BP Flouts the Rule of Law (Yet Again)

Like no other mammoth corporation that did very bad things—not Enron, not WorldCom, not Exxon, and not even HSBC (which, after all, laundered money for the Mexican drug cartel and was allowed to pay a fine without pleading guilty!)—BP has not lost its arrogant swagger. In a fit of high dudgeon it filed a lawsuit last week challenging the one step the federal government has taken that could actually hurt the company over the long run: the long-overdue debarment of this chronic scofflaw from receiving contracts to supply fuel to the U.S. military. 

Despite the semi-hysterical, every-argument-known-to-humans tone of its 127-page legal filing, Bob Dudley, BP’s chief executive officer, has been blithe about the effect of the debarment on its bottom line: “We have largest acreage position in Gulf of Mexico, more than 700 blocks…that’s plenty, we have a lot (sic),” he told the Telegraph, a British newspaper, a few weeks ago. “We have been debarred from supplying fuel to the U.S. military going forward but quite frankly we have a very big business in the U.S. and this is not distracting us from what we do.”

The Clean Water Act authorizes the Environmental Protection Agency (EPA) to debar companies that are not “responsible” from doing business with the government. Other provisions of federal law give the Pentagon the same authority but it could not be bothered to find a different fuel supplier even after the Deepwater Horizon explosion killed 11 and devastated the Gulf of Mexico.  Showing itself once again to be one of the last feisty entities left in government, and after contemplating just such an action since 2005, EPA debarred BP in November 2012, just a few short months before the company pled guilty to manslaughter, a slew of environmental crimes, and—just for good measure--lying to Congress. It paid a $4 billion fine—the largest in history but Dudley is apparently still smiling. 

The term “scofflaw” should not, of course, be used lightly. For those who need a little boning up on BP’s recidivist history, consider the following and let’s ask ourselves whether we might have avoided the entire Deepwater Horizon horror had EPA been allowed to debar the company back in 2005.

On March 23, 2005, a massive explosion at BP’s Texas City refinery—the third largest in the country--killed fifteen people and injured 200.  Evidence from a surprising variety of sources traced the tragedy back to frantic growth as the huge corporation’s Chief Executive Officer (CEO), Lord John Browne, and his handful of top aides known as the “Mutant Ninja Turtles,” transformed BP into the largest oil company in the world.  BP swallowed American competitors like Amoco and Atlantic Richfield, neglecting to knit safety and compliance regimes together. It eliminated layers of middle management and became more dependent on outside contractors operating beyond its immediate control.

Worried about the cumulative impact of cost-cutting months before the explosion, Texas City plant manager Don Parus commissioned a consulting firm named Telos to conduct a confidential and anonymous survey of employees’ concerns about safety and maintenance.  Telos reported that “we have never seen a site where the notion ‘I could die today’ was so real.” Parus traveled to London, begging top executives not to impose another round of cuts in funding that was needed for minimal maintenance and upgrades of outmoded equipment.  He took the drastic step of presenting a powerpoint containing photographs of workers killed in plant accidents to John Manzoni, the BP vice president who was the head of refining and marketing.  Manzoni and other top executives did not yield.

One might conclude from this discouraging chain of events that BP would have every incentive to mend its ways, at the very least at Texas City. In 2009, OSHA returned for a follow up inspection at the plant, learning that 270 violations from the first consent decree remained unaddressed and discovering 439 new violations. By August 2010, during the Gulf spill, BP agreed to pay $50 million in penalties to settle this new crop of citations.  

Given this disgraceful track record, before we start feeling even a little bit sorry for Dudley and his cohorts, not to mention the shareholders still unfortunate or unwise enough to remain invested in BP, we should remind ourselves that the company posted an annual profit of $26.7 billion in 2012. We can only hope that some of that money has been re-invested in safety programs that bite, although Dudley has paid scant attention to those aspects of his far-flung operations.

In the meantime, let’s pray EPA is allowed to stick to its guns. White House politicos and Pentagon procurement agents, that means you.