McCain criticizes Deepwater deal

John McCain Show caption
John McCain

Letter demands Holder explain ‘paltry’ fine in BP well case

U.S. Sen. John McCain criticized the Justice Department on Thursday for making a plea deal with the Halliburton Co. that included “paltry” fines for destroying evidence in the aftermath of the 2010 BP oil leak off the coast of Louisiana.

McCain, R-Ariz., sent a letter Thursday to U.S. Attorney General Eric Holder asking follow-up questions about the Halliburton plea agreement to express concerns about a seemingly lax punishment.

Last week, the U.S. Justice Department announced that the oilfield services company agreed to plead guilty to destroying evidence in a deal that included a maximum statutory fine of $200,000 and a three-year probationary period.

Separate from the plea deal, Halliburton also agreed to pay $55 million to the National Fish and Wildlife Foundation.

“I worry that such paltry fines fail to discourage defendants from destroying evidence,” McCain wrote. “If the fines do not adequately deter companies, they may begin routinely destroying unfavorable evidence as an acceptable cost of doing business.

“In matters like the Deepwater Horizon disaster, which tragically killed 11 people, devastated our treasured shores, and dramatically disrupted the economy in the region, plea agreements warrant maximum transparency,” McCain continued. “It is important for the American people to know how effectively the terms of such plea agreements hold accountable those who affirmatively attempted to undermine the investigation into this massive disaster.”

McCain asked what further criminal prosecutions are being pursued against Halliburton or its managers, why the matter was settled for such a small fine, and to what extent did the Justice Department pressure Halliburton to make the $55 million donation.

McCain is the ranking GOP member of the Senate Permanent Subcommittee on Investigations.

Halliburton was contracted to provide the cementing and other services for the Mocando well in the Gulf of Mexico. The 2010 Deepwater Horizon drilling rig explosion resulted in a three-month discharge of 4.9 million barrels of oil into the Gulf of Mexico off the coast of Louisiana.

For years, BP has accused Halliburton employees of internally investigating after the blowout and finding and destroying evidence of early test results that showed potential problems. The argument is that some of the destroyed evidence would remove some of BP’s burden of guilt. But Halliburton had initially denied any destruction of evidence.

In March, Timothy Probert, who headed Halliburton’s safety program at the time of the BP oil leak, acknowledged in federal court that he had learned some evidence was destroyed. But Probert also testified that he believed Halliburton had “zero responsibility with respect to the accident.”

The plea agreement states that Halliburton formed an internal investigation group about two weeks after the April 20, 2010, well blowout. The investigation included looking at whether the number of “centralizers” used in the well’s production casing played a role in the disaster. Centralizers are used to keep the drill pipe centered in the well as cement is pumped in.

Prior to the blowout, Halliburton had recommended that BP use 21 centralizers in the well; BP opted to use only six, according to the Justice Department.

The plea deal states that Halliburton conducted three-dimensional simulations to study the matter and found “there was little difference between using six and 21 centralizers,” according to the plea deal.

But the key is that Halliburton’s cementing technology director then directed a program manager to destroy the results, despite feeling “uncomfortable” about doing so, according to the criminal bill of information. In June 2010, similar evidence was also destroyed in a later incident of again studying the centralizers, although another employee also felt “uncomfortable” about the orders and initially hesitated before following through.