The company agreed to pay a record-breaking $21.4 million OSHA penalty to settle an investigation of a March 23 explosion at its Texas City, Texas, refinery that killed 15 workers and injured more than 170 others. The settlement also obliges BP to undertake a number of safety improvements to the facility.
The enormity of the unusual pre-citation settlement fine is leading legal experts and the United Steelworkers (USW) to wonder if the agreement contains some hidden benefits for the company, including a promise that OSHA will not make a referral. A telephone call to OSHA's Houston South area office, seeking information on the status of the criminal referral, was not returned.
In most cases, OSHA issues a citation outlining all the violations the agency has found in the course of its investigation. But BP settled with OSHA before the release of the citations.
"We are glad that BP was willing to settle this case," said USW president Leo Gerard in a statement. "But that settlement should have happened after a citation, not before."
The pre-citation settlement strategy allowed BP to exclude worker representatives from the settlement negotiation with OSHA, a move that drew criticism from the union.
"We will never know what OSHA traded away to get the settlement," said Gerard. "The families of the victims, workers in the plant, and the surrounding community deserve to know all the problems OSHA uncovered. And the workers who face those hazards every day on the job should have had a voice in the settlement talks."
Michael Wright, USW's director of health, safety and the environment, said in an interview, "Although we have criticized the process, we support everything that's in the settlement. Our question is about what's not there."
Companies usually have to agree to almost everything OSHA wants in order to obtain pre-citation settlement agreements, and this appears to be what BP did, according to lawyers with extensive OSHA legal experience. The attorneys spoke on condition of anonymity, because they continue to represent clients in OSHA enforcement actions.
What companies typically get in return, legal experts say, is a press release that is far less negative and an end to negative headlines about the continuing legal dispute.
"The BP strategy here is, 'let's get this behind us as quickly as possible,'" said one legal source. "For BP, $22 million is a drop in the bucket." In addition, if there are safety problems at the refinery, BP may have concluded it wants to get them fixed quickly anyway.
"We preferred to focus our discussions with OSHA on areas other than the violations," commented BP spokesperson Ronnie Chappell. "We're doing what's necessary to take corrective actions and improve our operations at Texas City."
A Credible Process?
One key question, according to both Wright and legal sources, is whether in order to obtain a big uncontested fine, OSHA traded away the right to refer the case for criminal prosecution.
"We think criminal referrals may be warranted, both with EPA and OSHA," said Wright. "We don't know whether there was some secret sidebar about this that's one of the problems with the union being cut out of this secret negotiation."
The company has accepted responsibility for the Texas City explosion that killed 15, and BP has been cited by OSHA for 303 willful violations. OSHA has the power to refer any case for criminal prosecution when a worker dies as a result of a willful violation.
The settlement agreement contains nothing that would prevent OSHA from referring the case to the Department of Justice, according to one lawyer who has reviewed it. And even if OSHA doesn't make the referral, the Justice Department could decide on its own to press charges against BP.
"But if they don't refer, OSHA will take a lot of heat from the public and other members of industry," commented one attorney with a private OSHA practice. "Many cases far less grievous than this have been sent to Justice so if BP isn't referred, what does that say about the credibility of the process?"