Three reasons the court should reject Halliburton’s plea agreement

Today, a federal judge will decide whether to approve a plea agreement that calls for Halliburton Energy Services to pay a trivial $200,000 fine for destroying evidence after BP’s 2010 oil spill in the Gulf of Mexico.  The judge should reject the deal.

Here’s why:

1)      The misdemeanor charge does not reflect the seriousness of the offense.

Halliburton concedes that employees twice erased computer simulations that undercut the company’s argument about the causes of the disaster.

Destruction of evidence can lead to multiple felony counts, including obstruction of justice. The evidence that was intentionally deleted is material to the cause of the Macondo well blowout, which led to an explosion that killed 11 men and the worst oil spill disaster in U.S. history. In response the plea agreement between the Department of Justice and Halliburton Energy Services Inc., Southwestern Law School professor, Kelly Strader said, “Given the scale of the harm caused by the oil spill, it seems surprising that the government would accept a plea to a relatively minor charge.”

Though the joint memorandum submitted by the U.S. government and Halliburton Energy Services Inc. cites a decision by the Southern District of Texas in which the court opines that a court may not reject a plea proposed under Rule 11(c)(1)(C) on the grounds that it fails to charge a sufficiently severe crime and goes on to suggest that a court must “defer to the government’s position except under extraordinary circumstances,” a body of case law exists that challenges the constraints, imposed by corporate plea agreements, on judges’ sentencing functions and their ability to administer justice and protect the public interest.

2)      The fine associated with the charged offense is paltry and will not deter future criminal conduct for the corporation or other corporate actors.

In response to the Halliburton plea agreement, Robert Weisberg, law professor and director of Stanford Law School’s criminal justice center, asserted,  “One might read this as a deterrent in the reverse sense, in that it strongly encourages future corporate defendants to admit guilt, make separate unconditional payouts and cooperate like crazy, with the ‘carrot’ being a mere misdemeanor conviction.”

Moreover, the joint parties’ argument supporting the sentencing agreement points out that the appropriate assessment of fines, for the charged misdemeanor, should also consider additional factors, including “in the case of organizational defendants, the size of the organization and any measures taken by it to discipline responsible employees and to prevent a recurrence.”

To this end, as reported by The Washington Post, Halliburton will pay the maximum fine for a misdemeanor, but the $200,000 is equal to just under four minutes’ revenue for the company. And according to a Halliburton official, the employee who instructed two colleagues to destroy computer simulations that would have been evidence in the investigation of the oil spill has retained his anonymity and continues to work for the company. 

3)      The agreement does not accurately depict the history or characteristics of the defendant

In defending the charged offense, the joint parties cite the fact that Halliburton Energy Services Inc. has not been subject to any criminal actions over the past 10 years.  This information is intended to demonstrate that the plea agreement reflects, as recommended in Federal Sentencing Guidelines, the consideration of the history and characteristics of the defendant in determining appropriate sentencing.  This is a myopic view of the parties’ focus on the corporation’s conduct, because it fails to consider the corporation’s history that is most germane to this case. The National Oil Spill Commission investigation into the BP disaster found that the Halliburton cement used to seal the bottom of BP’s wild Gulf well in April 2010 was unstable, that it was used despite multiple failed tests in the weeks leading up to the massive well blowout, that Halliburton knew about the problems, and that it used the cement mixture anyway.

Further, the joint parties note in several places throughout the memo that Halliburton Energy Services Inc. has provided full and exceptional cooperation in the Deepwater Horizon Task Force’s investigation of the events surrounding the blowout of the Macondo well on April 20, 2010, and the ensuing oil spill. This point is a substantial overstatement.

Halliburton has been far from cooperative. For example, U.S. District Court Judge Carl Barbier, who is presiding over the civil case to assign liability for the accident, ordered Halliburton in 2010 to turn over to federal investigators samples of the cement the company used to try to seal the Macondo oil well before it exploded. But Halliburton did not turn over the test results on those samples until Aug. 1, 2011 – 16 months after the accident.

Even by the government’s own accounting of efforts to recover the evidence deleted, Halliburton’s cooperation cannot be characterized as exceptional. The memo states that while Halliburton “undertook substantial efforts to forensically recover” the deleted computer models, its efforts “ultimately were unsuccessful.” Following this substantial but failed effort and pursuant to court order, “a consulting company with technology expertise eventually recreated the models” based on the same inputs that a Halliburton “employee certified he believed were used in May/June 2010”.

The government also seems to attribute the bargain-basement plea agreement to the fact that Halliburton disclosed the offense to investigators as soon as it learned about it. The evidence was destroyed more than three years ago. One has to wonder why it took so long – after multiple government, industry and private investigations – for this indiscretion to come to the attention of Halliburton senior executives.

One should further wonder if the cementing technology director, who ordered two employees to run and then destroy the simulations, was directed to run those tests by his boss or by those running internal investigations into the well blowout. If so, shouldn’t those parties have wondered, after three years, why they never got those reports? If this plea agreement is accepted, these are the kinds of questions the public will never know the answers to.