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BP Tab in Refinery Disaster Tops $800M

Friday, November 4, 2011

More items for Health & Safety

BP has just added another $50 million to its cost for the 2005 Texas refinery catastrophe that killed 15 workers and injured 180 people.

In what he called a “record-breaking announcement,” Texas Attorney General Greg Abbott announced late Thursday (Nov. 3) that BP Products North America would pay the state $50 million to settle environmental litigation claims stemming from the March 2005 disaster in Texas City.

Chemical Safety Board

The March 2005 explosion at BP America killed 15 employees, injured 180 people, laid waste to much of the facility, and caused $1.5 billion in financial losses.

In its scathing 2007 report on the accident, the U.S. Chemical Safety Board laid the disaster to “organizational and safety deficiencies at all levels of the BP Corporation.”

OSHA Settlement

The Texas agreement is just the latest in a series of settlements in the case, totaling hundreds of millions of dollars for the oil giant.

In 2010, BP agreed to pay $50.6 million in fines to the Occupational Safety and Health Administration to resolve more than 400 willful and failure-to-abate violations that led to the nearly 200 injuries and deaths.

That settlement followed OSHA’s 2009 finding that the company had not remedied many of the problems for which it was cited six months after the explosion.

The oil company also agreed at that time to invest at least $500 million in safety improvements at the plant. The largest refinery in the BP family of companies, the BP America facility in Texas City produces a wide range of petroleum products and has a capacity of approximately 460,000 barrels of crude oil per day.

EPA Settlement

In September 2010, BP agreed to pay a $15 million penalty to resolve federal Clean Air Act violations at the refinery—the largest penalty the Environmental Protection Agency had ever assessed for civil violations of the law’s chemical accident prevention regulations

That settlement was EPA’s second with BP stemming from inspections that began after the explosion. A February 2009 settlement required BP to spend more than $161 million on pollution controls, enhanced maintenance and monitoring, and improved internal management practices at the refinery, as well as pay a $12 million civil penalty and spend $6 million on a supplemental project to reduce air pollution in the Texas City area.

“BP’s actions at the Texas City refinery have had terrible consequences for the people who work there and for those in nearby communities,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance.

TX Settlement

BP’s new settlement with Texas includes $49.5 million in penalties for violating state environmental protection laws and $500,000 for the state’s legal fees and litigation expenses.

The entire amount is due within 30 days of the settlement.

BP admits no liability in the judgment, saying it is settling the case “because of the uncertainty and costs of litigation.”

The settlement resolves the Attorney General’s 2009 lawsuit  charging BP with violating state environmental protection laws during and after the explosion.

Continuing Emission Releases

According to the suit, BP is responsible for 72 separate, unlawful pollutant emissions that have been occurring every few months since March 2005.

The legal action originated with a referral from the Texas Commission on Environmental Quality, which regulates and permits emissions at Texas refineries.

After the original suit was filed, TCEQ submitted a second, related referral against BP, citing state environmental violations at the refinery between April 6 and May 16, 2010. The AG’s Office then filed a second enforcement action charging BP with illegally emitting approximately 500,000 pounds of harmful air pollutants in Texas City.

Restarting Disaster

The accident occurred about 1:20 p.m. on March 23, 2005, when a series of explosions shook the refinery during the restarting of a hydrocarbon isomerization unit.

Many of the victims worked in or around trailers located near an atmospheric vent stack. The explosions occurred when a distillation tower flooded with hydrocarbons and was over-pressurized, causing a geyser-like release from the vent stack.

In its investigation, the Chemical Safety Board looked not only at the refinery operation but also at BP’s corporate management in the UK. The board concluded:

“Warning signs of a possible disaster were present for several years, but company officials did not intervene effectively to prevent it.

“The extent of the serious safety culture deficiencies was further revealed when the refinery experienced two additional serious incidents just a few months after the March 2005 disaster. In one, a pipe failure caused a reported $30 million in damage; the other resulted in a $2 million property loss. In each incident, community shelter-in-place orders were issued.”

‘Holding Polluters Accountable’

The Texas agreement resolves the state’s environmental claims against BP, Abbott said.

“The Texas Attorney General’s Office is committed to protecting our State’s precious natural resources by enforcing environmental pollution laws,” he said. “The proposed agreement reflects the State’s commitment to protecting air quality and holding polluters accountable for illegal emissions.”