BP Agrees To Pay Full Penalty of $50.6 Million For Citations Stemming from 2005 Texas City Refinery Explosion

Aug. 12, 2010
OSHA on Aug. 12 announced that BP Products North America Inc. will pay the 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 in October 2009 after a 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 L. Solis. “The size of the penalty rightly reflects BP’s disregard for workplace safety.”

When asked if he felt the agency’s aggressive fines were too tough on the largest local employer in Texas City in bleak economic times, Deputy Assistant Secretary of Labor Jordan Barab responded: “It is perfectly within BP’s financial means to make this facility safe and they’ve admitted they have the ability to make it safe.”

As part of the agreement, BP 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 what both Solis and Barab called “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 Assistant Secretary of Labor for OSHA 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. Upon issuance of the citations, the parties entered into an agreement that required the company to identify and to correct deficiencies. In a follow-up investigation in 2009, OSHA found that BP had failed to fully live up to several extremely important terms of that agreement. As a result, OSHA cited BP for “failure to abate” violations with penalties totaling a record $50.6 million that BP now has agreed to pay.

A damning report issued in March 2007 by the Chemical Safety and Hazard Investigation Board (CSB) on the causes of the Texas City explosion asserted that “organizational and safety deficiencies at all levels” of BP caused the March 23, 2005. Interestingly, CSB investigators also fingered OSHA for failing to enforce the workplace safety agency's process safety management standard (29 CFR 1910.119, Process Safety Management of Highly Hazardous Chemicals) at petrochemical facilities such as BP's Texas City refinery.

Barab stressed during a conference call to announce the latest agreement that should BP fail to meet the terms of the agreement, OSHA could issue additional failure-to-abate or willful citations and even could terminate the agreement entirely if it feels the company is not meeting its responsibilities in good faith.

The question now remains: Will this agreement result in BP improving safety at the facility? And assuming the facility received increased scrutiny from the agency following the 2005 blast and yet managed, according to OSHA itself, to fail 270 times to fully comply with items in the 2005 settlement agreement, the more important question might be what, if anything, is OSHA really going to do about it?

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