorous accounting” of the events that led to the Gulf Oil Spill.  President Obama noted the spill occurred in an environment where “there’s been a far too cozy relationship between oil companies and the agencies that regulate them,” and charged the Commission with the responsibility of examining the operation of the oil and gas industry by conducting public hearings and obtaining information from all “relevant companies.”

Because both the criminal and civil investigations into the spill are in their infancy, their exact nature and scope remain largely undefined.  At a minimum, however, the investigations are likely to explore potential violations of the Clean Water Act, Refuse Act, Oil Pollution Act, Endangered Species Act, and Migratory Bird Treaty Act.  The government employed these statutes after the Exxon Valdez disaster, perhaps the most notable criminal investigation of this kind.

Regardless of the precise focus of the impending investigations, companies with ties to the spill should be mindful of certain guiding principles. Foremost among these is need to plan ahead for the challenges presented by those investigations, and remain vigilant when government contact occurs. In virtually all investigations, the government interacts with a broad spectrum of parties – from those who are targeted for criminal prosecution to those from whom the government merely seeks isolated categories of documents or information, as well as others who fall somewhere in between. Unfortunately, it is not always clear where the company stands on that spectrum at the point of government contact, and that status can change over time depending on the evolution of the investigation.

Even with the level of uncertainty which currently shrouds the Gulf Oil Spill investigations, companies with ties to the disaster can and should formulate a plan of action for the swarm of government inquiries likely to follow. That strategy starts with establishing and maintaining clear lines of communication with the company’s employees. When examining a company’s conduct, government investigators frequently initiate contact with individual employees either through phone calls or visits to their homes. Depending on the particular nature of a company’s involvement in the Gulf Oil Spill, companies should install a plan to notify employees that they may be contacted, and provide them guidance on how to respond when contact occurs. While it goes without saying that employees should never be told that they cannot speak to investigators, it is entirely proper, and almost always advisable, to inform employees of three points:

  • The company intends to work with its counsel to manage the investigation, and work cooperatively with the government to as great an extent possible to bring the matter to an efficient and favorable resolution;
  • As part of that process, the company needs to know which employees have been contacted, and for what purpose, and therefore requests that any employee who is contacted report that fact immediately to a designated individual (typically in-house counsel or a member of senior management); and
  • Each employee may decide for themselves whether they wish to speak to government investigators.  In order to allow employees to make an informed decision about whether and on which terms to speak to investigators, the company will provide a lawyer who will consult with them beforehand and represent them during any subsequent questioning.
  • Employees should also be reminded of their obligation to maintain the confidentiality of information in communications with anyone outside the company, other than government investigators.

In an environment marked by growing concern about the escalating environmental and economic damage caused by the Gulf Oil Spill, companies with ties to the disaster must take heed of the substantial risks presented by the government’s recently announced investigations.  Installing a plan of action to manage and respond efficiently to government  inquiries – in whatever form they take – represents the most effective way to mitigate the risks presented.

Waller Lansden will continue to monitor events and issues related to the Gulf Oil Spill. For additional information on government civil and criminal investigations ( 866-362-6380).

The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.