How Bush’s DOJ Killed A 2006 Criminal Probe Into BP


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 at the Environmental Protection Agency’s (EPA) Criminal Investigation Division, which 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 spill dumped 267,000 gallons of oil across 2 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 in the criminal investigation would result in felony charges against BP. The company’s senior executives had received advance warnings from dozens of employees who worked at Prudhoe Bay. In fact, West, who spent nearly 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, West described how the Justice Department (DOJ) shut down his investigation into BP in August 2007 and gave the company a "slap on the wrist." He first aired his frustrations after he retired from the agency in 2008. His story is ripe for retelling because the same questions about BP’s record are being raised after the catastrophic explosion aboard the Deepwater Horizon drilling rig killed 11 workers and ruptured an oil well 5,000 feet below the surface, spewing at least 200,000 gallons of oil per day into the Gulf waters.

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). Hamel had become the de facto 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 Prudhoe Bay.

Hamel also operated a now-defunct website, which became a clearing house for 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. One of the letters is dated January 10, 2001 and was sent to Hamel by unnamed BP employees who asked him to assist them in getting management to address workers’ concerns about safety and maintenance issues after repeated attempts had failed. They said they had even reached out to then-BP President Lord John Browne about "inadequate staffing levels" two years earlier, but never received a response.

Hamel followed up the employees’ letter with one he sent to Browne on April 11, 2001 at the company’s London headquarters alerting him to the substandard safety and maintenance policies 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 or even read the letters. (BP would not comment for this story.) West said when he met Hamel, he was told in no uncertain terms that a section of pipeline at a caribou crossing was filled with sludge and was going to rupture and when it did, it would be catastrophic. 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 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 monitor squeals as it travels through the pipeline, giving the device 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.

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. In an interview with me 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 on in the event of a pipeline rupture, failed to close. Secondary valves that connect the oil platforms with processing plants also failed to close. Because the technology at Prudhoe Bay would be duplicated at ANWR, that meant there was a strong chance of an explosion there 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 mid-level managers and documents they turned in exposing the pipeline corrosion and leak detection equipment on pipes that failed and were 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…. BP turned a blind eye and a deaf ear to their experts who predicted a major spill. It wasn’t an intentional act to put oil on the ground, but it was an 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 2005 that he had information an oil spill was likely to happen in the North Slope. But, West said, "the transit lines are not regulated by the federal government. It was the state of Alaska that had jurisdiction. The only thing we could do was wait."

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 malfunctions 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. Long-time 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.

West said he immediately dispatched one of his investigators to the North Slope. 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 get 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 recent explosion on the Deepwater Horizon drilling rig that led to the massive oil spill in the Gulf.

One of the setbacks West faced 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 names 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.’"

The U.S. attorney’s office in Anchorage, under the guidance of Assistant U.S. 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. 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 talking 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 and 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 for an August 2007 meeting with BP’s defense attorneys. Steward noted that the goal for the prosecution for the next two months was 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 six 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, i.e., that 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.

"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 1990s 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 was, ‘We’ll never get the money for that.’ The only reason things started to change was 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 2004, which recommended serious changes in organization and budgeting to address the problems that started to be rolled out in 2005."

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."

"Something Sinister"

During a meeting of investigators and prosecutors in Anchorage on August 28, 2007 to discuss the case, 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 then 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."

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 made on 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." 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 U.S. 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 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."

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 chair 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. U.S. 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."

The Whistleblower

West’s tenure at the EPA was tumultuous after his investigation into BP was shut down. 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. "I took a bath and washed off the stink because I was so disgusted," he said. 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 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 November 3, 2008 statement said. "EPA, along with DOJ, also concluded that further investigative efforts were unlikely to be fruitful."

Last year, the DOJ filed a civil suit on behalf of the EPA against BP Exploration Alaska over the March and August 2006 oil spills in Prudhoe Bay. 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 has 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 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.

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."

Z


Jason Leopold is a reporter and editor of the web-based political magazine, the Public Record. Leopold’s pieces have been published in the Nation, Salon.com, the Financial Times, the Wall Street Journal, the San Francisco Chronicle, Utne Reader, Counterpunch, Common Dreams, and Truthout.org.