BP...so now we wish an accounting

The recent BP [British Petroleum] Gulf oil disaster is a global environmental and economic issue of massive proportions...and it isn't yet resolved. In addition to the physics of containment, economic recovery, and environmental restoration, focus is now directed towards culpability and untethered business ventures. The players not only involve BP's executives and policy makers but the sweet deals coming from the Federal Government and lack of stringent legislation to curb unsafe drilling practices.

It has become evident that BP received waivers and favors and threw caution to the wind and they must certainly be accountable and pay for their misdeeds. This will be the difficult issue. Yes, money will resolve some of the problems but judicial decisions must be delivered too.

"Oil spill jail time for BP officials? It could happen."

BP officials could be prosecuted under the Clean Water Act, the Oil Pollution Act, and the Endangered Species Act. So could federal officials if they aided and abetted any illegal acts.

by

Peter Grier

June 2nd, 2010

The Christian Science Monitor

The US Department of Justice has launched civil and criminal investigations into the events surrounding the BP oil spill. Does that mean people who helped cause the spill will be going to jail?

Yes, they might be. Violations of some of the applicable environmental laws, such as the Clean Water Act, can result in severe repercussions.

“Clearly, that’s on the table,” says William Snape, a professor at the American University school of law. “I’d say the odds are greater than 50-50 that someone will get jail time or a probationary sentence.”

In one sense, Tuesday’s announcement of the Justice Department probe into the Deepwater Horizon disaster was a chronicle of a prosecution foretold. Given that 11 people died in the explosion and fire that destroyed the Deepwater rig, and that the oil spill may be the worst environmental disaster in American history, federal law enforcement officials are virtually duty-bound to launch an investigation into what transpired in the Gulf of Mexico on that fateful April evening.

However, the manner in which the White House chose to make Tuesday’s announcement – a televised public statement by Attorney General Eric Holder following a meeting with state attorneys general and federal prosecutors – was something of a surprise. After all, it’s BP that’s in charge of stopping up the well that’s currently pouring oil into the open ocean. In that sense, the administration remains in a working relationship – albeit an uneasy one – with the very firm it’s threatening to prosecute.

The laws at issue here include, among others, the Clean Water Act, which mandates both civil and criminal penalties for violations; the Oil Pollution Act of 1990; and the Endangered Species Act, which penalizes those who injure or kill covered wildlife.

In terms of civil violations all these statutes have fairly strict liability standards. For the Endangered Species Act, prosecutors must prove only that a particular action sickened or killed one endangered sea turtle, say.

Given that low bar, a successful civil prosecution in this case is almost inevitable.

“It’s almost certain that [BP, Transocean, or other firms involved] will be found guilty of something,” says professor Snape, an expert in environmental law.

According to Snape, the more interesting question is whether Interior Department officials will also be prosecuted and found guilty of contributing to the BP disaster.

A number of internal reports have found egregious personal behavior and a too-cozy relationship with industry within the Interior Department’s Minerals Management Service (MMS). If federal officials aided and abetted illegal acts on the part of BP, the Justice Department could pursue them, too.

“There are definitely some government officials who are sweating a little bit right now,” says Snape.

While prosecutors will be considering violations of a number of environmental statutes, the most important one in this case is the Clean Water Act, says James Tripp, a senior counsel at the Environmental Defense Fund. It is a comprehensive law that sets both civil and criminal penalties for a wide range of acts resulting in water pollution.

To meet the standards of a civil prosecution, the government must show that a certain act occurred. To meet the standards of a criminal prosecution, the government must show that someone knowingly and intentionally undertook an active malfeasance.

“That’s altogether different from a civil prosecution, and very serious,” says Mr. Tripp.

But the consequences of the BP oil spill are themselves already serious, and getting worse.

“This is a mind-blowing disaster of international magnitude,” says Tripp. “Certainly the Department of Justice actions [in beginning investigations] are well-founded."

