The following post is from Mijin Cha at Policy Shop, the Demos weblog
British Petroleum announced that it had reached a resolution with the Department of Justice over the Deepwater Horizon disaster that released nearly 5 million barrels of oil into the Gulf of Mexico. BP will pay $4 billion over 5 years in fines to the DoJ and an additional $525 million to the SEC to settle securities charges. The fine is record-setting and far more than the $373 million fine BP paid in 2007 to the DoJ to settle a series of probes, including an oil pipeline spill and charges of conspiring to corner the U.S. propane market. Yet, while the fine may be record setting, it is just a fraction of the $234 billion in revenue BP recorded in 2011.
The fact that the fine is record setting says a lot about how weak our regulatory system really is. Regulations are not just a series of bureaucratic hurdles. They are meant to protect the public. As such, the fine structure must be designed to seriously dissuade companies or individuals from violating them. Otherwise, what’s the point? In our current system, it is often much cheaper to just pay the fines than to pay for appropriate safety measures, which is exactly what BP did when they valued cost control over safety.
It’s estimated that it will take at least 40 years to completely clean up the Deep Horizon disaster and see the total environmental consequences. In the meantime, the damage done to local economies dependent on the Gulf is substantial, not to mention the damage done to local wildlife. And, what are the consequences for BP? A fine that is a fraction of their annual sales. Plus, they have five years to pay it.
If you were them, why would you do anything different?