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EPA Weighs Sanctions Against BP

Posted on May 25, 2010
U.S. Coast Guard / CPO John Kepsimelis

Clouds of smoke billow up from controlled burns meant to reduce the amount of leaked oil in the Gulf of Mexico.

(Page 2)

In the past decade environmental accidents at BP facilities have killed at least 26 workers, led to the largest oil spill on Alaska’s North Slope and now sullied some of the country’s best coastal habitat, along with fishing and tourism economies along the Gulf.

Meunier said that when a business with a record of problems like BP’s has to justify its actions and corporate management decisions to the EPA “it’s going to get very dicey for the company.”

“How many times can a debarring official grant a resolution to an agreement if it looks like no matter how many times they agree to fix something it keeps manifesting itself as a problem?” he said.

Documents obtained by ProPublica show that the EPA’s debarment negotiations with BP were strained even before the April 20 explosion on the Deepwater Horizon rig. The fact that Doug Suttles, the BP executive responsible for offshore drilling in the Gulf, used to head BP Alaska and was the point person for negotiations with debarment officials there, only complicates matters. Now, the ongoing accident in the Gulf may push those relations to a break.


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Discretionary debarment for BP has been considered at several points over the years, said Jeanne Pascal, a former EPA debarment attorney who headed the agency’s BP negotiations for six years until she retired last year.

“In 10 years we’ve got four convictions,” Pascal said, referring to BP’s three environmental crimes and a 2009 deferred prosecution for manipulating the gas market, which counts as a conviction under debarment law. “At some point if a contractor’s behavior is so egregious and so bad, debarment would have to be an option.”

In the three instances where BP has had a felony or misdemeanor conviction under the Clean Air or Clean Water Acts, the facilities where the accidents happened automatically faced a statutory debarment, a lesser form of debarment that affects only the specific facility where the accident happened.

One of those cases has been settled. In October 2000, after a felony conviction for illegally dumping hazardous waste down a well hole to cut costs, BP’s Alaska subsidiary, BP Exploration Alaska, agreed to a five-year probation period and settlement. That agreement expired at the end of 2005.

The other two debarment actions are still open, and those are the cases that EPA officials and the company have been negotiating for several years.

In the first incident, on March 23, 2005, an explosion at BP’s Texas City refinery killed 15 workers. An investigation found the company had restarted a fuel tower without warning systems in place, and BP was eventually fined more than $62 million and convicted of a felony violation of the Clean Air Act. BP Products North America, the responsible subsidiary, was listed as debarred and the Texas City refinery was deemed ineligible for any federally funded contracts. But the company as a whole proceeded unhindered.

Workers respond on March 3, 2006 to the largest oil spill on Alaska's North Slope after 200,000 gallons of oil leaked from a hole in a pipeline in Prudhoe Bay. (BPXA)A year later, in March 2006, a hole in a pipeline in Prudhoe Bay led to the largest ever oil spill on Alaska’s North Slope – 200,000 gallons—and the temporary disruption of oil supplies to the continental U.S. An investigation found that BP had ignored warnings about corrosion in its pipelines and had cut back on precautionary measures to save money. The company’s Alaska subsidiary was convicted of a misdemeanor violation of the Clean Water Act and, again, debarred and listed as ineligible for government income at its Prudhoe Bay pipeline facilities. That debarment is still in effect.

That accident alone—which led to congressional investigations and revelations that BP executives harassed employees who warned of safety problems and ignored corrosion problems for years—was thought by some inside the EPA to be grounds for the more serious discretionary debarment.

“EPA routinely discretionarily debars companies that have Clean Air Act or Clean Water Act convictions,” said Pascal, the former EPA debarment attorney who ran the BP case. “The reason this case is different is because of the Defense Department’s extreme need for BP.”

Instead of a discretionary debarment, the EPA worked to negotiate a compromise that would bring BP into compliance but keep its services available. The goal was to reach an agreement that would guarantee that BP improve its safety operations, inspections, and treatment of employees not only at the Prudhoe Bay pipeline facility, but at its other facilities across the country.

