US hits BP with $373m in fines in three cases

25 October 2007 20:37  [Source: ICIS news]

Justice Department explains BP finesWASHINGTON (ICIS news)--The US imposed $373m (€261m) in fines and restitution against energy giant BP on Thursday for criminal violations in the fatal March 2005 Texas City, Texas, refinery blast, pipeline leaks in Alaska and propane trading fraud.


Officials of the Justice Department and five other federal agencies also announced criminal charges against four former BP America propane traders who await trial.


The fines include $50m for the Texas City refinery blast that killed 15 workers and injured 170 others. 


It is the first criminal prosecution under the federal Clean Air Act for failure to meet the law’s “requirement that refineries and chemical plants take steps to prevent accidental releases”, said Granta Nakayama, assistant administrator at the Environmental Protection Agency (EPA).


Nakayama said the criminal charge against BP for the Texas City accident was warranted because of the loss of life and because BP, as “a global company with vast experience has no excuse for what happened at Texas City”.


“It is critical that companies must have precautions in place to prevent fatal accidents in the release of hazardous substances,” Nakayama said.


“BP must take a long, hard look at its actions leading up to the Texas City tragedy and ensure that that never happens again,” he said.


In the Alaska pipeline case, BP has agreed to pay $12m in criminal fines, $4m in criminal restitution to the state government and an additional $4m to an environmental foundation to resolve a violation of the Clean Water Act related to the March and August 2006 leaks in BP pipelines on Alaska’s North Slope.


“The leaks were the result of BP’s failure to heed many red flags and warning signs of imminent internal corrosion that a reasonable operator should have recognized,” the EPA said.


The company also is to pay a $100m criminal penalty and a civil fine of $125m as part of an agreement to defer prosecution of a one-count criminal charge accusing BP with conspiracy to violate the US Commodity Exchange Act and to commit mail and wire fraud in connection with an alleged conspiracy in February 2004 to manipulate the propane market in the US northeast.


The single criminal count against BP in the propane manipulation case is deferred and will not be prosecuted if BP fully complies with terms of the settlement agreement.  This is the same case in which the four former BP employees are facing criminal trials for conspiracy.


Also in connection with the propane manipulation charges, BP is to pay $25m into a US Postal Service fund for consumer fraud recovery and other restitution of $53m.


“These BP cases demonstrate our commitment to enforcing the laws that protect our environment, the safety of Americans and the integrity of the marketplace,” said Acting Attorney General Peter Keisler.


Keisler told a press conference that investigations by the Justice Department and other federal agencies are ongoing in all three cases and that additional charges, including criminal allegations, are possible.


($1 = €0.70)

By: Joe Kamalick
+1 713 525 2653

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