"Before BP oil spill, Big Oil-led study urged feds to cut safety testing"

The 2009 study intensifies suspicions that Big Oil interests trumped US safety regulations, a concern that has been growing since the BP oil spill.

by

Mark Clayton

June 2nd, 2010

The Christian Science Monitor

Blowout preventers – crucial safety devices in offshore drilling that are supposed to preclude undersea oil gushers like the one in the Gulf of Mexico – have failed 62 times during testing in Gulf waters over three years.

A 2009 reliability study of blow-out preventers deployed in the Gulf of Mexico also found that four of those breakdowns were "safety critical failures," meaning the equipment malfunction was serious enough to have allowed "an uncontrolled release" of crude oil from the well bore.

The study, which has not before been reported in the press, is an example of the coziness between government regulators and the oil industry that has been much criticized since the Gulf oil spill, some say. Funded mainly by oil companies but with participation by the US Minerals Management Service (MMS), the study examines whether it is possible to scale back the frequency of safety testing required on blowout preventers. Such testing "is costly," the study notes. "Thus, a study to evaluate the relationship between testing and its impact on safety and environmental performance was warranted."

Its conclusions? Less testing. The study recommended that pressure testing of most blowout preventer systems occur a minimum of every 35 days rather than every 14 days. That would save the industry about $193 million a year, according to the study's prospectus. However, for the least-reliable component of blowout preventers – the hydraulic and electrical control systems – the study recommended keeping "function tests" at their current weekly rate.

The reduction in testing was never adopted, but the study highlights federal reliance on industry recommendations and intensifies suspicions that industry interests have been trumping US safety regulations.

"You're letting the people being regulated get too close to the regulators," says a blowout preventer expert who is familiar with the study and asked not to be named. "Is this study an example? I wouldn't argue with that. Is it too cozy? Right on."

The report's data analysis seems to him to be accurate, and he says redundancies built into the devices make them very safe, but he nonetheless questions whether the report's conclusions are justified. Its authors seem "less than enthusiastic" about their recommendations, he says, and the apparent industry-MMS agenda to justify less testing makes the report seem "precooked."

The 'fail-safe' myth

A blowout preventer (BOP) is essentially a massive school-bus-size "stack" of hydraulic valves weighing hundreds of tons. BOPs sit on the ocean floor beneath every drill rig in the Gulf – just in case.

Because of their multiple valve redundancy, BOPs have long been seen as working almost flawlessly, as statements from industry and government have implied.

The April 20 explosion on the Deepwater Horizon rig would not have happened if the "fail-safe" blowout preventer had worked as expected, Lamar McKay, chairman and president of BP America, told the Senate Environment and Public Works Committee in May.

"Before the blowout, it is clear that there was an assumption that a BOP would never fail," Janet Napolitano, secretary of the Department of Homeland Security, told a Senate committee recently.

Of course, leaks have occurred as oil companies plumbed the Outer Continental Shelf for new energy supplies. MMS has recorded 39 blowouts in US waters from 1992 to 2006 – despite the use of BOPs.

The industry-led study of blowout preventer reliability included these findings:

•During safety testing, BOP components and control systems had 62 failures across 238 subsea wells drilled over three years (2004-06) in the Gulf of Mexico.

•Four of the 62 BOP breakdowns were "safety critical failures," i.e., failures that would "prevent the BOP or a component of the system from closing and sealing on demand and allowing an uncontrolled release of fluid from the well bore," the study found. One safety-critical failure was so severe that, if a blowout had occurred at the time of the test, "they would not have been able to contain it."

•A total of 89,189 BOP pressure tests and other tests were conducted during the study period. The 62 failures during those tests produced failure rates much less than 1 percent for the blowout preventer's hydraulic rams and other pressure systems – rates that, according to the report's authors, justified a reduced schedule of pressure testing. More than doubling the number of days between such tests "will not result in substantial changes to reliability," the study concluded.
Some omissions

The study did not evaluate the failure rate per drilling rig (37 were in the study) or per well. Safety experts in the nuclear and other industries often use such an approach to identify potential problems.

