WASHINGTON — The federal government’s top oil drilling regulator asked Congress on Thursday to increase the penalties that can be assessed to violators.
The request comes in the wake of infraction penalties issued in the BP Deepwater Horizon disaster amounting to $45 million.
The Interior Department’s Bureau of Safety and Environmental Enforcement issued violations to BP and its subcontractors, Transocean and Halliburton, earlier in the week.
Under the Oil Pollution Act, the maximum fine to BP would be $21 million, while Transocean and Halliburton face fines of up to $12 million each.
“These kind of figures you’re talking about are trivial to these companies,” bureau Director Michael Bromwich told the House Natural Resources Committee.
The development could again trigger debate over whether the fine ceiling should be raised.
Under the Oil Pollution Act, drafted 20 years ago in response to the 1989 Exxon Valdez oil spill, responsible parties are required to pay up to $75 million.
The House voted last year to increase that limit, but the legislation stalled in the Senate when oil-state senators such as Sen. Mary Landrieu, D-La., expressed concern that eliminating it could wipe out smaller, independent companies. Landrieu proposed a cap of $250 million.
The three companies were cited for 15 infractions that the Interior Department said failed to “protect health, safety, property and the environment by failing to perform all operations in a safe and workmanlike manner.”
The BP Deepwater Horizon rig exploded on April 20, 2010, killing 11 men and resulting in a three-month discharge of 4.9 million barrels of oil into the Gulf of Mexico.
BP was cited for seven violations on Wednesday while Transocean and Halliburton each received four citations. The companies have 60 days to appeal the determination.
A company representative from Transocean said they intend to use the appeal process.
Halliburton said it would reserve its right to appeal, while BP Vice President Raymond Dempsey told the committee the company has acknowledged its role in the disaster and has established a $20 billion fund for the ramifications.
U.S. Rep. Ed Markey, D-Mass., mocked the potential fine amounts, noting that BP is on a pace to make $25 billion in profits this year. The penalty would amount to seven hours of profits for the oil giant, Markey said.
“We need to ensure that there are sufficient financial incentives in place to deter oil companies from cutting corners,” said Markey, the top Democrat on the committee. “We need to hold these companies accountable for their actions.”
Companies can be fined up to $40,000 per day for violation of the Outer Continental Shelf Lands Act, known as OCSLA, and $30,000 per day under the Oil Pollution Act.
The citations came after the U.S. Coast Guard and Interior Department released a report last month on the disaster. The findings were the most extensive since the explosion because the panel had subpoena power and interviewed 80 witnesses, including rig workers.
The agencies determined that poor risk management on BP’s part was a key contributing cause of the catastrophe. The conclusions determined that the company made multiple decisions to reduce costs that contributed to the blast and subsequent sinking of the rig.
The committee hearing contained several combative exchanges between U.S. Rep. Jeff Landry, R-New Iberia, and Bromwich. Bromwich recently asked Landry to apologize for likening department permit issuers to the “Gestapo.” Landry refused.
Landry sparred with Bromwich over whether the department had the statutory authority to go after subcontractors, such as Transocean and Halliburton.
“We’re trying to see if you are usurping your power,” Landry said.
Bromwich cited a provision in the OCSLA that gave the department regulatory authority. Landry also took the time to criticize the agency for what he called slowing down the issuance of drilling permits since the disaster.
“I’ve got people unemployed in my district,” Landry said.
Bromwich challenged assertions made at a committee hearing on Wednesday that the time it takes to get a permit issued had almost tripled. Prior to the disaster, approval of plans took 34 days compared with 37 days afterward, Bromwich said.
“I don’t know where these stories come from but they’re not true,” Bromwich said.