How Bush Killed a Criminal Probe Into BP That Threatened Top Officials

May 20, 2010 by  


By Jason Leopold, 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.

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Oil sits on the bank of the the breakwater in the mouth of the Mississippi River where it meets the Gulf of Mexico in Louisiana, May, 18, 2010. Fears that oil from a massive Gulf of Mexico spill was drifting to U.S. shorelines rose on Tuesday after tar balls were found in Florida, while BP faced mounting pressure to stem its leaking well.  

REUTERS/Sean Gardner/Greenpeace/Handout

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.”

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