Are DOJ and DOI Making A Competent Legal Effort On Gulf Moratorium?

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Exactly one week ago, in a post entitled Judicial Ethics in the Gulf: Judge Feldman’s Conflicts and DOJ Malpractice, I related the patently obvious, and disqualifying, statutory ethical conflicts on the part of the Federal judge in the Eastern District of Louisiana, Martin Feldman, who made the curious and shocking decision to stay enforcement of the Obama Administration’s six month deepwater moratorium. As I pointed out, it legally was somewhat astounding the government did not raise Feldman’s conflict at any opportunity:

With this knowledge in the public sphere at least substantially by the night after Feldman’s decision, the government nevertheless did not even mention it as a ground in their attempt to stay Feldman’s ruling at the district court level when they filed their motion to stay at the district court level late the following day. That motion was in front of Feldman himself, so maybe you could rationalize the government not raising it at that point (although I would have posed the motion to stay to the chief judge for the district and included the conflict as grounds for relief were it me).

Having predictably received no relief in their lame request for stay from Feldman, the judge who had just hammered them (not surprising), the government put their tails between their legs and made preparations to seek a stay from the 5th Circuit. Surely the government would forcefully argue the glaringly obvious egregious appearance of both conflict and lack of impartiality once they were free of Feldman and in the Fifth Circuit, right? No, no they didn’t.

When the government filed their motion for stay in the 5th Circuit mid to late day Friday June 25, a full three days after getting hammered by oiled up Judge Feldman, and after Feldman’s most recent 2009 financial disclosure had even started being released to the general public (as evidenced by the literally damning piece on it Rachel Maddow did Friday night), the government STILL did not avail themselves of the glaringly obvious argument of conflict by Feldman. Nary a peep from the fine lawyers at the DOJ on one of the most stunningly obvious arguments of judicial bias in recent memory.

Another week later, and there STILL is no peep from the government on an issue that would be critical to reinstating their moratorium if they really wanted to. But while the government lawyers refuse to zealously litigate the position they claim to support, intervenors represented a by law school clinic professor and two lawyers for environmental groups have done the work the government should have done. On Friday June 2, Defendant-Intervenors filed a Motion to Disqualify Feldman in the district trial court and properly noticed the record at the 5th Circuit.

From the D-I Motion to Disqualify:

Pursuant to 28 U.S.C. § 455, Defendant-Intervenors Defenders of Wildlife, Sierra Club, Florida Wildlife Federation, Center for Biological Diversity, and Natural Resources Defense Council (collectively “Defenders”) respectfully move this Court to disqualify itself from Read more →

Oil Shill Mary Landrieu Claims Ignorance of ConocoPhillips

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The Senate Energy and Natural Resources Committee has voted to have its own commission investigate the BP disaster. The Committee finds that necessary, according to Mary Landrieu, because Obama hasn’t appointed a representative from the oil industry to his own commission.

The Senate Energy and Natural Resources Committee voted Wednesday to create a congressional bipartisan commission to investigate the spill, with Sen. Mary Landrieu, D-La., and others saying a separate panel is needed because the White House commission has four environmental advocates — three members and the executive staff director — but no oil industry representation.

“Maybe the commission that the Congress sets up, in a more balanced fashion, with both very strong environmental views and very strong industry views, could actually come up with something that really might work for the dilemma and the challenge that this nation faces, which briefly is this: We use 20 million barrels of oil a day,” Landrieu said. “That was true the day before the Deepwater Horizon blew up. It is true today. And we need to get that oil from somewhere.”

Aside from the problem of the oil industry investigating the oil industry, there’s another problem with Landrieu’s complaint.

Bill Reilly, the Republican Co-Chair and one of the people Landrieu’s calling an “environmental advocate”? He serves on ConocoPhillips’ board. ConocoPhillips is a much smaller player in deepwater drilling than, say, BP. But it’s still the sixth largest driller.

But I guess that kind of obvious conflict isn’t enough to reassure Landrieu.

