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Leaked memo re: Oil Spill
05-14-2010, 06:46 PM,
#16
RE: Leaked memo re: Oil Spill
US Senate Begins Oil Spill Cover-Up

By Tom Eley

Global Research, May 13, 2010
World Socialist Web Site - 2010-05-12

On Tuesday, the US senate began hearings into the Deepwater Horizon disaster, which took the lives of 11 workers in an April 20 explosion and has since poured millions of gallons of oil into the Gulf of Mexico, threatening the region with an environmental and economic catastrophe.



Appearing before the Energy and Natural Resources Committee in the morning and the Environmental and Public Health Committee in the afternoon were executives from the three corporations implicated in the disaster: Lamar McKay, president of the US operations of BP, which owned the oil and the drill site; Steven Newman, president of Transocean, the contractor that owned the rig and employed most of its workers; and Tim Probert, an executive with Halliburton, which contracted for the work of cementing the rig’s wellhead one mile beneath ocean’s surface.



The hearing resembled a falling out among thieves, with multi-millionaire executives—who, until April 20, had collaborated in thwarting basic safety and environmental considerations—each blaming the other for the explosion.



McKay of BP blamed Transocean. “Transocean owned the Deepwater Horizon drilling rig and its equipment, including the blowout preventer,” he said. “Transocean’s blowout preventer failed to operate.” Newman flatly denied that the blowout preventer was responsible for the disaster, shifting blame to BP, which he said controlled the operation, and Halliburton, which was responsible for the cementing around the well cap. “The one thing we know with certainty is that on the evening of April 20 there was a sudden, catastrophic failure of the cement, the casing, or both,” Newman said. Probert of Halliburton pushed back, indicating that BP and Transocean had moved forward operations before cementing was adequately set.



There was, in fact, some harmony between the accounts offered by the executives of Halliburton and Transocean, both of whom appeared to suggest that BP ordered the skipping of a usual step in offshore drilling—the placing of a cement plug inside the well to hold explosive gases in place. That this step was passed over was corroborated by two workers on the rig, who spoke to the Wall Street Journal on condition of anonymity. The workers also told the Journal that BP first cleared the decision with the US Department of the Interior’s Minerals Management Service (MMS). Both BP and the MMS refused comment to the Journal.



Robert Bea, a University of California at Berkeley engineering professor, has gathered testimony from Deepwater Horizon survivors that indicates the rig was hit by major bursts of natural gas, promoting fears of an explosion just weeks before the April 20 blast, the New Orleans Times-Picayune reports. This raised concerns about whether mud at the well head should be replaced by much lighter seawater prior to installation of a concrete plug. The decision to proceed won out, according to information gathered by Bea.



Whatever the immediate cause of the disaster, the clear thrust of the hearings was to focus public outrage on a single, correctable “mistake,” such as a mechanical failure or regulatory oversight, in order to obscure the more fundamental reasons for the disaster: the decades-long gutting of regulation carried out by both Republicans and Democrats at the behest of the oil industry that made such a catastrophe all but inevitable.



A similar calculation lay behind Department of the Interior Secretary Ken Salazar’s Tuesday announcement that the MMS, which ostensibly regulates offshore oil drilling, will be split into two units—one that collects the estimated $13 billion in annual royalties from the nation’s extractive industries, and one that enforces safety and environmental regulations. Salazar’s claim that this would eliminate “conflicts of interest” in government regulation was nervy, to say the least, coming from a man with long-standing and intimate ties with oil and mining concerns, including BP.



Indeed, more farcical than the executives’ recriminations against each other was the spectacle of senators attempting to pose as tough critics of the oil industry. The US Senate, like the House of Representatives, the Department of the Interior, and the White House, is for all intents and purposes on the payroll of BP and the energy industry as a whole. Among the senators sitting on the two committees who have received tens of thousands in campaign cash from BP and the oil industry are Richard Shelby (Republican, Alabama), Mary Landrieu (Democrat, Louisiana), John McCain (Republican, Arizona) and Lisa Murkowski (Republican, Alaska).



One of the few truthful moments in the hearings came when an exasperated Murkowski told the executives, “I would suggest to all three of you that we are all in this together.” Murkowski and Landrieu also expressed concerns that the disaster could compromise offshore drilling.



None with even a passing familiarity of the workings of Washington or the Senate can have any doubt that Tuesday’s hearings were but the opening of a government whitewash. The ultimate aim is to shield the major industry players and the financial interests that stand behind them from any serious consequences.



The assemblage of the guilty parties inside the Senate chambers took place as ruptured pipes on the ocean floor continued to gush forth oil at a rate conservatively estimated at 220,000 gallons per day some 40 miles off Louisiana’s coast. The rate could be many times greater, but arriving at a more accurate estimate is impossible because BP has refused to release its underwater video footage for independent analysis.



BP, which is liable for cleanup costs, has all but admitted it has no idea of how to stop the leak. Its attempt last weekend to lower a four story box over the piping failed when ice crystals clogged a portal at the structure’s roof, a result that was widely anticipated. BP is now considering lowering a much smaller box in order to avoid icing. US Coast Guard and BP representatives have also floated the idea of a “junk shot,” firing golf balls, tire shreds, and other refuse at high pressure into the well.



The drilling of two relief wells continues, with the aim of disrupting the flow of oil from the current well. This option will take a minimum of 90 days, during which 18 million gallons more oil will pour out at the low-end estimate. Even this option provides no certainty. “The risks include unpredictable weather, since the wells will be operational at the start of hurricane season,” according to a report in the Christian Science Monitor. “The wells are also being drilled into the same mix of oil and gas that caused the original explosion, and operating two wells in the area creates the potential of igniting a second explosion that is more powerful.”



