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By Lynn Garner
The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) is preparing to notify companies involved in the Deepwater Horizon oil spill that the agency will pursue civil fines for alleged violations that resulted in the nation's worst offshore oil spill, the head of the bureau said Sept. 20.
Michael Bromwich, director of BOEMRE, said the letters will be sent either this week or the week of Sept. 26.
Under regulations pursuant to the Outer Continental Shelf Lands Act, Interior can assess fines of as much as $35,000 per day for each violation of safety and environmental regulations.
If the fines are based on the entire 87 days required to stop the oil spill, each violation could cost a company about $3 million.
The bureau intends to issue an incident of noncompliance (INC) letter to each company involved, outlining the violations, Bromwich said.
Bromwich hinted that while the well operator, in this case BP Plc, traditionally has been the recipient of an offshore drilling violation letter, as opposed to the contractors involved in the drilling process, the Deepwater Horizon case will be different.
Bromwich commented on Interior's offshore drilling reform effort during a media availability sponsored by Platts Energy Podium.
In the federal government's second and final investigative report on the Deepwater Horizon oil spill, which was released Sept. 14, federal investigators said they found evidence that “BP, and in some instances its contractors, violated [seven] regulations in effect at the time of the blowout.”
In addition to BP, federal investigators specifically mentioned Transocean Inc., the drilling rig contractor, and Halliburton, the cement contractor. At $3 million per violation, the collective fine would be approximately $21 million. Bromwich did not divulge the number of violations that would be pursued.
Some of the regulations cited by investigators are generic: “BP, Transocean, and Halliburton (Sperry Sun) did not prevent conditions that posed unreasonable risk to public health, life, property, aquatic life, wildlife, recreation, navigation, commercial fishing, or other uses of the ocean.”
Others are specific: “BP failed to conduct the negative [pressure] test on April 20 in accordance with the negative test procedure approved in the April 16 [application for permit to modify].”
Federal regulations provide for an appeals process once the companies receive the violation letters and before fines can be assessed.
Bromwich, a former Justice Department inspector general, said the civil penalties are far too low and should be increased significantly by Congress to encourage compliance by the energy industry.
Interior in June raised the maximum civil penalty rate to $40,000 per violation per day, which was permitted administratively as an inflation adjustment, but the higher rate will not be applied retroactively to the Deepwater Horizon incident, he said.
At the time the cap was increased, Bromwich said the current level of fines is “a trivial nuisance rather than an effective deterrent” for oil and gas companies, which can spend $1 million per day to rent a deepwater drilling rig.
The April 20, 2010, Deepwater Horizon oil spill, which claimed 11 lives and dumped almost 5 million barrels of crude oil into the Gulf of Mexico over 87 days, also prompted DOJ to begin a criminal investigation last year that is still ongoing.
A DOJ spokeswoman declined to comment on the status of the investigation and whether criminal charges would be filed.
More information is available at http://www.deepwaterjointinvestigation.com/go/site/3043/ .
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