BP Agrees to Pay $50M for Texas Refinery Penalties

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    NEWSLETTERS

    TK
    AP
    Police block roads around a BP Oil Refinery in Texas City, Wednesday March 23, 2005 after an explosion which injured at least 10 people. (AP Photo / Michael Stravato)

    Beleaguered oil giant BP has agreed to pay a record $50.6 million fine for failing to correct safety hazards at its Texas City oil refinery after a 2005 explosion killed 15 workers.

    The Occupational Safety and Health Administration said Thursday it is still working to collect another $30 million from BP Products North America for other penalties that the company is contesting.

    "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," Labor Secretary Hilda Solis said in a conference call with reporters.

    While the fines pale compared to the billions BP is committed to paying out for damages caused by the massive oil spill at its well in the Gulf of Mexico, it stands as the largest penalty issued in OSHA's history.

    OSHA initially had proposed $87 million in penalties last October, but later reduced it to $80 million because it had inadvertently imposed several duplicate fines.

    BP spokesman Scott Dean strongly denied Solis' assertion that BP has a disregard for safe working conditions. He said the $50.6 million penalty was a condition of the settlement but "does not mean that BP violated our previous agreement with OSHA or disregarded worker safety."

    "Rather than litigate the citations, OSHA and BP have agreed to put our differences aside and move forward collaboratively to continue a multiyear program to further enhance workplace safety at Texas City," Dean said in a written statement.

    Under the agreement, BP will invest $500 million between now and 2016 to upgrade safety conditions that will protect those now working at the refinery. OSHA Deputy Assistant Secretary Jordan Barab said the agreement gives the safety agency "an unprecedented level of oversight" in making sure BP fully complies.

    The company will hold regular meetings with OSHA officials, allow frequent site inspections and submit quarterly reports detailing its progress in correcting the plant's pressure release systems. BP is creating a liaison between its North American and London boards of directors and OSHA so the agency can raise compliance problems at the highest levels.

    BP had contested the entire amount before agreeing to pay $50 million for hundreds of violations that it was supposed to fix under a 2005 agreement with the agency. OSHA said that BP had failed to make the improvements quickly enough, while BP had sought additional time to complete the repairs.

    "There was much more trust in the 2005 agreement and we have learned our lesson here," Barab said.

    The agency has alleged that BP committed hundreds of new violations at the plant since the blast occurred. OSHA wants BP to pay another $30 million in penalties for allegedly failing to repair safety valves that protect equipment and pipes from becoming overpressurized. Barab said negotiations over those penalties are ongoing.

    OSHA officials have blamed the Texas City explosion on a piece of equipment that overfilled with highly flammable liquid hydrocarbons. Alarms and gauges that were supposed to warn of the overfill did not work properly.

    The deadly explosion at the refinery, about 40 miles southeast of Houston, also injured more than 170 people.

    Until now, the largest fine OSHA had ever assessed was $21 million, also against BP in connection with the same refinery accident.

    The latest sanctions come as BP contemplates environmental protection law fines of up to $21 billion arising from the Gulf oil spill, depending on how many barrels have spilled.