Using the study's data, a Monitor analysis shows there was one "safety critical" failure for every 59.5 wells drilled in the test period, and one per 9.5 rigs.

"Applying generic data gathered from a fleet of rigs to an individual rig can provide a useful picture of reliability," says David Lochbaum, director of the nuclear safety project at the Union of Concerned Scientists. "We've done this kind of breakdown for nuclear plants. I would not have any qualms about doing this for blowout preventer reliability."
More backup sought

While the reliability study recommended less BOP testing, it also called for more redundancy in the blowout preventer stack to ensure that any failing equipment would have backup.

"Additional redundancy for specific components should be considered," it said.

One such BOP component is the blind-shear ram, a last-line-of-defense emergency hydraulic piston designed to slice through the drill pipe and seal the well. While two blind-shear rams were "in place on many rigs," many other rigs would benefit from installation of a second blind-shear ram, the study says.

Even so, the study recommended that the government loosen its testing regimen for this type of ram – once every 77 days rather than every 30 days. The blind-shear ram on the Deepwater Horizon rig is suspected of failing to cut through the pipe to close off the blowout.

The study also found big disparities between the failure rates of older blowout preventers and newer models. BOP failure rates also varied by company: Some firms' equipment failed six times sooner than other firms' BOPs.

Authors of the report at West Engineering, a Brookshire, Texas, consulting firm, refused multiple requests for comment. A spokesman at the American Petroleum Institute declined to comment.

Cameron International, which made the BOP used on the Deepwater Horizon rig, has "never characterized company products as fail-safe," says spokesman Mike Pascale.

Department of Interior officials refused Monitor requests to interview MMS officials involved with the BOP reliability report, citing an ongoing reorganization to split the agency's enforcement duties from its royalty-gathering operations.

"We need a stronger oversight and enforcement agency to police the industry, and that's why Secretary [Ken] Salazar divided up MMS so that its conflicting missions are separate and independent," Kendra Barkoff, Interior Department press secretary, wrote in a statement.

BOP systems consultants say blowout preventers remain vulnerable to failure in spite of design redundancies and very low component failure rates.

"Nothing is fail-safe, including blow-out preventers," says Paul Helfer, a former senior engineer in the research and development department of Cameron International. "Anything can fail. You just do whatever you can to make it as reliable as you can."

So, are we after justice or revenge?

Creative responses from Slate readers...

"How To Punish BP"

Your most creative, incisive, and sadistic ideas for how to make the company suffer.

by

Daniel Gross

June 2nd, 2010

Slate

Our call for reader suggestions on how to punish BP and its executives for the oil spill hit a nerve. It inspired more than 120 comments and several dozen e-mailed suggestions, including a few in French from Slate.fr readers. (Merci!)

After combing through and categorizing the responses, my conclusion is that you are in a very angry and vindictive mood, eager to hit BP, its executives, and its shareholders where it hurts. There were multiple calls for shutting down the company, seizing its assets, and imposing various legal and extra-legal sanctions on its executives.

The two most popular proposed punishments are also the most likely to actually occur. Nearly 30 readers demanded that BP pay a severe financial penalty. The federal government and the plaintiffs' bar will almost certainly ensure that it does. And 18 of you advocated criminal prosecution of the company and its executives, a strategy that the Justice Department may be pursuing.

You proposed several other interesting punishments as well.

