Ex-EPA Official Faults Probe of BP Alaska Oil Spill

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NOVEMBER 19, 2008

Ex-EPA Official Faults Probe of BP Alaska Oil Spill
Head of Investigation Claims Justice Department Ended Inquiry Into 2006 Incidents Early, Forgoing Possible Felony Charges
By JIM CARLTON
WSJ

The former head of an EPA criminal probe into pipeline spills at a BP PLC oil field in Alaska claims the Justice Department prematurely shut down the investigation and settled with the company for less than the case may have warranted. The Environmental Protection Agency in early 2007 considered seeking penalties of as much as $672 million and possible felony charges against BP for the 2006 spills, depending on what the probe uncovered, the former EPA official and EPA agree. The possible fine was based on variables such as how much money BP saved by not performing pipeline maintenance.

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Scott West, a former special agent-in-charge of the EPA's criminal-investigation division in Seattle who supervised a team of investigators, says that in August 2007, at a meeting of federal officials on the case in Anchorage, a prosecutor asked whether he had enough evidence to charge BP with a felony. Mr. West says he didn't at that point, but needed another year or so to go through the evidence that EPA and Federal Bureau of Investigation agents had gathered. While he was given 17 months to investigate after the March 2006 spill, Mr. West says such probes typically take two to four years, and other federal law-enforcement officials confirm that. Mr. West alleges that prosecutors told him it wasn't in the government's interest to continue the investigation if it could settle with BP on a misdemeanor. Following the meeting, Mr. West says, Karen Loeffler, the criminal chief in the U.S. attorney's office, told him "the decision to settle now was made by Ron Tenpas." Mr. Cohen, speaking on Ms. Loeffler's behalf, says she "flatly denies" making that statement. He adds that his office acted independently in resolving the case. "I was never pressured in any way, shape or form in how to handle the case," Mr. Cohen says.

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Mr. West says his inquiry began in July 2005 -- before the actual spills -- after some BP engineers told him that a pipe rupture and leaks were inevitable, and that their warnings had been repeatedly ignored. The engineers were steered to him by Charles Hamel, a former oil-tanker broker who serves as a conduit for oilfield workers' complaints in Alaska. In March 2006, a corroded line broke, spilling about 200,000 gallons of crude on the tundra. In August 2006, a spill of about 1,000 gallons took place at another corroded line nearby. No injuries resulted from either spill. BP, which in its plea agreement admitted to negligence in not preventing corrosion on oil-transit lines at Prudhoe Bay, then ordered almost the entire field shut down to repair corroded pipes. The company has said it replaced miles of the lines at the field.

The EPA probe kicked into high gear after the spills, with as many as a dozen criminal investigators from the agency, the FBI and the state of Alaska, Mr. West says. He says there was an effort early on among EPA officials to look at possible illegal behavior, based on what he described as worker complaints that management repeatedly ignored warnings that the corrosion problem needed to be addressed. EPA officials said last week that such behavior was never proven. BP said that "we have no record that any concerns about corrosion leading to an oil transit-line breach...were communicated to BP by BP Alaska workers."

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Mr. West says Mr. Cohen's own prosecutors had been discussing the case as a potential felony, depending on what the evidence turned up. A Justice Department spokesman said the agency does not comment on what prosecutors discuss internally. On Oct. 15, 2007, Mr. West says, he attended a settlement meeting with BP lawyers at the U.S. attorney's office in which Mr. Cohen offered to settle the case for a $20 million fine. An EPA analysis two weeks earlier proposed two options of $58.5 million or $89.8 million in the misdemeanor case. EPA officials confirm the calculations were made. Mr. Cohen said they "discussed what a proper penalty should be. This is what we decided was a fair and just result." BP said in its statement that it "admitted that its processes and systems for monitoring Prudhoe Bay oil-transit lines were inadequate," and "that negligence on the company's part resulted in the March 2006 spill."

http://online.wsj.com/article/SB122706017166039657.html (subscription)

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