Judicial Ethics in the Gulf: Judge Feldman’s Conflicts and DOJ Malpractice

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Last week Federal district court judge Matin Feldman of the Eastern District of Louisiana (EDLA), in what has become a controversial decision, overturned the six month moratorium on deepwater oil drilling imposed by the Department of the Interior. It was a legally curious decision to start with as it, on its face, appeared to be contrary to the well established standard of review.

Almost immediately from the time Judge Feldman’s decision hit the public conscience, information on Feldman’s undisclosed (at least on the case record at issue) financial ties to the oil and gas exploration industry started coming out of the woodwork. From Saturday’s Washington Post:

The federal judge who presided over a challenge to the Obama administration’s six-month moratorium on deepwater oil drilling simultaneously owned stock in an oil company affected by the ban, according to a financial disclosure statement released Friday.

U.S. District Judge Martin L.C. Feldman sold the stock in Exxon Mobil 14 days after the case was filed in New Orleans by a group of oil service firms — and less than five hours before he struck down the moratorium.

Feldman said in a statement elaborating on the disclosure that he was unaware of his holdings in Exxon Mobil and a smaller oil company until 9:45 p.m. Monday, the day before he issued his ruling.

“Because he remembered that Exxon, who was not a party litigant in the moratorium case, nevertheless had one of the 33 rigs in the Gulf, the judge instructed his broker to sell Exxon and XTO [Energy Inc.] as soon as the market opened the next morning,” according to a statement released by his chambers and reported by Bloomberg News.

Even before this latest disclosure, Feldman was criticized by environmental groups and others for not recusing himself from the case. The groups pointed to his 2008 disclosure form, which showed that he had invested in companies involved in offshore oil and gas exploration.

So Judge Feldman not only held numerous oil and gas interest stocks, but was trading them up to and including the morning of his fateful decision, and doing so out of an admitted realization that he had an appearance of ethical conflict. Feldman owned and was trading Exxon stock, a company whose Gulf of Mexico rigs were losing money at the rate of a half million dollars a day due to the moratorium, during the entire time he was assigned the case. Yet, failing to disclose his appearance of conflict on the record or recuse, Feldman nevertheless proceeded to issue a questionable decision clearly benefitting the oil and exploration industry he is so invested in.

Lest there be any confusion that perhaps Judge Feldman somehow put himself in the clear by suddenly selling off his holdings in Exxon on the morning of June 22 just hours before issuing his surprising opinion Read more →

Erik Prince, Sanctions, and Mineral Wealth

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Let me start by laying out a few details about Erik Prince that have been reported of late.

  • Prince recently gave a speech I interpreted as a proposal for private contractors to serve as big oil’s enforcer–including in Nigeria and Iran
  • Blackwater illegally tried (but allegedly failed) to negotiate a deal to train guards for southern Sudan; as part of the deal, Blackwater would be paid with 50% of Sudan’s mineral wealth
  • The US is close, again, to not prosecuting Blackwater and instead simply fining it for that illegal contracting attempt and other export control violations
  • Anonymous sources say (but his spokesperson will not confirm) that Erik Prince will move to the United Arab Emirates, which has no extradition treaty with the US, claiming he would be leaving the US market altogether
  • He also announced he was selling the company–though you gotta wonder how the reported fine will play into the sale
  • For its part, Blackwater just signed new deals with the State Department and CIA for work in Afghanistan, which has been recently touted for its mineral wealth
  • When asked about the new CIA Blackwater contract, Leon Panetta explained that CIA has reviewed all of BW’s contracts and that for this one, BW simply underbid other bidders
  • Facing a veto threat from the Obama Administration, DiFi has all but dealt away Congress’ demand that GAO be able to audit intelligence related programs–including things like fraud in black ops contracts (more on that later)

Now, as I pointed out in my post on Prince’s reported move to UAE, his move followed that of Halliburton. Given the McClatchy report on the fairly extensive list of alleged export and Foreign Corrupt Practices Act crimes Blackwater had committed, I could imagine that Prince might move for precisely the same reason Halliburton may have–to avoid being held responsible for bribing foreign officials and violating sanction regimes (Halliburton faced its own FCPA charges when it moved to UAE).

