ProPublica

Journalism in the Public Interest

Oil Companies Pay a Pittance in Penalties to Offshore Drilling Regulator

Last week, as part of our coverage of the massive BP oil spill in the Gulf of Mexico, we noted the troubled past of the Minerals Management Service, the agency that regulates offshore oil and gas drilling.

On its website, MMS says that it issues civil penalties for serious safety violations. And there have been violations. A study conducted by the Minerals Management Service found that from 2001 to 2007, offshore drilling accidents resulted in 41 deaths and 302 injuries, according to The Huffington Post.

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In an analysis of civil penalties levied by the regulator, we at ProPublica found that over the past 12 years the average penalty has been $45,000. Currently, MMS can fine oil and gas companies a maximum of $35,000 per violation per day (PDF). The biggest fine an oil company has paid to the agency since 1998 was $810,000, paid in 2001 by Chevron. Overall, the Minerals Management Service has collected $20 million in penalties in those 12 years.

That kind of money is unlikely to sting much, considering the profits that major oil companies take in.

The British oil giant BP, for instance, made $5.6 billion in profits in the first quarter of 2010 alone. As we reported last week, far from having a spotless safety record, the company has faced fines from several federal agencies in the last decade: $21 million from the Occupational Safety and Health Administration, $50 million from the Environmental Protection Agency, $300 million from the Department of Justice -- just to name a few that the company has paid.

MMS fines against BP have been the equivalent of a rounding error. From 1998 through 2007 -- when MMS issued its last fine against the company -- BP paid less than $580,000 in penalties for its 12 safety violations.

Environmental groups say this simply isn't enough.

"Fines from the MMS are a tiny fraction of the financial profit these companies have made from their dangerous and environmentally devastating oil drilling operations," said Marcie Keever of Friends of the Earth. "When oil companies have been caught violating safety standards, they've been let off the hook with mere slaps on the wrist."

Lawmakers have also begun scrutinizing the safety regulator in connection with the BP oil spill in the Gulf. On Monday, Sen. Bill Nelson of Florida, an outspoken critic of offshore drilling, requested an inspector general's investigation into MMS and its rulemaking process, to determine whether the regulator was influenced by industry lobbying.

We've called BP for comment and will update when we get it. We've also reached out to MMS requesting explanation of its penalties. The agency has yet to return our call.

This story doesn’t surprise me in the least.  I heard, today that BP, who earned more than $5 Billion in the last quarter, is asking for “Volunteers” to help it clean up its spill.  I also heard a BP spokesperson announce that they intend to recompense fisherman for economic losses.  Good luck collecting any of that money; BP won’t part with a pence or shilling without some government arm-twisting.  And as this story details, their arm-twisting doesn’t hurt much.

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