U.S. Must Disclose Records To Chevron, Court Rules

WASHINGTON (CN) - The U.S. Court of Federal Claims ordered the government to hand over thousands of

documents that the Department of Energy claimed were privileged in its legal tug-of-war with Chevron over equity rights in the Elk Hills oil reserve in California's San Joaquin Valley.

The dispute centered on negotiations over an amended 1944 contract between Chevron's predecessor, Standard Oil, and the government over the rights to the Elk Hills oil field. The Navy originally held majority rights in the reserve, but transferred its equity interest to the DOE after the government decided the Navy no longer needed to keep a reserve in case of a national emergency.

As Chevron and the DOE hashed out the final equity interest, Chevron issued a letter in 2004 stating that it had "very recently discovered" that the government had breached key contracts over equity rights "worth hundreds of millions of dollars." The oil company accused a lawyer for the DOE of acting as both counsel and an advisor to the decision maker, the Assistant Secretary for Fossil Energy. It claimed this conflict of interest not only wasted time and money, but was also to blame for "one-sided" decisions against Chevron.

Chevron filed suit for breach of contract and requested copies of the written communication between the assistant secretary and the DOE equity team.

The United States claimed that nearly 36,000 pages of documents were private under the deliberative-process privilege, the attorney-client privilege and/or the work-product privilege.

After examining a sample of the documents, the court found that only a small percentage was properly concealed.

"The integrity of the federal litigation process depends on the parties' good faith representations when privilege assertions are made," Judge Susan Braden wrote. "Zealous advocacy is one matter; abusive litigation tactics are quite another."

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