Deepwater Horizon -- Another Holder Coverup?

Bruce Thompson
The trial regarding the assessment of fines for environmental offenses due to the BP Oil Spill has started and some trends have emerged.

Federal, state and local governments are all looking to maximize their windfalls from the fines that will be assessed. Since the fact that significant environmental damage took place is indisputable and some fines will need to be paid, the arguments are focused on deciding who is responsible for what fraction of the overall amount, how big will the fines be, and which government entity will get the money. The private-party claims have largely been settled with most being subject to the class-action settlement. Some of the private claims are not yet resolved because they are subject to resolution over a period of time that has not yet ended, the claims of oyster fishermen being a prominent example.

The court has established a time frame for scientific surveys to determine if the fishery will recover after proper documentation of loss. The decision by the State of Louisiana to divert fresh water from the Mississippi River into normally brackish tidal waters could have strong negative effects on future harvests. Only time will tell if the remedial actions are taken to re-establish the oyster beds are effective. Many of the remaining unresolved private-party issues are dependent on whether the location where the alleged injury took place will be considered legitimate. For example, some claims in Florida and Texas were excluded from the class settlement because proof that the oil got that far was lacking. So those matters were left to later litigation and the results are still undetermined. For those issues, patience is in order.

What is most distressing, from a technical point of view, is how poor the questioning of the witnesses by the trial attorneys has been. They seem to be beating the same old dead horses. It is amazing that these people get paid nearly $1000 per billable hour! The more hours they drag out the proceedings, the more money they get paid, so getting to the core of the issue is not a priority. Let us look at one very simple question from arm's length. (This country truly needs tort reform!)

The key factual finding of all the investigations is that the decision to do a negative pressure test was a critical factor. It is agreed that there were actually two negative pressure tests done after the first test yielded confusing results. Buried in the reports is the observation that standard industry practice skipped doing a negative pressure test during the temporary plug and abandon operations, such as that being run at the time the well blew out. Unspoken at trial is the truth that had BP stuck with its original plan, there would have been no negative pressure tests and the well would have been left with heavy drilling mud exerting a hydrostatic pressure on the well that would have created an additional pressure barrier, by keeping the well "over-balanced". In combination with the cement pumped in place as a barrier, there would have been redundancy. One barrier, such as the cement job, could fail and yet the well would have stayed under control at all times due to the over-balanced condition. Put simply, the well would not have blown out if BP did not do the negative pressure tests not in their original plan.

So why did BP run a negative pressure test? Because the Offshore Installation Manager (OIM) for their drilling contractor, Transocean, insisted upon doing one. His name is Jimmy Harrell. You can watch him as he testified under oath at the Joint Investigation Team (JIT), Materials Management Service -- United States Coast Guard hearings, as recorded on C-SPAN. At 25:35 he says that the first plan "did not have a negative test in it... I told them it was my policy to do a negative test."

What the court will have to decide is whether BP had the right to trust the knowledge and experience of a drilling contractor they had hired with regard to safe drilling operations. The judge has already ruled that an indemnity agreement between BP and Transocean protects the contractor, save for instances of gross negligence on the part of the contractor. If there is gross negligence, the legal principle of an implied warranty of merchantability and fitness would prevail. The buyer (BP) cannot waive its rights under this principle, so the indemnity agreement would become null and void. Transocean would be responsible.

Under a similar set of questions, Halliburton could be held responsible despite also having an indemnity agreement with BP. There is no dispute that the Halliburton cement job failed -- fragments of cement washed onto the deck of the supply boat, the Damon Bankston, as the well blew out. And you can see the outline of a government coverup by asking, where is that critical physical evidence? Clearly, the fragments of failed cement would be most interesting to a factual determination as to why the cement failed. But they seemingly remain locked up in Eric Holder's safekeeping, unavailable to the Parties-In-Interest to the trial. What is Eric Holder hiding? Is he protecting Halliburton from the consequences of its negligence so as to protect Democrats, particularly Ed Markey, who have been desperately trying to put the blame on BP for a failed Halliburton cement job? Why has the government failed to present to Congress the findings of the forensic examination of the well as detailed in the Chief Counsel's Report to the President's Oil Spill Commission?

Is there anything that Eric Holder won't hide from public view to advance the political interests of the Obama Administration? The emails regarding the imposition of the offshore drilling moratorium that were sent during the night of May 27-27, 2010 when BP was in the midst of its top kill operation under the direction of Kurt Mix, the first person indicted by the federal government despite having absolutely nothing to do with the accident, only with the containment efforts? The Chief Counsel's Report? As is this administration's standard policy, they seem to be trying to dirty up those who are in a position to frustrate their power grabs. And the question is, who will stop them?

