BP to pay record fine, spend $500M to upgrade Texas refinery

Introduction

BP will pay a $50.6 million penalty and spend at least $500 million to upgrade its Texas City, Texas, refinery where a 2005 explosion killed 15 workers.

The record fine was negotiated after the U.S. Department of Labor last year found BP “failed to live up to several extremely important terms” in a 2005 agreement with the Occupational Safety and Health Administration, according to an OSHA news release.

In May, a Center for Public Integrity analysis found 97 percent of what OSHA classified as the worst worker safety violations at two BP refineries, including the one in Texas City.

UPDATE 4:22 PM

“The size of the penalty rightly reflects BP’s disregard for workplace safety,” Labor Secretary Hilda Solis said in a conference call with reporters.

The Center’s finding that BP accounted for 97 percent of flagrant violations has been cited repeatedly by members of Congress and others as evidence of what they call BP’s cavalier attitude toward worker safety.

Deputy Assistant Labor Secretary Jordan Barab told reporters the agreement gives OSHA an “unprecedented level of oversight” at the Texas City refinery and is far superior to a 2005 agreement it struck with BP following the explosion.

Under the settlement, BP will create a liaison between its North American and London boards of directors, and OSHA, which will ensure that safety issues are raised “at the highest level,” the government said in a statement. BP will also hire independent experts to monitor its work on safety improvements.

But Brent Coon, a lawyer for many of the Texas City refinery blast victims, is skeptical. “If history is any indicator, it will have little impact” on BP’s safety performance, Coon said in an interview with the Center. “BP has never learned a lesson from its past conduct.”

In a prepared statement, BP said, “We disagree with the assertion that we have a disregard for workplace safety… The OSHA citations do not reflect the progress made at Texas City since 2005, which is why BP contested the citations [issued after the explosion]. Rather than litigate the citations, OSHA and BP have agreed to put our differences aside and move forward collaboratively to continue a multi-year program to further enhance workplace safety at Texas City.”

After fining BP a then-record $21.4 million six months after the blast, OSHA proposed an $87.4 million penalty against the company last October. Of that, $50.6 million – an amount BP initially contested but agreed to pay today – was levied for the company’s alleged failure to resolve safety violations previously identified by OSHA inspectors.

The remainder of the proposed $87.4 million penalty was for hundreds of new willful worker safety violations cited by OSHA. BP continues to contest those citations and is in settlement talks with OSHA officials.

BP On Probation In Related Criminal Case

It remains to be seen whether the new agreement with OSHA will affect a related criminal case against the corporation. The Department of Justice could seek to revoke BP’s probation in that case, which found Clean Air Act violations related to the Texas City explosion. BP paid the government a $50 million fine in that case.

Revocation of BP’s probation, Coon said, could allow the Justice Department “to prosecute individual executives and significantly increase any monetary penalties” against BP.

In Coon’s view, today’s deal is “obviously a confession of guilt” by BP that it violated terms of its 2005 agreement with OSHA. This, in turn, should result in its probation being revoked, he said.

In its statement, BP argued otherwise: “[O]ur settlement agreement does not admit any violation of the previous agreement and, in fact, specifically denies that BP has failed to comply with the previous agreement.”