If the spill cannot be stopped—a distinct possibility—the ruptured well could release a large share of the deposit’s underground reserves into the Gulf of Mexico, which totals upwards of 100 million barrels of crude oil. And even if the spill is stopped at a lesser volume, with each day there is a growing probability that the oil will devastate the entire Gulf from Louisiana to Florida and possibly reach the Gulf Stream, impacting the Atlantic seaboard.



In the interim, the Environmental Protection Agency (EPA) has given BP clearance to resume pumping chemical dispersants into the oil column as it emerges from the broken piping. BP also continues to dump large quantities of dispersant onto the ocean’s surface. The environmental impact of such heavy use of dispersants is unknown, but a growing number of scientists and environmental groups are warning that the highly toxic substance could simply be transferring the brunt of the spill from the shore to marine ecosytems.



“The companies love the idea of using a chemical to spray on an oil slick to sink it,” Rick Steiner, a former professor of Marine Conservation at the University of Alaska, told the World Socialist Web Site. “It’s ‘out of sight out of mind’ as far as the public is concerned because TV cameras can’t see it. This is the big oil company playbook: public relations, litigation protection, and image.”



Oil has now washed ashore in three places: the Chandeleur Islands off Louisana’s coast, on the coast of a navigable channel from the Mississippi River known as the “South Pass,” and on Alabama’s Dauphin Island. Fishing has been blocked over a wide area, effectively imposing layoffs on thousands of fishermen, many of whom are self-employed and therefore not entitled to unemployment benefits. Sightings of birds covered in oil and dead sea turtles washed ashore have increased in recent days.



In his testimony, McKay boasted that BP would make available “grants of $25 million to Louisiana, Mississippi, Alabama, and Florida,” and that it has paid out approximately $3.5 million in damage claims to those affected by the spill. These figures, presented as an act of enormous magnanimity, are such a tiny share of BP’s revenues as to be almost inconsequential.



The company took home $93 million per day in profits—for a total of $6.1 billion—during the first quarter alone. The $3.5 million in damage claims paid out are significantly less than CEO Tony Hayward’s 2009 compensation, estimated at over $4,700,000 by Forbes.
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05-20-2010, 12:20 AM,
#17
RE: Leaked memo re: Oil Spill
How Bush's DOJ Killed a Criminal Probe Into BP That Threatened to Net Top Officials

Wednesday 19 May 2010

by: Jason Leopold, t r u t h o u t | Report

photo
(Illustration: Lance Page / t r u t h o u t)

Mention the name of the corporation BP to Scott West and two words immediately come to mind: Beyond Prosecution.

West was the special agent in charge with the Environmental Protection Agency's (EPA) criminal division who had been probing alleged crimes committed by BP and the company's senior officials in connection with a March 2006 pipeline rupture at the company's Prudhoe Bay operations in Alaska's North Slope that spilled 267,000 gallons of crude oil across two acres of frozen tundra - the second largest spill in Alaska's history - which went undetected for nearly a week.

West was confident that the thousands of hours he invested into the criminal probe would result in felony charges against the company and the senior executives who received advanced warnings from dozens of employees at the Prudhoe Bay facility that unless immediate steps were taken to repair the severely corroded pipeline, a disaster on par with that of the 1989 Exxon Valdez spill was only a matter of time.

In fact, West, who spent more than two decades at the EPA's criminal division, was also told the pipeline was going to rupture - about six months before it happened.

In a wide-ranging interview with Truthout, West described how the Justice Department (DOJ) abruptly shut down his investigation into BP in August 2007 and gave the company a "slap on the wrist" for what he says were serious environmental crimes that should have sent some BP executives to jail.

He first aired his frustrations after he retired from the agency in 2008. But he said his story is ripe for retelling because the same questions about BP's record are now being raised again after a catastrophic explosion aboard the Deepwater Horizon drilling rig killed 11 workers and ruptured an oil well 5,000 feet below the surface that has been spewing upwards of 200,000 barrels of oil per day into the Gulf waters for a month.

The Watchdog

In the summer of 2005, West was transferred from San Francisco to the EPA's Seattle office and was introduced to Chuck Hamel, an oil industry watchdog, who is credited with exposing weak pollution laws at the Valdez tanker port in the 1980s prior to the Exxon Valdez spill and the electrical and maintenance problems associated with the trans-Alaska oil pipeline operated by BP.

Hamel had become the defacto spokesperson and protector of dozens of BP Exploration Alaska (BPXA) whistleblowers, who would routinely leak to him documents, pictures and inside information about the company's poor safety and maintenance record at its Prudhoe Bay operations. Hamel also operated a now defunct web site, Anwrnews.com (the acronym for Arctic National Wildlife Refuge), which became a clearing house for the whistleblowers' complaints and an archive showcasing, among other things, the letters Hamel had written to Congress, the White House and BP's top executives exposing the company's shoddy operations in the North Slope and demanding immediate action. The tagline on the archived version of Anwrnews.com says it was "established by and for the many concerned Prudhoe Bay BP operators who fear for their lives and the environment due to violations of Government regulations and requirements by BP."

One of the letters still posted on the web site is dated January 10, 2001. It was sent to him by unnamed BP employees, who asked him to assist them in getting BP management to address their concerns about safety and maintenance issues that their repeated attempts had failed to do. They said they even reached out to then-BP President Lord John Browne about "inadequate staffing levels" two years earlier, but never received a response.

