BP, contractors rebuked ahead of testimony

Oct. 13, 2011 at 5:39 PM   |   Comments

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WASHINGTON, Oct. 13 (UPI) -- Washington rebuked BP and two contractors at the heart of the Gulf of Mexico oil spill as company executives were to testify Thursday before a House committee.

But regulators refused to block BP from bidding in upcoming Gulf of Mexico oil-and-gas lease sales.

The U.S. Interior Department's new Bureau of Safety and Environmental Enforcement filed 15 "incidents of non-compliance" against BP PLC, based in Britain, and contractors Transocean Ltd. of Geneva, Switzerland, and Halliburton Co. of Houston, the department said.

Each charge carries a maximum penalty of $35,000 a day.

The decision to penalize the contractors "reflects the severity of the incident," the department said in a statement, adding Interior Department officials were committed "to holding all parties accountable" in the disaster.

But Michael Bromwich, head of the Interior bureau, said officials decided not to keep BP from bidding on the new leases, even though they had considered it, The Hill reported.

"We are not going to suspend or de-bar BP from that lease sale. We have considered and thought about this issue quite a lot and we don't think it is appropriate in these circumstances," Bromwich, told the House hearing.

The gulf oil spill was triggered by an April 20, 2010, Deepwater Horizon drilling rig explosion that killed 11 men, followed by an 88-day, mile-deep, sea-floor oil gusher that spewed 4.9 million barrels of crude oil into the gulf.

It was the largest accidental marine oil spill in petroleum-industry history, and caused extensive damage to marine and wildlife habitats and to the gulf's fishing and tourism industries.

The violations Washington alleged include failing to "protect health, safety, property and the environment by failing to perform all operations in a safe and workmanlike manner" and not taking "measures to prevent unauthorized discharge of pollutants into offshore waters," the department said.

BP's citations were widely expected, but those against Transocean, which owned the Deepwater Horizon rig, and Halliburton, responsible for cementing operations on BP's ill-fated Macondo well, jolted the contracting industry, The Wall Street Journal reported.

Contractors traditionally avoid liability in such accidents, so pursuing contractors for violations raised concerns that smaller companies might decide it's too risky to work on gulf projects, the Financial Times said.

All three companies have 60 days to appeal the sanctions.

Transocean said it would appeal. Halliburton said it believed it was indemnified by BP against any incident-related losses and penalties.

BP said it has since taken steps to improve safety and asserted the rebuke of Transocean and Halliburton, as well as BP, "makes clear that contractors, like operators, are responsible for properly conducting their deep-water drilling activities, and are accountable to the U.S. government and the American public for their conduct."

It pressed Transocean and Halliburton "to acknowledge their responsibilities in the accident."

BP and the contractors are embroiled in lawsuits blaming each other for the spill.

Any Interior Department fines would be separate from current U.S. Justice Department lawsuits against BP and Transocean.

The Wednesday sanctions came a day before executives from the three companies were to testify before a House Natural Resources Committee hearing about the government's probe of the gulf spill.

It would be the first appearance by company representatives since last month's release of the final federal investigative report on the disaster, which concluded a series of failures and regulatory violations by BP, Transocean and Halliburton contributed to the accident.

The 10 a.m. EDT hearing was originally to feature only the co-chairmen of the joint Interior Department-U.S. Coast Guard team that probed the accident. But panel Democrats, led by Rep. Ed Markey, D-Mass., insisted the companies must explain themselves, too.

The executives set to testify included BP America Vice President Ray Dempsey; James Bement, vice president of Halliburton subsidiary Sperry Drilling; and Bill Ambrose, managing director of Transocean's North America division.

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