The Wall Street Journal
British oil giant BP PLC will pay a $50.6 million fine for failing to fix safety hazards at its Texas City, Texas, oil refinery after an explosion in 2005, and will pour $500 million into the facility for safety improvements.
Labor Secretary Hilda Solis said Thursday that BP also agreed to establish a liaison between its directors and the Occupational Safety and Health Administration, which enforces U.S. workplace-safety laws. OSHA said the arrangement was a first for the agency.
BP agreed to hold regular meetings with OSHA officials, allow frequent site inspections and submit quarterly reports for OSHA's review, Ms. Solis said, in an agreement that represented an "unprecedented level of oversight of BP's safety program."
BP and the Labor Department are still discussing how to resolve about $31 million of remaining fines proposed for subsequent violations found at the refinery, where 15 workers were killed in the explosion.
BP said the settlement resolves 270 of the 709 citations OSHA issued in October 2009. BP said "the refinery has undertaken extensive actions to enhance worker safety since 2005."
The company said it hopes the settlement pact will provide a platform to resolve the remaining citations.
The $500 million BP will invest from 2010 to 2016 is in addition to more than $1 billion the company has spent on safety and infrastructure improvements from 2005 through last year, BP said.
The deal is the latest concession BP has made to the Obama administration in recent months, a period during which it has faced intense political pressure over the oil spill that erupted in April when a rig it was leasing exploded in the Gulf of Mexico. BP earlier agreed to set up an independently administered $20 billion escrow account to compensate victims of that disaster.
BP and the White House have agreed that revenue from the company's U.S. oil and gas production could serve as a backup source of funding for that claims pool, according to a copy of an agreement released by the White House this week.
BP still could face billions of dollars of additional penalties as a result of the Gulf spill. The Justice Department is conducting parallel criminal and civil investigations, alongside investigators from the Environmental Protection Agency and other federal agencies.
Civil fines under environmental laws could theoretically reach $4,300 per barrel of oil spilled if gross negligence is found. The U.S. government recently estimated that 4.9 million barrels of crude spilled into the Gulf during the three-month-long gusher.
BP also faces the possibility that Congress will pass proposed bills that would bar the company from obtaining future offshore drilling leases for five years.
Six months after the March 2005 blast at the Texas City refinery, OSHA fined BP $21 million, a then-record fine for the agency. OSHA and BP also reached an agreement in 2005 requiring BP to correct safety deficiencies at the refinery.
The Justice Department levied a separate $50 million criminal fine—the largest ever assessed against a corporation for violating the Clean Air Act.
But in a follow-up investigation in 2009, OSHA found BP had failed to live up to the agreement by not fixing many of the Texas City facility's safety problems. It slapped BP with $56.7 million in penalties for "failure to abate," but later reduced that to the $50.6 million agreed upon Thursday, after finding it had inadvertently duplicated some citations.
OSHA also identified 439 new violations that led to additional penalties of nearly $31 million. Those are the penalties that are still under discussion.
OSHA's inspectors expressed anger that many of the problems identified during the investigation concerned pressure-relief systems—equipment whose failure had contributed to the 2005 blast.
BP contested the citations and spent months negotiating with OSHA on the fines. BP and OSHA will now enter settlement negotiations to discuss the nearly $31 million in fines.
Labor Secretary Hilda Solis said Thursday that BP also agreed to establish a liaison between its directors and the Occupational Safety and Health Administration, which enforces U.S. workplace-safety laws. OSHA said the arrangement was a first for the agency.
BP agreed to hold regular meetings with OSHA officials, allow frequent site inspections and submit quarterly reports for OSHA's review, Ms. Solis said, in an agreement that represented an "unprecedented level of oversight of BP's safety program."
BP and the Labor Department are still discussing how to resolve about $31 million of remaining fines proposed for subsequent violations found at the refinery, where 15 workers were killed in the explosion.
BP said the settlement resolves 270 of the 709 citations OSHA issued in October 2009. BP said "the refinery has undertaken extensive actions to enhance worker safety since 2005."
The company said it hopes the settlement pact will provide a platform to resolve the remaining citations.
The $500 million BP will invest from 2010 to 2016 is in addition to more than $1 billion the company has spent on safety and infrastructure improvements from 2005 through last year, BP said.
The deal is the latest concession BP has made to the Obama administration in recent months, a period during which it has faced intense political pressure over the oil spill that erupted in April when a rig it was leasing exploded in the Gulf of Mexico. BP earlier agreed to set up an independently administered $20 billion escrow account to compensate victims of that disaster.
BP and the White House have agreed that revenue from the company's U.S. oil and gas production could serve as a backup source of funding for that claims pool, according to a copy of an agreement released by the White House this week.
BP still could face billions of dollars of additional penalties as a result of the Gulf spill. The Justice Department is conducting parallel criminal and civil investigations, alongside investigators from the Environmental Protection Agency and other federal agencies.
Civil fines under environmental laws could theoretically reach $4,300 per barrel of oil spilled if gross negligence is found. The U.S. government recently estimated that 4.9 million barrels of crude spilled into the Gulf during the three-month-long gusher.
BP also faces the possibility that Congress will pass proposed bills that would bar the company from obtaining future offshore drilling leases for five years.
Six months after the March 2005 blast at the Texas City refinery, OSHA fined BP $21 million, a then-record fine for the agency. OSHA and BP also reached an agreement in 2005 requiring BP to correct safety deficiencies at the refinery.
The Justice Department levied a separate $50 million criminal fine—the largest ever assessed against a corporation for violating the Clean Air Act.
But in a follow-up investigation in 2009, OSHA found BP had failed to live up to the agreement by not fixing many of the Texas City facility's safety problems. It slapped BP with $56.7 million in penalties for "failure to abate," but later reduced that to the $50.6 million agreed upon Thursday, after finding it had inadvertently duplicated some citations.
OSHA also identified 439 new violations that led to additional penalties of nearly $31 million. Those are the penalties that are still under discussion.
OSHA's inspectors expressed anger that many of the problems identified during the investigation concerned pressure-relief systems—equipment whose failure had contributed to the 2005 blast.
BP contested the citations and spent months negotiating with OSHA on the fines. BP and OSHA will now enter settlement negotiations to discuss the nearly $31 million in fines.
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