"We were concerned about our recommendations being ignored and disregarded...We were concerned about BP's cost cutting efforts undermining our ability to respond to emergencies and reducing the reliability of critical safety systems. We were concerned about the lack of preventative maintenance on our equipment," the BP employees' letter said. "We had suffered a major fire, which burned a well pad module to the ground and nearly cost one of our operators his life.

"We had suffered two job fatalities and a third serious injury to personnel in the months before the letter was sent. In response to our concerns, Sir John's Management Team further reduced our staffing levels from six to four in the GC Plants and from seven to six on the Well Pads. Our four Plant Operators do the work that seven did in 1990.

"It is clear that BP Management has one priority and that is cost reduction ... Perhaps you may know some way of getting our concerns heard and addressed. If these concerns are not addressed, we feel that a major catastrophe is imminent. We have only our lives and our futures at risk here."

Hamel followed up the employees' letter with one he sent on April 11, 2001, to Browne at the company's London headquarters alerting him to the substandard safety and maintenance policies in place at Prudhoe Bay that threatened the welfare of BP employees, an issue that persists at the facility nearly a decade later.

"Courageous 'Concerned Individuals' contacted me for assistance in reaching you," Hamel's letter to Browne said. "They have not succeeded in being heard in the past two years in London, Juneau or Washington. I am again a reluctant conduit. They hope that you will take whatever action appropriate to effect corrective action which would protect the environment, the facilities and their safety."

Hamel also sent a copy of the letter to President Bush. It is unclear if either Browne or the Bush White House ever responded. BP would not comment for this story. But a majority of these allegations were repeated to West when he met with Hamel years later, and one explosive tidbit of information would form the basis of his criminal investigation into the company.

West said when he met Hamel he was told in no uncertain terms by Hamel that a section of pipeline at a caribou crossing - a "perfect habitat for corrosion" - was going to rupture and when it did it would be catastrophic.

"He said 'eventually, the pipeline will fail,'" West said.

Hamel explained that the pipeline was so fragile that new employees were warned not to lean against it or allow their keys to bang against the structure because of the damage it could cause.

Hamel also told West that BP failed to take steps to conduct an internal inspection of the pipeline through a lengthy process known as "smart pigging," which calls for sending electronic monitors, referred to as "smart pigs," through the pipeline to determine whether any defects exist, such as sediment buildup, on the pipeline walls. The monitors squeal as they travel through the pipeline and that's how the device got its name. It would later be revealed that BP had not conducted such an inspection for eight years and ignored and or retaliated against employees who suggested the company do so.

West said the first question he posed to Hamel was "how do you know this?"

"This is what the employees are telling me," West said, recalling his conversation with Hamel. Hamel was unavailable to comment for this story. "I told Chuck that if you don't have first hand information there's not much that I can do. I asked if I can speak to the employees. But he's extremely protective of them and wanted assurances that I would keep their identities confidential and I wouldn't bring any harm to them. I gave him my word and he arranged for me to speak to these guys."

"Nightmares"

During the time that West met with Hamel, Congress was debating opening up the Arctic National Wildlife Refuge to exploration and BP, which operated the Prudhoe Bay oil field, the largest in North America and jointly owned by ExxonMobil, BP and ConocoPhillips, would have led the drilling efforts.

One of the concerns that employees expressed back then was that the frequent oil spills at Prudhoe Bay would also become a routine occurrence in ANWR because of BP's ongoing cost-cutting measures that left its operations vulnerable. And for that reason, some employees opposed calls to pass legislation to drill in ANWR.

In an interview with Truthout in 2005, Hamel said whistleblowers informed him and then-Interior Secretary Gale Norton, who at the time was touring the Prudhoe Bay oil fields, that the safety valves at Prudhoe Bay, which kick in in the event of a pipeline rupture, failed to close. Secondary valves that connect the oil platforms with processing plants also failed to close. And because the technology at Prudhoe Bay would be duplicated at ANWR, that meant there was a strong chance for an explosion and massive oil spills.

West said after he spoke with a handful of the BP whistleblowers he "started having nightmares."

"They told me there was going to be a massive spill on the North Slope and I need to be ready," West said. "I had these guys telling me about conversations they had with midlevel managers and documents they turned in exposing the pipeline corrosion and leak detection equipment on pipes that failed and ignored because it went off all the time. The employees were slapped down. They were given a lot of grief for having raised these issues. The BP culture is keep your mouth shut and your head down because nobody at BP wants to hear about it.

"That's why I knew this was a criminal case," West said. "BP turned a blind eye and deaf ear to their experts who predicted a major spill. It wasn't intentional act to put oil on the ground, but it was intentional act to ignore their employees. That's negligence and its criminal. "

West said he contacted colleagues in one of EPA's regional offices in around December 2005 that he had information an oil spill was likely to happen in the North Slope.

Prediction Becomes Reality

On March 2, 2006, West was at his desk when he received a phone call.

"It was one of the employees I spoke to months earlier," West said. "He said 'just as we predicted, there's a leak at the caribou crossing we told you about and it's pretty bad.'"

Even worse, the leak had gone undetected for nearly a week. The leak detection equipment employees had warned BP managers about malfunctioned and for about five days oil spilled out of a hole in the pipeline the size of a pencil eraser. The leak was discovered when an oilfield worker surveying the area smelled petroleum in the air and stepped out of his car to investigate.

"He ended up with a black foot," West said. "That's how bad the spill was."

