Our guest blogger is Kiley Kroh.
One day after the Interior Department formally issued citations to BP and its two main contractors, Halliburton and Transocean, for numerous safety and environmental violations connected to the explosion of the Deepwater Horizon rig in the Gulf of Mexico, ranking member of the House Natural Resources Committee Rep. Ed Markey (D-MA) referred to the fines as “nothing more than a slap on the wrist.”
At Thursday’s hearing on the official report on the disaster, Markey noted that the maximum penalty stemming from the citations would be a mere $21 million for BP — just seven hours of profit for the oil giant.
Even in a worst case scenario for BP, these violations that resulted in the nearly 5 million barrels of oil spilling into the gulf would cost the company a total of $21 million. Not billion, million. Considering what we know about what caused this disaster, BP should stand for “Bigger Penalties.” BP is on pace to make more than $25 billion this year — $21 million represents a little over seven hours of profits for the oil giant. That fine obviously does not even begin to approach the amount needed to be a deterrent against a repeat of this tragedy. That fine is nothing more than a slap on the wrist.
In a first step toward imposing civil penalties, on Wednesday Interior sent the companies formal notices that they violated multiple drilling safety regulations that were in place at the time of the spill. The government is accusing BP of violating seven regulations governing work on the outer continental shelf. Transocean, which owned the Deepwater Horizon drilling rig, and Halliburton, which performed cementing work at the site, are charged with four violations each. By law, each charge carries a maximum penalty of $35,000 per day. The notices are just the beginning of a long administrative process to determine civil penalties — which are separate from the Clean Water Act fines also facing the companies — and marks the first time the government has moved to sanction contractors in addition to the well operator. The companies now have 60 days to appeal the citations.
Transocean — which was also sued by the Justice Department this week for failing to comply with a separate federal investigation and five administrative subpoenas also related to the Deepwater Horizon incident — has already said it plans to appeal the citation. James Bement, vice president of a Halliburton subsidiary, told the Committee that the cement contractor also is considering an appeal. BP Vice President Ray Dempsey declined to comment on the company’s plans.
Michael Bromwich, head of the Bureau of Safety and Environmental Enforcement (the newly-restructured offshore drilling enforcement arm within the Department of Interior), echoed Markey’s sentiment, calling the fines “trivial to these companies” and nowhere near what is needed to deter oil companies from taking the same risks that led to the BP disaster:
No, I don’t think the current civil penalty authorization is a deterrent. I don’t even think it’s close.
The subject of the hearing, and basis for the fines, was the joint Interior-Coast Guard report issued last month that found BP “ultimately responsible” for the Deepwater Horizon catastrophe because it had repeatedly sought to cut costs and save time, all at the expense of safety. Though the report cited key failures on the part of both Transocean and Halliburton, the brunt of the blame certainly falls on BP for its “failure to have full supervision and accountability over the activities associated with the Deepwater Horizon.”
Civil penalties aside, Dempsey sought to convince lawmakers that the oil giant has always taken responsibility for its part in the spill — citing the $13 billion BP spent in direct response to the disaster and nearly $7 billion in payments to individuals, businesses, and government entities. Not surprisingly, he failed to mention the company was able to cut its tax bill by almost $13 billion by writing off its losses due to the spill. So it appears the American taxpayer unknowingly footed that bill.
This permissive treatment of oil companies — no matter what the cost to the American taxpayer or the environment — has led to what Bob Graham, co-chairman of the National Commission on the BP Deepwater Horizon Oil Spill recently referred to as a “culture of complacency.” Until Congress acts to eliminate the unjustifiable $4 billion in annual subsidies to Big Oil, raise the liability cap to discourage future risk-taking, and enact comprehensive safety standards, then we’ve clearly learned nothing from the worst maritime oil spill in our history.