Bloomberg News

U.S. Seeks to Lift BP Attorney Privilege on Spill Papers

January 31, 2013

BP Plc (BP/)’s exploration unit no longer has legal grounds to withhold from the U.S. documents detailing its calculations for the oil flow rate during the 2010 Gulf of Mexico spill, prosecutors said.

The company’s guilty plea to criminal charges means it can’t assert attorney-client privilege to keep the information confidential, prosecutors said yesterday in a filing in federal court in New Orleans. Since BP’s lawyers were “intimately involved” in aiding the company’s criminal conduct, the customary shield over their work is eliminated, the U.S. said.

BP Exploration & Production Inc. on Jan. 29 won final approval of its plea to 14 criminal counts related to the explosion of the Deepwater Horizon drilling rig, which killed 11 workers and sparked the worst offshore oil spill in U.S. history. Among those charges was a count for obstructing justice by lying to the U.S. Congress about the size of the spill, which the government said dumped more than 4.1 million barrels of crude into the gulf.

“Because BP used its attorneys to aid in its wrongdoing, it can no longer claim privilege with respect to communications related to developing the flow-rate information and communications forming the basis of BP’s false and misleading statements,” prosecutors said in the filing. This applies even if the lawyers were unaware they were aiding criminal conduct, the government said.

BP previously admitted in court papers “that the preparation of the false and misleading documents in question were attorney-directed efforts,” according to the filing. BP’s fraudulent statements were “drafted in a collaborative process led by Wilmer Hale and involving both in-house and external lawyers,” government lawyers said.

Wilmer Hale

Wilmer Hale Pickering Hale and Dorr LLP (1221L:US), a 1,000-lawyer corporate defense firm based primarily in Boston and Washington D.C., had no immediate comment on the government filing, Molly Nunes, a firm spokeswoman, said today.

BP initially told the government and the public that the flow rate was from 1,000 to 5,000 barrels a day, when internal estimates pegged the rate as high as 96,000 barrels a day, prosecutors said.

“Nothing in the plea deprives BP of the right to invoke the core protections provided under federal law,” Scott Dean, a spokesman for London-based BP, said in an e-mailed statement. “We will respond to the government’s motion on a schedule set by the court.”

$4 Billion

BP agreed to pay $4 billion in fines and penalties to resolve all criminal charges tied to the fatal explosion and spill. BP pleaded guilty to 11 counts of felony seaman’s manslaughter and two counts of violating federal environmental protection laws.

Separately, BP entered a consent judgment with the U.S. Securities and Exchange Commission to pay an additional $525 million for lying about the size of the spill.

Prosecutors yesterday asked U.S. District Judge Carl Barbier in New Orleans to force BP to turn over copies of “all previously withheld documents” related to flow-rate estimates BP executives provided Congress and the SEC during the first months of the spill, according to the filing.

E-Mail Sought

The Justice Department also said it wants a copy of an e- mail that Doug Suttles, BP’s U.S. operations chief at the time, sent the U.S. Coast Guard commander leading the joint spill- response team in mid-May 2010.

That message was accompanied by an attachment that formed the basis of the company’s consent agreement with the SEC as well as a separate criminal indictment of Suttles’s subordinate, David Rainey. Rainey denies misleading the government about the size of the spill and is fighting the charges.

Barbier is in charge of civil litigation over economic and medical injuries stemming from the spill. The claims are consolidated in his court for pretrial processing. BP won approval last month for a $7.8 billion settlement with lawyers representing thousands of coastal property owners, businesses and individuals who claimed they were harmed by the spill or efforts to clean it up.

Barbier on Feb. 25 is scheduled to begin a nonjury trial to apportion liability for the explosion and spill among BP and its partners and contractors, including Transocean Ltd., Halliburton Co. (HAL:US) and Anadarko Petroleum Corp. (APC:US)

Bench Trial

An August bench trial before Barbier will be held to determine the quantity of oil BP spilled and how much it should pay in civil pollution fines for violating the U.S. Clean Water Act. Under that statute, BP could face an additional fine of as much as $17 billion, depending on the size of the spill and whether the company is found to have acted with gross negligence in causing the disaster.

BP has so far spent more than $14 billion on operational response and clean-up costs and committed an additional $1 billion to environmental restoration projects, according to an e-mailed statement by the company after the Jan. 29 plea hearing.

The case is In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010; 2:10-md-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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