The oil leak was determined to be caused by "severe corrosion." It forced BP to shut down five oil processing centers in the region for about two weeks, which led to a spike in gas prices during a time of tight crude supplies.

Longtime BP employee Marc Kovac said a couple of weeks after the oil spill that he and his co-workers warned the company numerous times that their aggressive cost-cutting measures would increase the likelihood of accidents, pipeline ruptures and spills.

"For years we've been warning the company about cutting back on maintenance," Kovac told The New York Times. "We know that this [March 2006 oil spill] could have been prevented."

West said he immediately dispatched one of his investigators to the North Slope and he admits that he became "excited about the prospect of putting people in jail for environmental crimes" and that was his goal as he and his team, working with the FBI, the DOJ and Alaska state environmental and regulatory officials, launched their probe into the circumstances behind the spill.

As West's investigation into the company began to take shape, he obtained information that "very senior people in [BP's] London [headquarters] were aware of what was going on [with regard to the corrosion in the pipeline] and did nothing."

"That's where my investigation was going," he said. "This was one of the top two cases being investigated by the EPA's criminal division in 2007. This was a big deal. This case had all the markings of letting us getting high and deep into the corporate veil. "

West would not identify the executives, but two DOJ officials, who work in the agency's environmental and natural resources division and are familiar with the case, said it was Browne, BP's then-president and chief executive, and Tony Hayward, who was head of the company's production and exploration division. The DOJ officials would only speak on condition of anonymity because of the sensitive issues surrounding BP in the aftermath of the explosion on the Deepwater Horizon drilling rig that led to the massive oil spill in the Gulf.

Hayward took over for Browne in May 2007, a move that BP accelerated by 18 months in the wake of the Alaska oil spill and widespread safety issues there at a March 2005 refinery explosion in Texas that killed 15 employees.

Grand Jury Convened

One of the setbacks West faced early on, however, was that he could not use the information he and his investigators obtained from the employees who claimed BP officials knew about the pipeline corrosion prior to the spill.

"One of the things that made this case slow was the vindictive nature of BP," West said. "Sources we spoke with would not allow their name to be used because they feared they would be fired or retaliated against. What that meant was that I couldn't send investigators out to knock on their doors at night and take their statements. [The employees] said 'what you have to do is get me in front of a grand jury and subpoena me to testify.'"

So, the US attorney's office in Anchorage, under the guidance of Assistant US Attorney Aunnie Steward, the lead prosecutor on the case, convened a grand jury to hear witness testimony and subpoena witnesses as well as documents from BP. Because grand jury testimonies are secret, West could not say who or how many people testified before the panel. Nor could he divulge the details about what they revealed.

West said his team prepared a "surgical subpoena," requesting specific documents from the company that would shed light on who knew what and when regarding the Alaska pipeline rupture.

"BP overwhelmed us," West recalled. "When I say overwhelmed I'm talkin' 62 million pages of documents they turned over. That told me there was a smoking gun in there but it was going to take time to find it."

"Like Trying to Turn the Titanic"

The investigation progressed into 2007, and by June of that year, prosecutors were discussing the evidence of BP's alleged crimes.

Indeed, in a confidential email dated June 12, 2007, Steward sent to other federal and state prosecutors and EPA officials working on the case. Steward said what made the Alaska pipeline spill an issue of criminal negligence was that "BP knew or should have known that failure to maintenance pig the line that leaked would cause the line to fail."

"Standard in the industry is anywhere from quarterly to once every five years," said Steward's email, under the subject line "BP Theory of the Case." The email was prepared in preparation for an August 2007 meeting with BP's defense attorneys. Steward noted that the goal for the prosecution for the next two months is to "get something in writing on the charges and the evidence. It won't be trial ready in August." But she said her hope "for the August 28 [2007] meeting is to listen to BP and find out what they think their defenses or mitigating circumstances are so that we can focus on those."

As for the evidence, Steward said the prosecution had plenty and she expressed an interest in pursuing felony charges.

"It had been eight years since the line had been pigged. We have a nice photo of the cross-section of pipe where the leak occurred with 6 inches of sediment accumulated in the line. BP's own corrosion engineers say that if they had known there was that much sediment in the line they would have pigged immediately. The important point here is that other parts of BP's organization besides the corrosion team knew that there was sediment in the line - so perhaps a corporate collective knowledge would get us to knowing, ie, BP knew that failure to pig was going to cause the pipe to fail because of sediment build up."

By this point, BP had mounted a vigorous defense and suggested that even if they had performed maintenance on the line it still could have failed. But the company's own corrosion engineers disagreed with that assertion. The company also said that it intended to pig the line by the summer of 2006, but the oil spill happened first.

Moreover, according to Steward's email, "BP has also made a point of saying that everyone thought these lines were not likely to leak and so even if they had more money to throw at it, nothing would have been done differently regarding the lines that leaked. We have a ton of evidence to the contrary on this point."

Steward's email then indicates that employee concerns about aggressive cost-cutting measures were substantiated during the course of the investigation. She indicated that BP has stated publicly that the company "changed their attitude" about cost-cutting in 2005, after the Texas refinery explosion and was "trying to do the right thing but they just didn't do it quickly enough (and I think the implication is that they should thus not be penalized)."

