Justice Department asks judge to require BP to produce documents showing how it low-balled oil flow

The Justice Department on Wednesday asked a federal judge in New Orleans to require BP to produce documents that outline how it low-balled the amount of oil flowing into the Gulf of Mexico from its Macondo well in 2010. The estimates were sent to the Coast Guard and Congress.

The request came just one day after BP's guilty plea to criminal charges related to the Deepwater Horizon drilling rig explosion and fire that caused the release of millions of barrels of oil into the Gulf.

The BP guilty plea accepted by U.S. District Judge Sarah Vance on Tuesday included an admission that the company misled Congress and the Coast Guard in the weeks after the spill, saying that only 5,000 barrels of oil per day were flowing from the well, when its own internal estimates indicated that as much as 100,000 barrels per day could have been released.

The company made a similar admission in a separate civil plea agreement filed with the federal Securities and Exchange Commission in November, in which BP said it filed inaccurate statements with the commission that underestimated the flow of oil, thus misleading the commission and the company's investors.

Justice Department attorneys want to use the documents during an upcoming civil trial before U.S. District Judge Carl Barbier to prove that BP was "grossly negligent" in its actions to staunch the flow of oil. Proving that claim could mean the company would have to pay billions of dollars more in fines under the Clean Water Act.

The first phase of the civil trial, which will focus on how the Macondo well blowout occurred, is due to begin Feb. 25. A second phase, which will be scheduled when the first phase is completed, will focus on the response to the blowout and spill, including how much oil was released during the blowout.

Under the Clean Water Act, BP and other parties found responsible for the spill could be fined $1,100 per barrel for oil released during the spill. However, if BP were to be found grossly negligent, the company would face penalties of up to $4,300 per barrel.

"Thus, for each additional 5,000 barrels discharged per day, the company could face an additional $21.5 million in penalties, every day of the spill," the federal government attorneys say in a footnote to their memorandum in support of their motion to order BP to produce the documents.

Only minutes after Justice lawyers filed the memorandum, they asked that it be sealed. NOLA.com | The Times-Picayune obtained a copy of the memorandum and redacted documents before the motion to seal was filed.

In its motion, the Justice Department asked for previously withheld documents related to the preparation of BP statements to Congress on May 4, 2010; BP correspondence with Congress on May 24 and June 25, 2010; a May 19, 2010, email from BP executive Doug Suttles to Coast Guard Adm. Mary Landry; and documents provided to the Securities and Exchange Commission on April 29, April 30 and May 4, 2010.

The flow-rate documents that the Justice attorneys are seeking have been withheld from use in the civil case until now because they are considered "work product" of the attorney-client privilege.

But because it was found guilty of the criminal charges, Justice Department attorneys argue, "BP's use of attorneys to aid in its wrongdoing destroys any privilege for communications related to the criminal or fraudulent activity."

"As the Supreme Court has explained, a 'client who consults an attorney for advice that will serve him in the commission of a fraud will have no help from the law. He must let the truth be told,'" the government attorneys wrote.

In support of its motion, the government appended portions of a June 2011 deposition of former BP vice president for exploration David Rainey, who has been separately charged with obstruction of justice for allegedly providing Congress with the low-ball estimates. Rainey testified that he prepared several internal memoranda providing more accurate estimates in April and May 2010 that were reviewed by Doug Suttles, who was then chief of BP's exploration and production activities and who oversaw the company's oil spill response. Suttles retired at age 50 in January 2011 after 22 years with the company.

During the deposition, Rainey said he prepared the memos at the request of BP's counsel, who reviewed the drafts.

The names of the BP counsel are not in the government documents, some of which have blacked-out passages. But according to the BP plea agreement, the company's counsel also requested Rainey to prepare a memo submitted to the House Subcommittee on Energy and Environment in May after U.S. Rep. Ed Markey, D-Mass., questioned the company's earlier assertion before the committee that only 5,000 barrels of oil a day were flowing from the well.

That memo "falsely stated that BP's worst case discharge estimate was raised from 60,000 (barrels of oil per day) to 100,000 BOPD after subsequent 'pressure data was obtained from the BOP stack'" -- a reference to the blowout preventer equipment stack atop the well -- BP admitted in the factual basis accompanying its guilty plea. Instead, the factual basis said, Rainey knew the 100,000-barrel estimate wasn't the result of the pressure data, but instead had been prepared as a worst-case estimate as early as April 21, a day after the blowout.

Rainey's memo also was submitted to Coast Guard Rear Adm. Mary Landry, who was the federal on-scene coordinator immediately after the accident, in response to a May 17 letter from Landry to Suttles. In the letter, Landry asked for information on how much oil was being released to "help us continue to hone our efforts to respond most effectively to the spill and to mitigate the ongoing threat to our environment and coastal communities."

The attorneys also included a portion of a deposition by retired Coast Guard Adm. Thad Allen, who served as national incident commander during the spill, concerning his need for information about the flow rate.

"Flow rate became important in terms of trying to size the equipment needed for the surface response in terms of skimming equipment, boom, in situ burning equipment and that sort of thing," Allen testified. "And, therefore, sooner or later, you had to reconcile supply and demand with the amount of oil that was out there versus the equipment that would be needed to deal with it. In that portion of the response, flow rate is consequential."

The rate of oil flow also was important in relation to the pressure in the well, the procedures being used to cap and contain the flow of oil from the well, "and the potential integrity of the wellbore itself," Allen said.

Source: http://www.nola.com/news/gulf-oil-spill/index.ssf/2013/01/justice_asks_federal_judge_to.html

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