The U.S. offshore oil and gas industry is awash in INC! Incidents of Noncompliance, that is. The Bureau of Safety and Environmental Enforcement’s (BSEE) chief weapon is the INC, the penalty it can assess if an oil company violates regulations. According to the agency’s statistics, BSEE used that weapon to assess higher fines last year than ever before.
Every time BSEE pulls out its INC pen, that is called a case. INC’s may result in warning or in initial penalties that may be removed if the company addresses the problem. However, BSEE may pursue the fine or, as a worst case, block the company from operating leases. In 2014, BSEE took 53 cases all the way to the penalty phase. That is not a record. Back in 2000, 66 cases resulted in penalties. The number of cases don’t really fall into any pattern over the last 15 years. They may be affected by the business cycle, the randomness of incidents or changes in the regulatory climate.
However, look at the dollar amount and it tells a completely different story:
At roughly $5.7 million in fines, the 2014 dollar figure is nearly twice the next highest year’s total. What caused the jump? It is always possible that the cases represented more serious violations than in the past. A chief cause may be that, after sitting at $35,000 per instance, the maximum fine was increased to $40,000 in 2011. However, there was not such a dramatic increase in 2012 or 2013.
We might speculate that this represents an interest by BSEE officials in seeking the highest penalties in more and more cases. That is certainly in line with OSHA’s approach in recent years. There is an old saying about newspapers – “Don’t pick a fight with someone who buys their ink by the gallon.” With BSEE you might say, ” Never pick a fight with an agency that buys their INC by the barrel.”