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Big Suits: U.S. v. BP et al.

BP p.l.c. and several subsidiaries were ordered to dish out $373 million in fines and restitution in two plea agreements and a deferred prosecution agreement.

The agreements and fine, all announced October 25, stemmed from three separate investigations. The company admitted to violations of the Clean Air and Clean Water Acts at two BP units, as well as fraud at a propane trading unit.

One plea stemmed from a March 23, 2005, explosion at a Texas City BP refinery that killed 15 employees and injured 170 others. The Environmental Protection Agency and the U.S. Department of Justice began a criminal investigation in June 2005 of BP Products North America Inc.'s conduct prior to that explosion. The investigation led BP to admit, according to a company statement, that its written procedures to ensure its equipment's safety and integrity were inadequate, and that it had failed to inform employees of known fire and explosion risks. Under the October 25 deal, BP agreed to plead guilty to a felony violation of the Clean Air Act and to pay a $50 million criminal fine, the largest ever assessed for such a violation. It will also implement safety-related renovations of its plant. (On November 20, four victims of the explosion and eight surviving family members of persons killed in the explosion filed a motion in federal district court in Houston asking that the plea agreement be rejected and a $1 billion fine imposed.)

Another plea was related to two pipeline leaks in 2006 that released more than 200,000 gallons of crude oil over the Alaskan tundra. The first leak, discovered on March 2, 2006, was the largest spill ever to occur on Alaska's North Slope. During EPA and Justice investigations, the government concluded that the BP unit was aware of corrosion along the pipeline where the leak occurred but did not respond appropriately. The company pleaded guilty to one violation of the Clean Water Act and will pay a $12 million criminal fine, $4 million in criminal restitution to the state of Alaska, and $4 million to the U.S. Fish and Wildlife Service.

A third government probe of BP was prompted by extensive trading losses sustained by propane market participants in February 2004. The  Department of Justice's fraud section investigated allegations that BP's propane-trading unit attempted to corner the propane market by using the company's financial resources to purchase more than the available supply of propane and then sell it at an artificially inflated price. Losses to other market participants totaled $53 million.

In a criminal information filed in federal district court in Chicago, BP America, Inc. admitted to violating the Commodity Exchange Act and committing mail and wire fraud. As part of a deferred prosecution agreement, BP consented to three years of federal monitoring. It also agreed to cooperate with continuing investigations. (Four BP traders have been indicted.) BP will pay $53 million in restitution, as well as a criminal penalty of $100 million and a $25 million payment to the U.S. Postal Inspection Service Consumer Fraud Fund.

The trading investigation triggered a separate suit by the Commodity Futures Trading Commission. Under a consent order signed October 25, BP will pay a $125 civil penalty.


IN-HOUSE: At the environmental crimes section of the U.S. Department of Justice: senior trial attorney Christopher Costantini and trial attorneys Daniel Dooher, David Joyce and J. Ronald Sutcliffe. At the U.S. attorney's office in Houston: assistant U.S. attorneys Cynthia DeGabrielle and Mark McIntyre. At the U.S. attorney's office in Anchorage: special assistant U.S. attorneys Daniel Cheyette and Todd Mikolop and assistant U.S. attorney Andrea Steward. At the Environmental Protection Agency: regional criminal enforcement counsel Dean Ingemansen. At the U.S. Department of Justice criminal division, fraud section: deputy chief Paul Pelletier and trial attorneys Jerrob Duffy and Stacey Luck. At the Commodity Futures Trading Commission: trial attorney Joseph Konizeski, deputy directors Judy Lee, Joan Manley, and Charlotte Ohlmiller, and associate director Paul Hayeck.


IN-HOUSE: BP declined to provide names of in-house counsel.

VINSON & ELKINS: Carol Dinkins. (Dinkins is in Houston.) The firm was sole criminal counsel for BP handling the Clean Air Act investigation and cocounsel on the Clean Water Act violations. Dinkins declined to name others on the team.

FELDMAN ORLANSKY & SANDERS: Jeffrey Feldman. (Feldman is in Anchorage.) The firm also handled the Clean Water Act violation for BP. The firm often represents the company in Alaska matters.

DAVIS GRAHAM & STUBBS: Michael Gallagher and associate Andrea Wang. (Both are in Denver.) The firm also handled the Clean Water Act violation.

SULLIVAN & CROMWELL: Steven Peikin, Kenneth Raisler, special counsel Jason de Bretteville and William Schroeder, and associates Stephen de Vore, Matthew Fitzwater, Qian Gao, Michael Geiser, Scott Hall, Sverker Hogberg, Niall O'Murchadha, Katherine Taylor, and Melissa Turitz. (De Bretteville, Hall and Hogberg are in Palo Alto; the rest are in New York.) The firm handled the Commodity Exchange Act violation for BP, a longtime client.

BAKER BOTTS:William Jeffress, Jr., and Mary Spearing. (Both are in Washington, D.C.) The firm regularly advises BP. Baker Botts also handled the Commodity Exchange Act violation for BP.

JONES DAY: David Miller, Daniel Reidy, Lee Ann Russo, and associate Sara Keegan. (Reidy and Russo are in Chicago; Miller and Keegan are in Houston.) The firm, which handled the CFTC's civil case, has worked with BP on other energy trading investigations.

KIRKLAND & ELLIS: Richard Godfrey, Andrew Kassof, Kathryn Taylor, and David Zott. (All are in Chicago.) The firm also handled the CFTC's civil case.