In what would be the most fitting punishment for BP's many crimes, there are rumors that the Environmental Protection Agency (EPA) is considering debarment for the company. Debarment is somewhere between corporal and capital punishment for scofflaw companies. The most severe form is "discretionary debarment," which would cancel all government contracts and leases on federal lands, a move that would cost BP at least 16 billion dollars a year.
An article in ProPublica by Abrahm Lustgarten discusses the prospects for debarment for BP and gives even a cynic like me reason to smile. Let me touch on the points that had me licking my canine teeth.
- BP has already received debarments for the Texas City refinery explosion and the Prudhoe Bay pipeline spill. Those debarments were facility-specific and have had limited impact on BP operations and bottom line. Prohibiting an oil company as large as BP from receiving any government income from one refinery and one pipeline is more symbolic than costly. Think of it as more of an accounting headache than punishment.
There was one important stumbling block for BP. EPA negotiated these lesser penalties with the expectation that BP would mend its ways. It is difficult for a leopard to change its spots.
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.
- BP took a confrontational approach to the negotiations, which is a telling in and of itself. The EPA was offering BP an opportunity to continue to sell gas to the military and drill on federal lands and waters as long as the company would agree to a plan for verifiable compliance with existing laws. Those negotiations were still ongoing and turning ugly before the Deepwater Horizon blowout filled the Gulf of Mexico with oil.
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.
- The Death Penalty, discretionary disbarment, has been considered as recently as last year because of the number of serious crimes on BP's rap sheet.
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."
- The stumbling block to the Death Penalty is the reliance of the Pentagon on BP for petroleum products. This dependency is puzzling since it is difficult to imagine that another major oil company, or companies for that matter, not being able to satisfy the contractual obligations. Perhaps the other majors have their own skeletons in the closet to contend with. Or perhaps there was some high level spit-swapping going on. Since the British government was on the hook for two wars as part of the fabled "coalition of the willing" while BP was breaking U.S. laws, it is difficult not to wonder if a protection deal for the largest corporation in the United Kingdom was part of the diplomatic give-and-take.
- Any decision on discretionary debarment will probably not come until after the investigation in the Deepwater Horizon fiasco is complete. However, if serious criminal charges result from the investigation, the EPA will be more than justified in pursuing the death penalty if the misconduct looks and smells like previous BP offenses. In fact, there is likely to be considerable pressure to do so.
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.
Lustgarten demonstrates the fine and forgotten art of journalism in this piece. There is one question he did not raise, but seems natural in the context. BP has gone out of its way to obfuscate the magnitude of the spill and blame the accident on Transocean and Cheneyburton. These actions may not just be motivated by the desire to limit civil litigation over the spill effects. Just maybe BP has the cold sweats over the very real prospect of losing billions in revenue from lucrative government contracts and leases on federal lands. Our role as citizens and taxpayers will be to watch the investigation closely and demand the EPA sharpen the proverbial guillotine blade.
Note to the President. Since Sarah Palin has accused you of being too cozy with oil companies, BP in particular, what better way to prove her wrong than by allowing the EPA to deliver the death penalty of discretionary debarment to BP? Over a third of BP's revenues come courtesy of U.S. taxpayers, something even Tony Hayward will not be able to write off as a drop in the ocean.
Read Lustgarten's article. He picked up on an important issue that has been overlooked by the mainstream media.