"It was all, however, too little too late," Steward wrote. "Like trying to turn the titanic. Managers at BP have said that things were so tight at BP from the 90s through 2004 that even after things began to change in 2005 the mentality of employees was still so entrenched in cost cutting that the first response to any proposal is 'we'll never get the money for that'. The only reason things started to change were because the corrosion manager was such a tyrant and cost cutting was so rampant that whistleblowers complained to the probation office while [BP Exploration Alaska] was on probation for [a prior] felony conviction. This led to an audit in '04 which recommended serious changes in organization and budgeting to address the problems that started to be rolled out in '05."

The audit was prepared by the law firm Vinson & Elkins. It said BP created a climate of fear for employees who wanted to report concerns about the company's operations. Congressional investigators probing the March 2006 oil spill obtained internal BP emails that showed executives issued "budget challenges" and ordered "top down cost cutting" with no regard for the safety of its pipelines.

Steward said in her email, however, that the "explosion in Texas got BP's attention" and company executives maintained that BP had "changed."

"Tony Hayward traveled to [Alaska] after the [Texas refinery] explosion to see if there were similar problems in [Alaska] as in [Texas] such as overly aggressive cost cutting and a lack of communication between [management] and employees and found that there were," she wrote.

Hayward told BP employees who attended a town hall type meeting in December 2006 that BP has "a leadership style that is too directive and doesn't listen sufficiently well. The top of the organisation doesn't listen sufficiently to what the bottom is saying."

Those comments led Steward to conclude that the changes at BP "did not come about because they were being good corporate citizens, it was because they were already felons and had recently killed a bunch of people."

Steward also attached a 12-page memo to her from Dean Ingemansen, the EPA's criminal enforcement attorney, of the proposed fines that could be levied against BP Exploration Alaska for the week-long oil spill as well as another spill that occurred five months later, which also resulted from a corroded pipeline.

Ingemansen concluded, based on his review of case law, sentencing decisions and "guidance documents" from the EPA and the DOJ's Environmental Crimes Manual, that BP could be penalized as much as $672 million for the March and August 2006 oil spills or as little as $58 million, "incredibly low settlements" as far as West was concerned.

Blunted

West said he knew he still had quite a bit of work to do. Although his probe had crossed the one year mark, he didn't have enough evidence to recommend felony charges against BP or senior executives.

"These are complex investigations," West said. "It usually takes a minimum of three to five years."

He said as much during a meeting of investigators and prosecutors in Anchorage on August 28, 2007, to discuss the case. And, West said, he was told that if he did not have enough evidence to allow prosecutors to file immediate felony charges against BP or executives at the company than the government was no longer interested in pursuing the case.

Federal prosecutors "asked me what I thought we could charge BP at that very moment and I said a criminal misdemeanor for Clean Water Act violations," West said. "And they said 'OK, then a misdemeanor it is.' I'm screaming bloody murder! I told them I'm hot on the trail. Don't kill this investigation now! It would be different if I were working this case for six years and spent a lot of time and resources on it. But it was only 17 months."

DOJ attorneys in Alaska decided the best course of action was to settle the case then and there. West said he continued to argue against the "rush to settle" and explained that he still had a large volume of evidence he hadn't yet reviewed. He said he needed at least another year.

"They said flatly 'no,'" West said. He then asked for six months and again was rebuffed.

"How about three more months?"

"No," he was told. "It's over."

West said he was pulled aside at the end of the meeting by Karen Loeffler, the chief of the criminal division of the US attorney's office in Alaska.

"She told me that she was just following orders and that the decision to close the case and settle was made by Ron Tenpas," the assistant attorney general for Environment and Natural Resources at Main Justice, who was appointed to that position earlier in the year.

Tenpas, now in private practice at the law firm Morgan Lewis in Washington, DC, did not return calls or emails seeking comment. Loeffler also did not respond to requests for comment. Loeffler had previously denied that she told West that Tenpas shut down the probe. Tenpas had said in November 2008 that, while he agreed with the decision to settle, the decision to do so was not his.

West said he would be willing "to testify under oath and take a lie detector test" to prove that Loeffler told him Tenpas killed the investigation.

"What really irritated me though is that my own management didn't even back me on this one," West said. "Something happened between June of 2007 when Aunnie Steward sent the email talking about serious criminal charges and the meeting I attended in August when the case was killed."

He suspects that federal prosecutors in Alaska had already been negotiating with BP about a plea agreement prior to the August 28, 2007, meeting. DOJ officials familiar with the case said they were unaware whether there was any interference from the Bush White House or senior agency officials that would have led to the decision to shutter the probe.

In a statement issued in November 2008 when he first went public, the DOJ said West's claims that something "sinister took place
between June 12 and August 28, 2007" are "not based in fact and simply not true."

"As with any investigation, there comes a point in time when further investigation is no longer warranted if it does not have a realistic chance of generating useful evidence," the statement said. In this case, the judgment by career prosecutors was that the case had been sufficiently and fully investigated to reach appropriate charging decisions. No further investigation was likely to find evidence that would shed any new light on the essential facts of the case. The investigators from the EPA and FBI agreed with the prosecution's approach."

Naturally, West disagrees.

"I know how this case would have proceeded," he said. "I would have interviewed more people and developed more leads and obtained more documents to look at. That's a guarantee. At the end of the day we would have had a clear understanding of who knew what and when and then we would be able to make appropriate charging decisions. But because the investigation was shut down that was the end of it."

Penalty Phase

West said he believed the DOJ did not appropriately handle the case as it moved into the penalty phase a couple of months later.

"The US Attorney in Alaska, Nelson Cohen, sidestepped the recommendations EPA made for fines against BP," West said. "He said the fine would fall somewhere between $20 to $35 million and that the benchmark he came up with was based on the [1999] Olympic Pipeline" explosion in Bellingham, Washington, that spilled 277,000 gallons of gasoline into nearby creeks, which killed a teenager and two ten-year-old boys.

