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US Cites BP, Two Contractors in Deepwater Horizon Disaster

The first formal citations and fines have started to roll out for the Deepwater Horizon oil disaster, 18 months after the explosion that started it all. The Interior Department handed out citations to BP and some of its contractors:

The citations, which could lead to millions of dollars in fines, arose from an investigation of the April 2010 explosion that killed 11 workers and led to the worst offshore oil spill in American history. The department and the Coast Guard found in a report issued last month that BP, Transocean and Halliburton had failed to operate the Gulf of Mexico drilling rig in a safe and responsible manner, had heedlessly endangered their workers, had not followed proper well control procedures and had not properly maintained safety equipment, including the blowout preventer.

“The joint investigation clearly revealed the violation of numerous federal regulations designed to protect the integrity of offshore operations,” said Michael R. Bromwich, head of the department’s offshore safety office. “To ensure the safe and environmentally responsible conduct of offshore operations, companies that violate federal regulations must be held accountable.”

This is the first time in US history that a contractor has been cited in addition to the well owner. No attempt has been made to assign specific levels of blame to each principal, which will lead to the determining of fines. That will be settled after the completion of various investigations and as the result of court battles. The fines could be as high as $35,000 per day of the leak. Given that the spill lasted 87 days, that’s around $3 million. But that’s just one level of fine on one portion of the violations of law; the Clean Water Act violations, based on the amount of oil spilled into the ocean, are much higher.

The Justice Department, in a related action, is suing Transocean for their failure to comply with one of the ongoing investigations:

The Justice Department filed a lawsuit against Transocean on Wednesday to force the company to comply with subpoenas from the U.S. Chemical Safety and Hazard Investigation Board (CSB), an independent agency investigating the April 2010 explosion of the Deepwater Horizon drilling rig and the Gulf of Mexico oil spill that followed. The lawsuit says Transocean has failed to comply with five subpoenas between Nov. 24, 2010 and April 7. A separate federal investigation found in September that Transocean’s rig crew made mistakes that led to the rig’s blowout and millions of barrels of oil flowing into the Gulf.

The final reckoning of all this could take years and many court battles. Clearly Transocean, Halliburton and BP will do their best to avoid as many penalties as possible.

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David Dayen

David Dayen