Beyond petroleum. Nearly eight years ago, I wrote a piece debunking BP's "Beyond Petroleum" advertising campaign. The oil company's efforts to paint itself as a firm for which hydrocarbons were only a small part of business was laughable. But this spill could actually force BP to go beyond petroleum. Several readers suggested compelling BP to use the cash it earns from its frequently reckless extraction and processing of fossil fuels to fund the transition to different energy sources. Karen suggested we could require BP "to use a certain percentage of their profits per year in research and development of alternative energy resources, with a requirement that some amount of new tech is made reasonably available to consumers within a certain timeframe." Nathalie tagged that percentage at 50 percent of all future profits, plus $75 million, which should go into hydrogen fuel-cell development. Judith Gill proposed that BP match, on a dollar-for-dollar basis, the damages it causes with funding for clean-energy technology.

The Glamour magazine approach. There's a time-honored technique for exacting revenge on the boyfriend who hurt you. Don't get mad. Slim down and get a makeover that will make him rue the day he dumped you. Several readers suggest we forget about trying to get BP to fund the transition away from oil and just get on with it ourselves. Let's start biking, increase gas taxes to discourage driving, build electric cars, and, most of all, build nuclear power plants. Then we won't need BP. Writes Todd Bridges (that Todd Bridges?): "If the average environmentalist had not been so adamant against nuclear power in the early '80s we might not be having all of the problems we've had over the last 10 years, most of which have to do with oil." "Embrace nuclear power and electric cars," says Cameron MacPherson. "Enough is enough—it's clean, it's much safer now than it was 40 years ago, it removes our dependence on foreign oil."

The Freakonomics approach. Several readers suggested changing incentives to encourage BP and other oil companies to be better citizens. Raising the price of failure and increasing the rewards of success in protecting the environment could be a more powerful tool than regulation or the threat of prosecution. John James suggested a fee/reward system, under which "the company's record is assessed once a year with a 10-year look-back on a set of metrics—spills, injuries, deaths, equipment failures as well as green investments/innovations, safety innovations, cleanup/response innovations, etc. Each comes with a fee based on severity or a reward based on effectiveness. Each year the company's balance from the assessment is collected/disbursed and published." Several readers suggested tinkering with taxes on pollution. "What about a Super Tax to be imposed only on those found guilty of pollution?" asks Gary Ross. The tax, based on gross income, would levy a fee per barrel of spilled oil. Aaron Martin suggested "a graduated tax penalty that increases exponentially with each infraction? … You can also add an escalator clause that kicks in after, I don't know, 35 days of unsuccessfully managing of the crisis." Karl Marschel suggested boosting the per-barrel tax each company pays into the Oil Spill Liability Trust Fund, "but have that tax ratchet down if a company goes a certain amount of time without incident. … If you tripled the per barrel tax to $15, each company would then be competing to reduce incidents."

The Quentin Tarantino approach. Get medieval on the executives. Devise punishments that make them physically feel the pain they have caused to others. On this score, our readers were quite imaginative. Nick Inzalaco: "Hit BP executives over the head with every last one of the dead fish." Chad Brick suggested "seppuku for the executives of any firm that colossally screws up." Or we could take all the responsible executives and politicians "coat them all completely in crude oil and throw them in jail until their skin suffocates." Others suggested sentencing BP executives to spend their time cleaning up oil-covered birds. My favorite came from Becca: Raise money to fix the problem by letting BP execs participate in a dunk tank—filled with polluted gulf water.

I had promised there would be prizes and was thinking I'd buy BP gas cards for the most incisive, imaginative, interesting, of off-the-wall ones. But I figured that would go over about as well as a Gulf shrimp po'boy. So, instead, it'll be Starbucks gift cards. Have a latte on me. The winners should write to me—moneybox@slate.com—to claim their prizes.

And those winners are:

Robert Posey, for the best impression of Dick Cheney. "Two words: 'Extraordinary rendition.' Let's see how their executives like Chinese jails, or Syrian, or perhaps North Korean."

Commenter Lunchbreath gets the Robert Frost poetic justice award. "Make BP invest heavily in alternative energy projects and sustainable farming based specifically in communities whose industries have been hit hardest by the spill. Fish farming, wind farms, wind fishing, whatever."