According to e-mails obtained by ProPublica and several people close to the government’s investigation, the company rejected some of the basic settlement conditions proposed by the EPA—including who would police the progress—and took a confrontational approach with debarment officials.

One person close to the negotiations said he was confounded by what he characterized as the company’s stubborn approach to the debarment discussions. Given the history of BP’s problems, he said, any settlement would have been a second chance, a gift. Still, the e-mails show, BP resisted.

As more evidence is gathered about what went wrong in the Gulf, BP may soon wish it hadn’t.

It’s doubtful that the EPA will make any decisions about BP’s future in the United States until the Gulf investigation is completed, a process that could last a year. But as more information emerges about the causes of the accident there—about faulty blowout preventers and hasty orders to skip key steps and tests that could have prevented a blowout—the more the emerging story begins to echo the narrative of BP’s other disasters. That, Meunier said, could leave the EPA with little choice as it considers how “a corporate attitude of non-compliance” should affect the prospect of the company’s debarment going forward.

ProPublica reporters Mosi Secret and Ryan Knutson and director of research Lisa Schwartz contributed to this report.

This article is reprinted from ProPublica under Creative Commons license.

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By felicity, May 27, 2010 at 9:37 am Link to this comment

Leefeller - “accountability and responsibility”  The blatant negligence of BP resulted in 11 deaths.  If a drunk driver kills 11 people, do we hold him accountable and responsible?  You bet your sweet ass we do.  But a corporation ‘drunk’ with greed?  You bet your sweet ass we DON’T.

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By squeaky jones, May 26, 2010 at 9:19 pm Link to this comment
(Unregistered commenter)

Lets see, destroy the Gulf of Mexico, and all the wildlife, and all of it’s beauty. Washington D.C. says you have the green light, who cares about life as long as we can make a fast buck. Squeaky.

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By diamond, May 25, 2010 at 9:54 pm Link to this comment

The thing is, this is only getting so much press because it’s happening to America.

‘1993- Black Gold Conquistadors invade Ecuador Amazon, drilling.

Texaco Petroleum Company drilled the first oil well in Amazon territory in 1969. Today oil drilling occurs to 10 percent of Ecuador’s 32 million acres of the Upper Amazon Basin. The destruction left behind by Texaco and now continued by PetroEcuador was so great that the Amsterdam based International Water Tribunal morally condemned the two companies for spoiling the Amazon’s water system.’

from “33 Years of US Military Domination and Economic Deception” by Nelson Calderon.

These oil companies have been polluting the planet for decades and now they’re doing to America what they’ve done to so many others for so long. They are irresponsible baboons who should be sued or fined to the full extent of the law. Better still throw them in jail for the deaths of the oil workers and the despoiling and killing of wildlife and the destruction of the fishing industry. Maybe while they’re there they can work out how to develop a conscience.

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By Tim, May 25, 2010 at 8:51 pm Link to this comment
(Unregistered commenter)

By gerard, May 25 at 3:14 pm #

“This article reveals a basic problem with unregulated (unregulateable) capitalism—the “too big to fail” idea”

To big to fail, and to chummily to cross. Now with the recent revelations that employees of the Minerals Management Sevice have taken gifts from oil companies and even let oil company employees fill in the safety reports that were supposed to be filled out by U.S. Interior employees (MMS), we get the full picture of the disfunction, and further evidence that the line is no longer merely blurred between public and private, it hasn’t been there for decades.

Write your congressmen, write BP, even though I’d be lying about my eagerness to forego purchase of their products, as I’ve been biking all year long for the last 4 years. I’m still waiting for my zero point energy powered furnace, though.

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By Leefeller, May 25, 2010 at 7:41 pm Link to this comment

BP are people too! But “special people”, sort of like Congress were accountability and responsibility do not exist.

