THE BLOG
11/21/2012 11:29 am ET Updated Jan 21, 2013

BP's $4.5 Billion Dollar Fine -- Too Little, Too Late

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 U.S. 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 $4.5 billion in damages to the U.S. government, the largest criminal fine in U.S. 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 U.S. 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 April 20, 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 more than 30,000 feet through ocean and seabed strata, and the spill was the largest in U.S. history, spewing 206 million 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 U.S. 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 U.S. Department of Defense, with a contract worth about $1.35 billion last year, according to Businessweek. Slocum points out that a convicted felon in the U.S. is disqualified from receiving government contracts, yet BP, which he calls a convicted corporate felon, continues to receive more from the U.S. 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 $21 billion 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.

Originally published in Comment is Free, The Guardian, UK