The trial regarding the assessment of fines for environmental offenses due to the BP Oil Spill has started and some trends have emerged.

Federal, state and local governments are all looking to maximize their windfalls from the fines that will be assessed. Since the fact that significant environmental damage took place is indisputable and some fines will need to be paid, the arguments are focused on deciding who is responsible for what fraction of the overall amount, how big will the fines be, and which government entity will get the money. The private-party claims have largely been settled with most being subject to the class-action settlement. Some of the private claims are not yet resolved because they are subject to resolution over a period of time that has not yet ended, the claims of oyster fishermen being a prominent example.

The court has established a time frame for scientific surveys to determine if the fishery will recover after proper documentation of loss. The decision by the State of Louisiana to divert fresh water from the Mississippi River into normally brackish tidal waters could have strong negative effects on future harvests. Only time will tell if the remedial actions are taken to re-establish the oyster beds are effective. Many of the remaining unresolved private-party issues are dependent on whether the location where the alleged injury took place will be considered legitimate. For example, some claims in Florida and Texas were excluded from the class settlement because proof that the oil got that far was lacking. So those matters were left to later litigation and the results are still undetermined. For those issues, patience is in order.

What is most distressing, from a technical point of view, is how poor the questioning of the witnesses by the trial attorneys has been. They seem to be beating the same old dead horses. It is amazing that these people get paid nearly $1000 per billable hour! The more hours they drag out the proceedings, the more money they get paid, so getting to the core of the issue is not a priority. Let us look at one very simple question from arm's length. (This country truly needs tort reform!)

The key factual finding of all the investigations is that the decision to do a negative pressure test was a critical factor. It is agreed that there were actually two negative pressure tests done after the first test yielded confusing results. Buried in the reports is the observation that standard industry practice skipped doing a negative pressure test during the temporary plug and abandon operations, such as that being run at the time the well blew out. Unspoken at trial is the truth that had BP stuck with its original plan, there would have been no negative pressure tests and the well would have been left with heavy drilling mud exerting a hydrostatic pressure on the well that would have created an additional pressure barrier, by keeping the well "over-balanced". In combination with the cement pumped in place as a barrier, there would have been redundancy. One barrier, such as the cement job, could fail and yet the well would have stayed under control at all times due to the over-balanced condition. Put simply, the well would not have blown out if BP did not do the negative pressure tests not in their original plan.

So why did BP run a negative pressure test? Because the Offshore Installation Manager (OIM) for their drilling contractor, Transocean, insisted upon doing one. His name is Jimmy Harrell. You can watch him as he testified under oath at the Joint Investigation Team (JIT), Materials Management Service -- United States Coast Guard hearings, as recorded on C-SPAN. At 25:35 he says that the first plan "did not have a negative test in it... I told them it was my policy to do a negative test."

What the court will have to decide is whether BP had the right to trust the knowledge and experience of a drilling contractor they had hired with regard to safe drilling operations. The judge has already ruled that an indemnity agreement between BP and Transocean protects the contractor, save for instances of gross negligence on the part of the contractor. If there is gross negligence, the legal principle of an implied warranty of merchantability and fitness would prevail. The buyer (BP) cannot waive its rights under this principle, so the indemnity agreement would become null and void. Transocean would be responsible.

Under a similar set of questions, Halliburton could be held responsible despite also having an indemnity agreement with BP. There is no dispute that the Halliburton cement job failed -- fragments of cement washed onto the deck of the supply boat, the Damon Bankston, as the well blew out. And you can see the outline of a government coverup by asking, where is that critical physical evidence? Clearly, the fragments of failed cement would be most interesting to a factual determination as to why the cement failed. But they seemingly remain locked up in Eric Holder's safekeeping, unavailable to the Parties-In-Interest to the trial. What is Eric Holder hiding? Is he protecting Halliburton from the consequences of its negligence so as to protect Democrats, particularly Ed Markey, who have been desperately trying to put the blame on BP for a failed Halliburton cement job? Why has the government failed to present to Congress the findings of the forensic examination of the well as detailed in the Chief Counsel's Report to the President's Oil Spill Commission?

Is there anything that Eric Holder won't hide from public view to advance the political interests of the Obama Administration? The emails regarding the imposition of the offshore drilling moratorium that were sent during the night of May 27-27, 2010 when BP was in the midst of its top kill operation under the direction of Kurt Mix, the first person indicted by the federal government despite having absolutely nothing to do with the accident, only with the containment efforts? The Chief Counsel's Report? As is this administration's standard policy, they seem to be trying to dirty up those who are in a position to frustrate their power grabs. And the question is, who will stop them?