BP: Beyond Punishment?
The conclusions of a BP-led investigation into the causes of the worst environmental and industrial accident in American history aren’t surprising: it’s Transocean’s and Halliburton’s fault. To be sure, all companies involved – from Transocean’s operation of the floating Deepwater Horizon rig to Halliburton’s cementing job – share some responsibility, but predictably BP’s internal investigation glosses over critical decisions by BP management over well design that prioritized expediency over safety. As the New York Times reports, this digging-in-your-heels approach likely previews BPs efforts to fight charges the company’s management of the well was criminally negligent. This issue is critical to BP managing exposure to significant fines and sanctions for wrongdoing. So far the markets are reacting favorably: Fitch today upgraded BP from a BBB to an A bond rating, with Fitch assuming “that a majority of compensatory damages will be met via the independent claim facility that is administered by Kenneth Feinberg, reducing BP’s reliance on committed credit lines and other debt to finance future claims or damage payments.” Public Citizen has noted how this claim facility has prioritized BP’s finances at the expense of victims’, as the $20 billion fund will be shared with natural resource restoration and state & local government reimbursements and its funding is entirely collateralized with BP’s offshore oil and gas production, thereby hindering the ongoing criminal probe of the company’s probable criminal misconduct. Absent substantial modification by the Obama Administration, there’s a chance that BP’s expensive public relations campaign, combined with its sweetheart claims contract, could render the company Beyond Punishment.
Tyson Slocum is Director of Public Citizen’s Energy Program