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By MeHere, May 25, 2010 at 6:22 pm Link to this comment

Never heard of an industry that uses equipment but doesn’t have a clue about
fixing it when it breaks down. BP shouldn’t be allowed to run a candy store, never
mind drilling in the ocean floor. But, there’s still some hope—they haven’t used
duct tape yet. It works for me every time.

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By T. A. Madison, May 25, 2010 at 5:11 pm Link to this comment

Sanctions? Confiscate all their assets, the salaries of their principals and put their CEO’s and Field Managers in jail. British Petroleum simply should not be a corporate entity any longer.

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By Howard, May 25, 2010 at 4:34 pm Link to this comment
(Unregistered commenter)

The oil spill is a tragedy to the wild life in the
Gulf. But I would like to comment that the media is portraying BP as an evil empire. It is true that certain government and BP employees screwed up and they should be held accountable along with BP. The government should have stricter regulations and oversight on deep water drilling. The government should also certify the blowout preventer and their should be a backup.
To accuse BP or the government of dragging the feet in trying to stop the spill or in trying to clean it up is utter nonsense. The unscientific news media is convincing the masses that money is the reason this tragedy hasn’t been solved. The best engineers in the world are working on the problem.
Which dispersant to use is a controversial and
difficult problem. It is not back and white as the
new media portrays. Many people do not realize that natural occurring bacteria in the ocean eats the oil over time. More research needs to be done on dispersants and that takes time which doesn’t help in this situation. 
  We need oil to maintain our life style and until we start using more natural gas and nuclear power, what options do we have? BP and Halliburton have great engineers and resources and to say they should be put out of business is unrealistic. We need strict regulations and oversight to prevent this from happening again.
Solar and Wind power will not solve the problem. The government and its people should listen to the
scientists and engineers that built this great country and not to the news media or congress.

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By melting pot, May 25, 2010 at 4:15 pm Link to this comment
(Unregistered commenter)

Nationalize the oil production. Anyway, we already pay the socialization of its
hidden costs. Let the government hire experts and state of the art technology.
Brazil and Norway do it. No spills over there.

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By kerryrose, May 25, 2010 at 3:51 pm Link to this comment

What a wonderful idea!  Never let BP drill in the US again.  After that we only have to deal with Shell, and Chevron….

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By diamond, May 25, 2010 at 1:36 pm Link to this comment

BP stands for bloody pricks. They should be fined out of existence for their careless, greedy, selfish attitude to the environment and to other human beings. How could they build this damn platform in the middle of the ocean and have no clue what they would do if the hideous thing blew up? And why am I not surprised that once again Halliburton (famous for being infamous) has done some dodgy (cement) work and probably overcharged for it? What’s new? It’s common knowledge that in Iraq they overcharged the army for the fuel they supplied - double the market rate. And there were other examples of gouging too numerous to list here. The military was infinitely better off when they did it all themselves. Now they’re at the mercy of gougers and contractors - and so is the environment and the whole of humanity. This isn’t the only time cement work on these rigs has been done by Halliburton and failed disastrously. It’s happened in Australia and other countries. They have form, and so do BP.

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By gerard, May 25, 2010 at 11:14 am Link to this comment

This article reveals a basic problem with unregulated (unregulateable) capitalism—the “too big to fail” idea.  The recent economic collapse, and the necessity to not let banks fail, reveals the same loophope as it recurs with BP, its crimes and government’s inability to punish and actfor the public good.
  This irrational situation goes to the very root of law and order:  Petty crimes can be, must be, and are punished (often with decisions as fatal as the death penalty).  Yet huge crimes (involving the upper reaches of financial management and excess, that injure the environment or kill thousands of people) cannot be brought to court because they are “too big.”  They involve corporate devolution, “too much” stock and bond loss, go beyond the reach of courts and insurance companies. For all practical purposes, they are IMMUNE. 
  If this is allowed to happen, law becomes a farce. If law becomes a farce, we can kiss civilization (such as it is) goodbye.

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