West said he had a run-in with Cohen in October 2006, when, at the prosecutor's request, he met privately with him in Anchorage to discuss the case. Cohen was one of the recess appointments recommended by then-Attorney General Alberto Gonzales to fill the vacancy in the federal prosecutor's office in Alaska.

West said Cohen asked him "what do you know about me?"

"I said I didn't know anything about him, but I told him I was anticipating the Attorney General to make a recess appointment who would come to Alaska and kill my case against BP. And here you are."

West was, a year later, invited by Cohen to attend the meeting with BP's defense attorney Carol Dinkins and other people representing the company where terms of the plea deal would be hammered.

"I was shocked at what I witnessed," West said. "Cohen opened the settlement negotiations with the lowest dollar figure: $20 million. He said the government's benchmark was between $20 to $35 million and he opened with $20 million. I have never seen such anything like this during my career. Usually you start on the high end and negotiate toward a lower figure."

He said BP's defense team "hemmed and hawed" and then "came back and quickly accepted it. This looked like a big show staged for my benefit."

Cohen told The Wall Street Journal in November 2008 that the decision to impose a $20 million fine was a "judgment call" made by his office.

"It's not my job to take every nickel from a defendant when they have done something wrong," Nelson said. "Our job is to come up with what we feel is fair and just."

West said he was told that the reason the DOJ decided on the $20 million fine was because the criminal case against the company for safety and environmental violations resulting from the Texas Refinery explosion, where 15 people were killed and 170 other were injured, was being settled for $50 million, another example, West says, of a "rushed" settlement.

On October 25, 2007, in what can be described as a package deal, BP settled all of its major criminal cases. The corporation pled guilty to a criminal violation of the Clean Water Act and paid the $20 million fine related to the March and August 2006 oil spills that occurred in the North Slope. The EPA said the $20 million fine still represented one of the largest penalties under the Clean Water Act.

That same day, the company also pled guilty to a felony for the Texas City refinery explosion and entered into a deferred prosecution agreement with the DOJ where the company admitted that it manipulated the propane market.

Rep. John Dingell, the Democratic chairman of the House Committee on Energy and Commerce, issued a statement the day the settlement was announced excoriating the oil behemoth.

"Congress has held hearing after hearing about BP's mismanagement and now DOJ, [the Commodities Futures Trading Commission] and EPA have imposed criminal fines," Dingell's statement said. "It is troubling that many of the same BP executives who were responsible for the management failures that led to the criminal charges and settlements ... are still employed by BP and, in some cases, have been promoted to the highest levels of the company."

On November 29, 2007, BP formally entered a guilty plea in federal court in Alaska. US District Court Judge Ralph Beistline sentenced BP to three years probation and said the oil spills were a "serious crime" that could have been prevented if BP had spent more time and funds investing in pipeline upgrades and a "little less emphasis on profit."

Four months later, Dingell and Subcommittee Chairman Bart Stupak (D-Michigan) fired off a letter to Attorney General Michael Mukasey questioning the rationale behind the DOJ's settlement agreements with the company over the refinery explosion and oil spill in Alaska. The lawmakers requested documents from the DOJ that may have shed light on a prior decision to "consolidate" all of the pending criminal cases.

Mukasey responded on April 3, 2008, and said the DOJ was "not in a position to disclose non-public information about our prosecutorial decisions."

He did note, however, that while the three criminal plea "agreements were announced together, the agreements were not contingent on one another."

West said Dingell and Stupak didn't push back hard enough.

"They should have brought me in and DOJ officials to testify about the decision Ronald Tenpas made to shut down the case," West said. "When you have a situation like this where a career investigator is going to the Justice Department and saying 'I'm not done' give me a year, six months, three months and the answer is no that's completely unheard of."

The Whistleblower

West's tenure at the EPA after his investigation into BP was shut down was tumultuous. He said the agency tried to fire him over the fact that he continued to be outspoken about the case.

He retired from the agency on October 29, 2008. Two days later, he would become a whistleblower in his own right.

West took his complaints about the way the BP case was handled to the nonprofit organization Public Employees for Environmental Responsibility (PEER). He issued a two-page statement on October 31, 2008, that said he never had a "significant environmental criminal case shut down by the political arm of the Department of Justice, nor have I had a case declined by the Department of Justice before I had been fully able to investigate the case. This is unprecedented in my experience."

"The case against BP Alaska involved a major oil company with strong political connections," West said. " We had several investigative avenues available to us that in my judgment as a veteran senior manager with the EPA Criminal Investigation Division would likely have led us to find criminal culpability on the part of a number of senior BP officials and to felonious behavior by this major corporation."

The EPA issued a statement a few days later in response to West's claims. "In the case of BP Alaska, after a robust 18-month criminal investigation, EPA, FBI and DOT, along with DOJ prosecutors, jointly concluded the corporation was liable for a negligent discharge of oil," the agency's November 3, 2008, statement said. "EPA, along with DOJ, also concluded that further investigative efforts were unlikely to be fruitful."

PEER's Executive Director Jeff Ruch filed a complaint with DOJ Inspector General Glenn Fine on November 10, 2008, asking him to probe, among other things, whether West's investigation was "prematurely closed down" and if the amount of the fines were adequate. Fine's office responded by saying the allegations leveled by PEER was a matter for the DOJ's Office of Professional Responsibility (OPR), which is charged with investigating attorney misconduct. The OPR concluded federal prosecutors acted appropriately.