Here’s what Blackwater was up to in Sudan:

After negotiating a $2 million draft contract to train Kiir’s personal security detail, Blackwater in early 2007 drafted a detailed second proposal, valued at more than $100 million, to equip and train southern Sudan’s army. Because the south lacked ready cash, Blackwater sought 50percent of its untapped mineral wealth, a former senior U.S. official said.

In addition to its well-known oil and natural gas reserves, southern Sudan has vast untapped reserves of gold, iron and diamonds.

“Most people don’t know this stuff exists. These guys did,” said a second former senior official who saw the document, which apparently was never signed.

Ultimately, though, Blackwater’s venture in Sudan foundered, U.S. officials said.

“Blackwater had some problems in Iraq,” said Deng Deng Nhial, the deputy chief of southern Sudan’s Washington office. “Nothing really materialized. No services were performed.”

Federal investigators, however, found evidence that Blackwater’s sales campaign had violated U.S. sanctions, export control laws and the Foreign Corrupt Practices Act, which is designed to prevent U.S. companies from bribing foreign officials in return for business, according to the officials and documents.

The suspected violations included brokering for defense services without a U.S. government-approved license; transferring satellite phones and encrypted e-mail capabilities to southern Sudanese officials; and attempting to open a joint escrow account with the South’s government at a Minnesota bank.

So now you’ve got Prince, the guy who set up our Black Ops contractor, located in the Persian Gulf, with no way to prevent him from violating the US’ own laws about corruption and sanctions. Prince says he’s done working with the United States, and maybe he’s done working directly with the US. Or maybe not. But we do know he’s got aspirations to work with both US allies and enemies.

Read more →

We Can’t Even Get Japan to Stop Whaling…

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And now we’re going to have to try to get them to give up Maguro sushi.

Fearing that the oil spill in the Gulf of Mexico will deal a severe blow to the bluefin tuna, an environmental group is demanding that the government declare the fish an endangered species, setting off extensive new protections under federal law.

[snip]

Both the Bush and Obama administrations tried to win greater international protection for the bluefin, but their efforts were derailed by opposition from countries like Japan, where a single large bluefin can sell in the sashimi market for hundreds of thousands of dollars. (The tuna fish sold in cans comes from more abundant types of tuna, not from bluefin.)

The bluefin uses the Gulf of Mexico as a prime spawning ground, and the gulf is such a critical habitat for the animal that fishing for it there was banned in the 1980s. But after spawning in the spring and summer, many tuna spend the rest of the year roaming the Atlantic, where they are hunted by a global fishing fleet.

The environmental advocacy group, the Center for Biological Diversity, in Tucson, filed the request under the Endangered Species Act in late May. If the petition is granted, a process that could take years, the endangered listing would require that federal agencies conduct exhaustive analysis before taking any action, like granting drilling permits, that would pose additional risk to the fish.

Frankly, I think a campaign to put bluefin tuna on the endangered species list would be beneficial for a number of reasons. If a bunch of elites have to give up their Maguro sushi, it’ll highlight both the problem with overfishing generally and the concrete way in which our oil-addicted lifestyle endangers the little perks of life we love (and don’t get me wrong–I love Maguro sushi too).

Which will it be? Give up your SUV, or give up your favorite sushi?

In the meantime, there are two things you can do to help.

The Center for Biological Diversity, which is leading this effort, has been one of the best environmental groups responding to the BP Disaster. You might help them in any way you can.

And check your seafood choices for sustainability before you eat it. The Monterey Bay Aquarium has a great online tool (with pocket tools available) that provides recommendations for seafood choices based both on sustainability and health hazards, like mercury. In addition to bluefin, it also recommends you avoid Hamachi.

(Maguro image by pittaya under Creative Commons 2.0)

Obama Drilling Moratorium Overturned In Curious Court Decision

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The breaking news this hour is the decision of Judge Martin L. C. Feldman of the Eastern District of Louisiana to grant a preliminary injunction to the moving plaintiff oil and gas interests and against the Obama Administration’s six month moratorium on deepwater drilling for oil in the Gulf of Mexico.

