British Petroleum fined by feds in Colorado case -- three years later

Under fire for its lax supervision of British Petroleum and other offshore drillers, the embattled federal agency formerly known as the Minerals Management Service has fined BP $5.2 million for filing "false, inaccurate, or misleading" reports about its energy production in Colorado three years ago.

Grrr. That'll show 'em.

The civil penalty, which has nothing to do with the BP oil spill in the Gulf of Mexico, is notable both for its timing and the unusual circumstances that triggered the process.

Back in 2007, in the waning months of the Bush presidency, MMS was being roasted by some of its own auditors -- including Bobby Maxwell, the subject of a few Westword stories like this one -- as well as industry mavericks like Jack Grynberg for failing to collect millions in royalties due from energy companies in regard to drilling leases on public lands. But within MMS, the auditing process continued to be cut back, as the agency pushed its "royalty-in-kind" program (allowing companies to pay in crude rather than cash) and encouraged states and Indian tribes to take over some of the auditing functions.

The alleged inaccurate reporting of production on Southern Ute lands was brought to the attention of BP and the government by tribal auditors. Officials at BP acknowledged the errors and "repeatedly promised to correct the problems," according to a Department of Interior release. But subsequent audits found more of the same problems.

Flash forward three years. The royalty-in-kind arrangement was abolished by new Interior Secretary Ken Salazar last fall, amid scandal and concerns about the loss of revenue from too-cozy arrangements with industry. And in the wake of the Gulf debacle, MMS is now being split into three agencies, with tough-talking former prosecutor Michael Bromwich vowing "to collect every dollar due from energy production" as director of the newly formed Bureau of Ocean Energy Management, Regulation and Enforcement. And BP CEO Tony Hayward is pledging a $20 billion fund to assist those damaged by the company's little goof in the Gulf.

Of course, the billions the government plans to collect from BP over the spill make the fine for its alleged under-reporting out west seem like chump change. But when it takes three years for the case to wind through the system (and it ain't over yet -- BP can appeal), and the feds need local inspectors to bring the problem to their attention in the first place, it makes you wonder who's the real chump here.

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Alan Prendergast has been writing for Westword for over thirty years. He teaches journalism at Colorado College; his stories about the justice system, historic crimes, high-security prisons and death by misadventure have won numerous awards and appeared in a wide range of magazines and anthologies.
Contact: Alan Prendergast