The Compliance Center (ICC)

BP to pay $50.6 million fine for failures at refinery


Source: The Compliance Center (ICC)

OSHA today announced that BP Products North America Inc. will pay a full penalty of $50.6 million stemming from the 2005 explosion at its Texas City, Texas, refinery that killed 15 workers and injured 170 others. The agreement resolves failure-to-abate citations issued after a 2009 follow-up investigation. In addition to paying the record fine, BP has agreed to take immediate steps to protect those now working at the refinery, allocating a minimum of $500 million to that effort.

'This agreement achieves our goal of protecting workers at the refinery and ensuring that critical safety upgrades are made as quickly as possible,' said Secretary of Labor Hilda Solis. 'The size of the penalty rightly reflects BP's disregard for workplace safety and shows that we will enforce the law so workers can return home safe at the end of their day.'

Solis added that the agreement allows DOL not to have to spend resources to pursue the litigation against BP that was in place for these particular charges, a process she noted could have taken several years. 'Even though we had a strong case, you never know how you'll fare in litigation,' Solis said. 'We know BP could have fought this vigorously, and this agreement means we saved the Department of Labor legal resources that can be used to protect workers elsewhere.' The agreement immediately canceled an OSHA hearing before an administrative law judge in Houston that was planned for next week.

Under the agreement, BP said it immediately will begin performing safety reviews of the refinery equipment according to set schedules and make permanent corrections. The agreement also identifies many items in need of immediate attention; the company has agreed to address those concerns quickly and to hire independent experts to monitor its efforts. Additionally, the agreement provides an unprecedented level of oversight of BP’s safety program, including regular meetings with OSHA, frequent site inspections, and the submission of quarterly reports for the agency’s review. Finally, in a step toward workplace safety corporate-wide, BP agrees to establish a liaison between its North American and London boards of directors and OSHA, which will allow the agency to raise compliance problems at the highest level.

'Safer conditions at this refinery should result from this arrangement, which goes far beyond what can normally be achieved through abatement of problems identified in citations,' said OSHA chief Dr. David Michaels. 'Make no mistake, OSHA will be watching to ensure that BP complies with the agreement and safeguards its workers.'

In September 2005, OSHA cited BP for a then-record $21 million as a result of the fatal explosion at its Texas City refinery in March of that year. BP paid that fine, but upon issuance of the citations, the parties entered into an agreement that required the company also to identify and correct deficiencies. In a follow-up investigation in 2009, OSHA found that although the company made many changes related to safety, it failed to live up to several extremely important terms of the agreement. As a result, OSHA cited BP with penalties totaling a record $87.4 million. That amount included $56.7 million levied for the company's failure to abate the hazards behind the fatal 2005 explosion and $30.7 million in new willful violations. In OSHA's preparation for filing with the Occupational Safety and Health Review Commission, the agency discovered it inadvertently had assessed 29 duplicate failure-to-abate violations totaling $6.09 million. The penalty was therefore adjusted to $50.6 million, which is what BP agreed today to pay. It is, as OSHA Deputy Assistant Secretary Jordan Barab said today, still the highest fine ever issued by OSHA and paid by an employer.

Barab said settlement negotiation on the $30.7 million that remains from the original fine handed down in October 2009 will be handled separately, having to do with 'a lot of different pressure-release valve issues -- basically what they interpret industry standards to be versus what we interpret industry standards to be. So that will be a long, involved discussion with them, as well.'

Barab said this year's Deepwater Horizon disaster had no effect on today's agreement or the timing of this settlement.

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