The court’s decision is here. The key ruling is:

On the record now before the Court, the defendants have failed to cogently reflect the decision to issue a blanket, generic, indeed punitive, moratorium with the facts developed during the thirty-day review. The plaintiffs have established a likelihood of successfully showing that the Administration acted arbitrarily and capriciously in issuing the moratorium.
…..
Accordingly, the plaintiffs’ motion for preliminary injunction is GRANTED. An Order consistent with this opinion will be entered.

The 22 page decision is quite thorough in detailing the applicable law and standards of review. The Judge Feldman proceeds to blatantly disregard and violate the very standards and law he has laid out. It is really quite remarkable. Here, from his own decision (p. 11-12), is the scope he is supposed to be operating under:

The APA cautions that an agency action may only be set aside if it is “arbitrary, capricious, an abuse of discretion, or not otherwise not in accordance with law.” 5 U.S.C. §706(2)(A); see Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971). The reviewing court must decide whether the agency acted within the scope of its authority, “whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Overton Park, 401 U.S. at 415-16; see Motor Vehicle Manf. Ass’n of the U.S. v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 42-43 (1983). While this Court’s review must be “searching and careful, the ultimate standard of review is a narrow one.” Overton Park, 401 U.S. at 416; see Delta Found., Inc. v. United States, 303 F.3d 551, 563 (5th Cir. 2002). The Court is prohibited from substituting its judgment for that of the agency. Overton Park, 401 U.S. at 416. “Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’” State Farm, 463 U.S. at 43 (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)).

The key language is that an agency decision such as entered in this case can be set aside ONLY Read more →

Negotiation 101: How to Get Corporations to Do What You Want

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I just got back from driving across the rust belt – Syracuse, Buffalo, Cleveland, Toledo, MI – and am catching up on all the interesting conversations you’ve been having this week while I was celebrating my mom’s birthday (thanks, once again, to bmaz for watching the liquor cabinet while I was gone). So for the moment I want to make one quick comment.

The WSJ has a story describing how BP heroically pushed back against two of the Administration’s most onerous demands: that it pay for the costs of the moratorium on new drilling, and it pay to restore the Gulf to its natural state, rather than the state it was in when the Deepwater Horizon disaster struck.

BP PLC, despite being put under pressure by the U.S. government to pay for the oil-spill aftermath, has succeeded in pushing back on two White House proposals it considered unreasonable, even as it made big concessions, said officials familiar with the matter. BP last week agreed to hand over $20 billion – to cover spill victims such as fishermen and hotel workers who lost wages, and to pay for the cleanup costs – a move some politicians dubbed a “shake down” by the White House. Others have portrayed it as a capitulation by an oil giant responsible for one of the worst environmental disasters in history. A more accurate picture falls somewhere between.

The fund is a big financial hit to BP. But behind the scenes, according to people on both sides of the negotiations, the company achieved victories that appear to have softened the blow.

BP successfully argued it shouldn’t be liable for most of the broader economic distress caused by the president’s six-month moratorium on deep-water drilling in the Gulf of Mexico. And it fended off demands to pay for restoration of the Gulf coast beyond its prespill conditions.

Now, I know WSJ’s job is to make corporations look good, so I’m unsurprised by this spin. And I’m skeptical the $20 billion will get in the hands of those who need it in a timely fashion.

But it seems to me that the real story is that – for the first time I can think of – the Obama Administration has actually taken a tough approach to negotiation. Normally, of course, Obama starts by ceding on key issues (such as drug reimportation, oil drilling, and real financial reform) and from that incredibly weakened position, further damaging his policy position. Perhaps this time is different because the Administration is under a much greater public opinion threat. Perhaps this time is different because BP is a corporation (though so are the drug companies) not the opposing political party.

But this time is different.

I actually agree with the WSJ that Obama was unlikely to get BP to pay for the moratorium on drilling. But that may have not been the point. It established the window of possibility far beyond what it had been, and made the $20 billion escrow account look reasonable by comparison. And voila! BP at least said they agreed to cough up $20 billion.