Last year, the DOJ filed a civil suit on behalf of the EPA against BP Exploration Alaska over the March and August 2006 two massive oil spills in Prudhoe Bay three years ago. One of the spills forced BP to shut down it's oil processing centers in the region for five days, which led to price spikes during a period of tight crude oil supplies.

The complaint, filed by the DOJ on behalf of the EPA and the Department of Transportation-Pipeline and Hazardous Materials Safety Administration (PHMSA), is seeking maximum penalties from BP, alleging the company violated federal clean air and water laws and failed to implement spill prevention technology.

The state of Alaska also sued BP for violating environmental laws, claiming it lost as much as $1 billion in revenue due to the 2006 oil spills, which resulted in 35 million barrels of oil that BP was unable to produce. The complaint said the spills along with BP's work to repair a severely corroded pipeline "significantly reduced oil production for more than two years."

Oil Spill Redux

Despite the plea agreement BP entered into, it would appear the company may still be cutting corners on safety and maintenance.

Last November, a pipeline ruptured at BP's Prudhoe Bay oil field, spilling 46,000 gallons of crude oil and water onto the North Slope, which now hovers just a notch under the top ten oil spills in the region. State officials said the rupture occurred due to a buildup of ice inside the pipeline that caused it to burst under pressure.

Criminal and civil investigations were immediately announced, led by West's former colleagues at the EPA's criminal division and the FBI.

"The (EPA) Criminal Investigation Division is continuing to work in concert with our federal and state partners and British Petroleum, to assess the situation associated with the November 29 [2009] rupture," said Tyler Amon, the division's acting special agent in charge for the Northwest. "This matter is under investigation."

BP is still on probation for the March 2006 oil spill. If investigators determine that the company failed to address any of the maintenance and safety issues whistleblowers had told West about before and after the 2006 leak, then that would likely be a probation violation.

Mary Frances Barnes, BP's probation officer, said that is a question investigators will determine.

"It will be looked into," Barnes told Truthout. "We just have let the investigations play out."

West, who now heads the Department of Intelligence and Investigations for the Sea Shepherd Conservation Society, has heard that story before.

"I don't think BP learned any lessons," he said. "They were just doing what corporations do. It's the government that failed us. Now there's the disaster in the Gulf. When I first heard about it, I said to my wife that it's probably a BP rig and I was right. I will bet that when the investigations into the explosion and leak are complete we're going to find out it had something to do with BP cutting corners."
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05-25-2010, 10:57 AM,
#18
RE: Leaked memo re: Oil Spill
A buddy of mine that works for a company I am not at liberty to say had his boss testify before congress. The implications were a long shot but Looks like all the fishing around turned up something under another rock. Of course in the reputable ivory towers of the New York Times saw it fit to give this scandal lots of ink and prominent placement.

Evidence is a bit weak at this point but I don't doubt that the collusion and bribery happens oil as in the pharma industry and world politics. Not to turn a blind eye but hopefully the media doesn't overdo it and pounce on the sensationalist meth story to pin this on a fall guy (remember the drunk sea captain that seemed to shift some blame away from Exxon) when there are bigger fish to fry.

Quote:Inspector General Faults Minerals Management Service
By IAN URBINA
Published: May 25, 2010

WASHINGTON - Federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed industry officials several years ago to fill in their own inspection reports in pencil - and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency, according to an inspector general's report to be released this week.

The report, which describes inappropriate behavior by the staff at the Minerals Management Service from 2005 to 2007, also found that inspectors had accepted meals, tickets to sporting events and gifts from at least one oil company while they were overseeing the industry.

Although there is no evidence that those events played a role in the Deepwater Horizon oil spill, the report offers further evidence of what many critics of the Minerals Management Service have described as a culture of lax oversight and cozy ties to industry.

The report includes other examples of troubling behavior discovered by investigators.

In mid-2008, a minerals agency employee conducted four inspections on drilling platforms when he was also negotiating a job with the drilling company, a cover letter to the report said.

And an inspector from the Lake Charles office admitted to investigators that he had used crystal methamphetamine, an illegal drug. Investigators said they believe the inspector may have been under the influence of the drug during an inspection.

The report was provided to The New York Times by a person familiar with the investigation who is not authorized to speak to reporters. Previous inspector general investigations of the minerals agency have focused on inappropriate behavior by the royalty-collection staff in the agency's Denver office.

The new report describes similar activities and improper relationships with industry representatives in the leasing and inspections staff in an agency gulf region office in Louisiana.

The report found that employees from the Lake Charles office had repeatedly accepted gifts, including hunting and fishing trips from the Island Operating Company, an oil and gas company working on oil platforms regulated by the Interior Department.

Taking such gifts "appears to have been a generally accepted practice," said the report, written by department's acting inspector general, Mary L. Kendall.

The investigation also found that at least two employees from the Lake Charles office of the minerals agency had admitted to using illegal drugs during their employment.

The report said the findings of the investigation had been presented to the United States Attorney's Office for the Western District of Louisiana, which declined prosecution.

At least seven inspectors cited in the report as having been involved in inappropriate or illegal activities were still employed by the agency when the report was completed in March. Interior officials said the employees cited in the report would be placed on administrative leave pending the outcome of a personnel review.

Interior Secretary Ken Salazar said that he found the report "deeply disturbing," and that the actions it found were why, "during the first 10 days of becoming secretary of the interior, I directed a strong ethics reform agenda to clean house of these ethical lapses at M.M.S."

