Noble Drilling (U.S.) LLC, Shell’s drilling contractor for the Keystone Kops oil drilling effort in the Arctic Ocean in 2012, has pled to eight felony counts.1
By the terms of the plea bargain, Noble will pay criminal fines of $8.2 million and must make a community service payment of $4 million. The corporation will serve a four-year term of probation (it can be reduced to three years for good behavior). Noble has to develop, fund and implement a fleet-wide Environmental Compliance Plan (“ECP”), something it should have done before the 2012 season.
$12.2 million sounds like a lot of money, but Noble and its parent are huge, with net income in 2013 of $787 million. The total fine is just 1.55% of last year’s revenue. Shareholder dividends would have been reduced from $3.05 to $3.00 per share. That doesn’t even qualify as a slap on the wrist. It’s less than trivial. It’s utterly without deterrent value.
Noble’s crimes were far from trivial. Noble forged documents, lied, failed to report extremely serious problems and knowingly presented false documents to the U.S. Coast Guard. From the plea agreement:
[Log] entries reflected that the Noble Discoverer’s Oil Water Separator (“OWS”) was used six times to process a total of 64 cubic meters of oily bilge water from bilge holding tank 27S between March 10-28, 2012, when in truth the OWS was inoperable during this time period. In fact, the Noble Discoverer’s OWS was both inoperable and operating at reduced capacities at various times during the transit from New Zealand to Seattle, and again during the transit from Seattle to Dutch Harbor. Noble did not make any entries in the [log] to indicate that the OWS was not working during these periods of time.
The [log] also reflects an entry on August 31, 2012, indicating that the OWS was run for approximately nine hours and processed 35 cubic meters of bilge water from the bilge holding tank 27S, all of which was under 3 ppm. This entry was false.
And that’s just one of the eight counts to which Noble plead guilty.
If you or WC did that, we’d be fined most of our net worth and pull hard time in the penitentiary. Noble was fined 0.013% of its net worth. If you are lucky enough to have a net worth of $250,000, that would be a fine of $325.00. Less than a heavy speeding ticket.
So good lawyers and political connections can get you a sweet deal in federal court. That’s not exactly news in America today. True, U.S. District Judge Ralph Beistline can reject the deal; it’s subject to court approval. But Judge Beistline is a Republican appointee, and wasn’t selected for his willingness to seriously spank bad corporations. The deal is going to go down.
No individuals have been charged with crimes. And despite what Mitt Romney thinks, corporations are artificial persons, and can only act through natural persons. People did the things that led to Noble copping out. People made false entries in the logs; people presented the falsified logs to the USCG. People pumped the mixed oil and water from the bilge, untreated, into the Arctic Ocean. If there were bad consequences – other than being reprimanded for being caught – for those persons, we haven’t heard about it.
But here’s the riddle: how can anyone now trust Noble? Or Shell? They’re headed back to the Chukchi Sea this coming summer, at least according to Shell. How are we supposed to trust these crooks, these convicted felons, these Keystone Kops, with something as important as the health of a relatively pristine marine environment? How can we trust them with the lives of their employees? With the subsistence lifestyle of the Inupiaq people?
Recidivism is real. Especially where there are no real consequences to getting caught. Neither Shell nor Noble Drilling have been meaningfully punished for some very serious crimes. As profit-maximizing corporations, there is no reason for either corporation to behave different in the 2015 drilling season.
And that’s before you even reach the more fundamental folly and madness of drilling in the Chukchi Sea in the first place.
- WC smells an informant or whistleblower in this case. The Coast Guard’s arrival to inspect the Noble Discoverer and the detail it was able to obtain of Noble Drilling’s misconduct suggests to WC an inside source for information. But that’s speculation. ↩