It’s called negotiation!

Whoever came up with this novel idea really ought to get a bigger policy portfolio.

The Well Oiled Man Hayward Goes Yachting As Gulf of Mexico Dies

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Now that I have effectively turned this blog into Gawker, I might as well take one more crack at the well heeled aristocracy. Today’s jet setting celebrity is none other than BP Big Man Dr. Anthony Bryan Hayward, CCMI. Better known to us “small people” here in the States as Tony Hayward, CEO of the corporate criminal BP, one of big oil’s supermajors.

And what has Anthony Bryan Hayward, CCMI been up to lately you ask? Well like all the finest jet set playahs in summertime, he has been yachting:

Embattled BP Chief Executive Tony Hayward took a break from manning the massive Gulf Coast oil spill Saturday to attend a posh yacht race in England.

“It’s a well-known event in the British calendar. He’s entitled to private time with his family,” said BP spokesman Robert Wine.

Hayward — who infamously quipped that he’d like the devastating spill stopped so he could “get (his) life back” — was watching his boat “Bob” in the J.P. Morgan Asset Management Round the Island Race Saturday off the Isle of Wight.

Guess Big Man Tony got his life back. Unfortunately, Aaron Dale Burkeen and the other men on Deepwater Horizon will never get their lives back. Eleven of them no longer even have a life to get back, having perished in the burning and exploding hell of Hayward’s Macondo inferno.

Meanwhile, back at the Gulf shore of the United States, things are going swimmingly. Well, swimming in oil anyway. The Gulf oil spill is a hole in the world; as Naomi Klein says in a brooding but fantastic article in today’s Guardian:

The Deepwater Horizon disaster is not just an industrial accident – it is a violent wound inflicted on the Earth itself.

Indeed. Oh, and the gross quantities of methane and crude oil gushing forth at ever increasing flow volume from the mouth of hell Macondo well could create “dead zones” where oxygen is so depleted that nothing lives. And there is enough oil in the vast Macondo reservoir to keep spewing oil at the current rate for two to four years, maybe longer. So we Yanks have that going for us as Big Shot Tony goes yacht clubbing with his sleek racing sloop, the “Bob”, in the posh and prestigious J.P. Morgan Asset Management Round the Isle of Wight Race.

BP’s Well Failure Due to Effort to Save $10 Million?

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Henry Waxman just put up a letter and a whole bunch of backup documents in preparation for a hearing with Tony Hayward Thursday. In it, he lists 5 shortcuts BP used in the days before the well explosion, all of them with real risks. But BP chose them to save money and time.

Well Design. On April 19, one day before the blowout, BP installed the final section of steel tubing in the well. BP had a choice of two primary options: it could lower a full string of “casing” from the top of the wellhead to the bottom of the well, or it could hang a “liner” from the lower end of the casing already in the well and install a “tieback” on top of the liner. The liner-tieback option would have taken extra time and was more expensive, but it would have been safer because it provided more barriers to the flow of gas up the annular space surrounding these steel tubes. A BP plan review prepared in mid-April recommended against the full string of casing because it would create “an open annulus to the wellhead” and make the seal assembly at the wellhead the “only barrier” to gas flow if the cement job failed. Despite this and other warnings, BP chose the more risky casing option, apparently because the liner option would have cost $7 to $10 million more and taken longer.

Centralizers. When the final string of casing was installed, one key challenge was making sure the casing ran down the center of the well bore. As the American Petroleum Institute’s recommended practices explain, if the casing is not centered, “it is difficult, if not impossible, to displace mud effectively from the narrow side of the annulus,” resulting in a failed cement job. Halliburton, the contractor hired by BP to cement the well, warned BP that the well could have a “SEVERE gas flow problem” if BP lowered the final string of casing with only six centralizers instead of the 21 recommended by Halliburton. BP rejected Halliburton’s advice to use additional centralizers. In an e-mail on April 16, a BP official involved in the decision explained: ” it will take 10 hours to install them . .. . I do not like this.” Later that day, another official recognized the risks of proceeding with insufficient centralizers but commented: “who cares, it’s done, end of story, will probably be fine.”

