The US justice department says its fine on BP is exemplary, but the oil giant makes more in profits from military contracts alone
An explosion Friday on a rig in the Gulf owned by Houston-based Black Elk Energy has reportedly injured several workers, with four missing, two possibly killed. This latest incident – just a day after the US department of justice’s historic settlement with BP over the Deepwater Horizon disaster – highlights the risks of offshore oil-drilling, and the need for tougher regulations on one of America’s most hazardous industries.
British Petroleum has agreed to pay $4.5bn in damages to the US government, the largest criminal fine in US history. BP agreed that its corporate negligence had been a factor in causing the catastrophic Deepwater Horizon oil spill in the Gulf of Mexico.
In a settlement negotiated with the US justice department, the company pled guilty on 14 counts, including manslaughter charges against two of its supervisors who had failed to act on problems revealed during earlier safety tests. In a separate indictment, BP’s former vice-president and incident commander for the disaster, David Rainey, pleaded guilty for lying to Congress and concealing documents about the rate and seriousness of the spill.
The explosion on the BP rig on 20 April 2010 killed 11 crewmen and created a fireball that was visible 35 miles from the scene. The explosion was sparked by a blowout on the floor of the ocean, which poured crude oil into the Gulf for the rest of that spring, and continued to leak more slowly during the summer until it was declared “effectively dead” five months later.
This was a disaster for the record books: the offshore exploratory well was the deepest drilling ever, plunging over 30,000 feet through ocean and seabed strata, and the spill was the largest in US history, spewing 206m gallons of oil – nearly 20 times what the Exxon Valdez had dumped into Prince William Sound in Alaska a decade earlier.
Speaking of the historic financial settlement with BP, Attorney General Eric Holder Jr told a news conference in New Orleans, Thursday:
“I hope this sends a clear message to those who would engage in this wanton misconduct that there will be a penalty paid.”
But Tyson Slocum, the director of the activist group Public Citizen’s “Energy Program”, characterized the settlement – which requires the payment over five years of just a fifth of the company’s 2011 profits – as “a pathetic slap on the wrist” for what he called “the largest corporate crime in US history”. Slocum told me that the company had already been placed on criminal probation by federal courts for two earlier incidents, including an oil refinery fire in Texas City, Texas that killed 15 workers and injured more than 170 others in 2005.
BP is the largest fuel supplier for the US department of defense, with contracts worth $2.2bn a year, according to the Wall Street Journal. Slocum points out that a convicted felon in the US is disqualified from receiving government contracts, yet BP, which he calls a convicted corporate felon, continues to receive more from the US military in yearly profits than it will be required to pay out in fine instalments over the next five years.
In a statement issued yesterday by Public Citizen, Slocum said:
“Any settlement must allow for full recovery of the Gulf Coast region and its communities; deter other companies from putting profits before safety; and involve the disclosure of all information gathered by the government, so the public has a complete understanding of the wrongdoing that killed workers and continues to wreak havoc on the environment.”
Other environmentalists reacted more positively to the BP settlement. Larry Schweiger, president of the National Wildlife Federation, said in a statement that the record criminal penalties were “a good down-payment”. But he added that the company needs to pay billions more in civil damages under the Clean Water Act to help those whose health or livelihoods have been damaged by the spill and to continue restoration in effected habitats.
Under the Clean Water Act, fines could be as high as $4,300 for every barrel of oil spilled if the company is deemed to have been “grossly negligent” in the disaster. This could amount to $21bn in additional fines, according to the New York Times.
The true cost of the spill to the Gulf ecosystem and surrounding communities remains difficult to assess. Environmental scientists say that it will be a generation before we know the full impact of the disaster. But for those who have lost their lives or their livelihoods – and for the ecosystems like coastal marshes and fish spawning grounds that may never come back – the cost is already beyond recovery.