Mr. Salazar added that he had asked the inspector general to expand her inquiry to determine if any of the inappropriate behavior had persisted after he put the new ethics rules in place in 2009.

The inquiry began after investigators at the Office of the Inspector General received an anonymous letter, dated Oct. 28, 2008, addressed to the United States Attorney's Office in New Orleans, alleging that a number of unnamed minerals agency employees had accepted gifts from oil and gas production company representatives, the report said.

On April 12, Elizabeth Birnbaum, director of the minerals agency, received the report for review. The findings were to be released this summer.

But after the Deepwater Horizon explosion, the Office of Inspector General sought to speed up the report's release because it was too relevant to wait, a minerals agency official said.

This month, the Obama administration reorganized the agency in an effort to address conflicts of interest in its structure.

Shown the report, Representative Nick J. Rahall II, Democrat of West Virginia and the chairman of the Natural Resources Committee, said the agency was clearly dysfunctional. "These newly revealed ethical lapses among agency personnel puts M.M.S. in the penalty box indefinitely," Mr. Rahall said.

The report said the inspector general had developed confidential sources "who provided additional information pertaining to M.M.S. employees at the Lake Charles District Office, including acceptance of a trip to the 2005 Peach Bowl game that was paid for by an oil and gas company; illicit drug use; misuse of government computers; and inspection report falsification."

One of the confidential sources described regulators allowing company officials to fill out inspection forms in pencil after which inspectors would "write on top of the pencil in ink and turn in the completed form."

Industry watchdogs say that much of the inappropriate behavior found by the Office of Inspector General had stopped with the new administration. But some repercussions continue.

Some industry experts have speculated that the Deepwater spill and the report's findings could explain the sudden resignation this month of Chris C. Oynes, who led the Gulf of Mexico region for the Minerals Management Service for about 12 years until he was promoted to a senior position in Washington in 2007.

Mr. Oynes is not mentioned in the inspector general's report, and Interior Department officials have declined to answer questions about his resignation.

In a cover letter to Mr. Salazar, Ms. Kendall, the acting inspector general, said she wanted to emphasize that all the conduct highlighted predated Mr. Salazar's tenure and his January 2009 revamping of the ethics code.

She added, "Of greatest concern to me is the environment in which the inspectors operate - particularly the ease with which they move between industry and government."

Some in Congress had been trying to get rid of Mr. Oynes for a while. In 2007, Representative Carolyn B. Maloney, Democrat of New York, voiced outrage that Mr. Oynes was, at the time, being promoted to gulf regional director at the minerals agency.

"It is completely ridiculous that M.M.S. would take the person most likely responsible for the royalty rip-off and put him in charge of the whole show," she said, describing Mr. Oynes as the person who signed 700 of the 1,100 1998-99 oil and gas leases with missing price thresholds that limit royalty relief, to the agency's associate director of the Offshore Minerals Management Program.
http://mobile.nytimes.com/article?a=600488&f=21
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05-27-2010, 06:21 AM,
#19
RE: Leaked memo re: Oil Spill
Another day, another oil spill. And before you ask: Yes
UPDATED: New Oil Spill in Alaska, Pipeline is 51% Owned by BP

Posted By Daniela Perdomo On May 25, 2010 @ 5:29 pm In Uncategorized | 8 Comments

Another day, another oil spill. And before you ask: Yes, BP is involved.

We’re only catching snippets of this breaking news, but the AP reports:

Alaska environmental officials say crude oil at a pump station of the trans-Alaska pipeline flowed into a tank and than a containment area when a valve failed to close.The quantity of the release into the containment area, a pad surrounded by berms and underlain with an impervious liner, was not immediately known,

The incident occurred Tuesday afternoon during a scheduled pipeline shutdown at Pump Station 9 near Fort Greely, about 100 miles south of Fairbanks.

Meanwhile, KTVA 11, Anchorage’s CBS affiliate says that the pipeline is 51% owned by BP. Workers have been evacuated due to the threat of explosion.

Updated (@ 5:32 pm PT): KTVA reports that “several thousands of barrels worth of oil have spilled at an Alyeska Pipeline pump station.” It appears the crude oil is flowing into a containment area with a capacity of 104,500 barrels.

State officials indicate that no environmental damage has been wreaked so far and so presumably we ought be thankful the spill occurred in a containment area, but the timing couldn’t be worse — for BP, that is.

Updated (@ 5:55 pm PT): Some background! BP has a terrible track record in Alaska.

The trans-Alaskan pipeline was completed in 1977 and is 800 miles long. BP owns the largest share of it — 51 percent — and the entire thing is managed by a management consortium known as Alyeska Pipeline Service Co.

The pipeline runs to Valdez — as in Exxon-Valdez, yes. (BP was involved in that mess but avoided a lot of the bad press Exxon faced because it settled out of court.)

More recently, in 2006, a pipeline managed by BP in Prudhoe Bay faced the following: “a badly corroded 34-inch-diameter pipeline (…) lost oil for at least five days before a worker driving down a nearby service road on March 2, 2006, smelled oil and spotted the spill, which covered at least two acres of tundra. At 200,000 gallons, it was the largest ever on the North Slope.”
And I’m guessing that’s just the tip of this proverbial iceberg.

Article printed from SpeakEasy: http://blogs.alternet.org/speakeasy

URL to article: http://blogs.alternet.org/speakeasy/2010/05/25/breaking-oil-spill-in-alaska-pipeline-is-51-owned-by-bp/
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