Cement Bond Log. BP’s mid-April plan review predicted cement failure, stating “Cement simulations indicate it is unlikely to be a successful cement job due to formation breakdown.” Despite this warning and Halliburton’s prediction of severe gas flow problems, BP did not run a 9- to 12-hour procedure called a cement bond log to assess the integrity of the cement seal. BP had a crew from Schlumberger on the rig on the morning of April 20 for the purpose of running a cement bond log, but they departed after BP told them their services were not needed. An independent expert consulted by the Committee called this decision “horribly negligent.”

Mud Circulation. In exploratory operations like the Macondo well, wells are generally filled with weighted mud during the drilling process. The American Petroleum Institute (API) recommends that oil companies fully circulate the drilling mud in the well from the bottom to the top before commencing the cementing process. Circulating the mud in the Macondo well could have taken as long as 12 hours, but it would have allowed workers on the rig to test the mud for gas influxes, to safely remove any pockets of gas, and to eliminate debris and condition the mud so as to prevent contamination of the cement. BP decided to forego this safety step and conduct only a partial circulation of the drilling mud before the cement job.

Lockdown Sleeve. Because BP elected to use just a single string of casing, the Macondo well had just two barriers to gas flow up the annular space around the final string of casing: the cement at the bottom of the well and the seal at the wellhead on the sea floor. The decision to use insufficient centralizers created a significant risk that the cement job would channel and fail, while the decision not to run a cement bond log denied BP the opportunity to assess the status of the cement job. These decisions would appear to make it crucial to ensure the integrity of the seal assembly that was the remaining barrier against an influx of hydrocarbons. Yet, BP did not deploy the casing hanger lockdown sleeve that would have prevented the seal from being blown out from below.

BP willfully ignored numerous warnings in an attempt to save $10 million here and there, and several days of time. And as a result, precisely what they were warned against happened, causing tens of billions of monetary damage and permanent environmental damage to the Gulf.

BP Well Bore/Casing Integrity Issues and Senator Nelson’s Statements

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One week ago, on the morning of June 7, I wrote about questions on the substantive physical integrity of the BP Macondo well casing and bore, and statements by Florida’s Senator Bill Nelson on the same, as well as potential resulting seepage from the sea floor surrounding the well head. To say the least it raised a few eyebrows.

I have again attached the FDL video from the appearance Nelson made on the Andrea Mitchell MSNBC show where he became the first official to materially discuss the game changing issue of sea floor seepage from a structurally compromised well below the surface. Since Nelson first made the statements and raised the questions, I have spoken to his office several times.

Here is a quote given directly to Emptywheel/Firedoglake by Senator Nelson:

Why do scientists and others suspect the well casing is breached beneath the seafloor? Well, for one, in one of my briefings I learned that a lot of mud used in the so-called “top kill” attempt didn’t come back up after it was pumped down there.

Clearly, from Senator Nelson’s quote, he has received multiple briefings in addition to the information in the public domain, and he is hearing other private disturbing reports. Quite frankly, this should be of no shock in light of that which is, and was, already in the public domain. In this post, mindful of the fact there is likely a wealth we in the public do not yet know, I would like to delve into the public evidence Senator Nelson was relying on and why this is an issue that should, and must, remain squarely in the forefront of public and media conscience.

First off, it is clear Senator Nelson’s measured statements to Andrea Mitchell were not an off the cuff or uninformed gaffe by Nelson. Quite the contrary, he and his staff had been probing the issue of the integrity of the well bore long prior to the MSNBC appearance. On June 2, Sen. Nelson directed the following correspondence to BP:

June 2, 2010

Mr. Lamar McKay
Chairman and president, BP America, Inc.
501 Westlake Park Boulevard
Houston, Texas 77079

Dear Mr. McKay:

I understand the priority of your company right now is capping the Deepwater Horizon well. But new information about the accident has come to light in two recently published accounts that raise serious questions I hope you can promptly Read more →

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