The Firm . Judge to consider whether BP settlement adequate


Judge to consider whether BP settlement adequate

Families of Texas City blast victims want $50 million fine increased
A federal judge this evening delayed a decision on a plea deal aimed at resolving a criminal probe into the March 2005 explosion at BP's Texas City refinery, after victims recounted their losses and lawyers raised complex legal issues.

U.S. District Judge Lee Rosenthal did not set a date to hear further arguments.

Relatives of victims of the blast, victims' rights advocates and environmentalists are protesting the deal that have BP pay $50 million for the explosion , which killed 15 people and hurt many more.

. This morning, opponents rallied before the hearing in downtown Houston to say the amount is too little.

"I think this agreement stinks," Eva Rowe, whose parents died in the explosion, said before the hearing. "If the purpose of punishment is to give incentive to the wrongdoer to change their ways and do the right thing, this agreement utterly fails. Fifty million is less than one month's worth of profit for this one BP plant."

Rowe, who won an undisclosed settlement from BP in one of the wrongful death cases against the company, largely repeated her remarks in court. As part of the deal, BP also paid millions to area schools and hospitals.

Her attorney, Brent Coon, who has represented several victims, said fines are insufficient.

"No one's going to jail for those 15 counts of murder, and that's wrong," he said. Three people have died because of accidents at the Texas City refinery since the 2005 blast. That proves the lack of safety-focused culture at the facility has not changed, Coon said.

Keith Casey, who has been the manager of the Texas City plant for about a year, pleaded guilty on behalf of the company. Rosenthal said the company can withdraw the plea if she rejects BP's deal with the government.

Nicole Pina, the daughter of Joe Gracia, a 34-year Texas City plant employee who died in an accident there three weeks ago, read a statement to the court on behalf of her mother, Robbie Gracia, who was too distraught to speak.

"It has now been 21 days since I last saw Joe," Pina read. "Now, BP claims it has made major safety changes at the plant. Joe's death proves that BP has not done nearly enough. My husband's death proves that BP will not do what is needed unless this court forces it to."

BP forged a deal with the Justice Department last October that required the London-based company's North American products division, which oversees its five U.S. refineries, to plead guilty to a felony environmental crime under the Clean Air Act, pay a $50 million fine and be on probation for three years. The investigation is continuing, and individuals still could be charged.

At the same time, BP struck two other plea deals to settle separate criminal investigations into propane trading manipulation and leaks from pipeline systems in Alaska's North Slope. The trading settlement involved a $303.5 million fine and an agreement from the government to forgo prosecution for fraud. The Alaska deal involved $20 million in fines, a guilty plea to a misdemeanor environmental crime and an agreement from Alaska prosecutors not to seek state charges related to the leaks.

BP had been slated to enter the blast-related plea in November, but several plaintiffs' lawyers who represent blast victims objected to the deal as too lenient. They say the company should pay at least $1 billion, and Rosenthal postponed the plea to allow blast victims to be heard.

In announcing the plea agreement for the blast, prosecutors acknowledged the disparity between the fines for that and the trading manipulation, which involved no deaths. However, the Clean Air Act calculates criminal fines with a mathematical formula that considers how much money a company may have saved by deferring repairs and failing to implement safety measures as well as profits. That formula doesn't account for fatalities.

Prosecutors applied that formula to the unit that exploded. They determined that $50 million was the most they could get in a criminal fine had they taken the case to trial and won, according to U.S. Attorney Don DeGabrielle in Houston. In a court filing BP acknowledged the company sought a deal that would bypass prosecution, but the government insisted on a felony plea and the fine, which would be the highest ever assessed under the Clean Air Act.

The plaintiffs' attorneys argued that the state of the entire plant should be taken into account when determining an appropriate fine, and that unsafe conditions were not isolated to the unit that exploded.

The blast happened when a tower in a unit that boosted octane in gasoline overfilled with hydrocarbons, which went into a blowdown stack that spewed liquid and vapors into the air. Those vapors ignited, causing the explosion.

Under the plea agreement, the company admits that several procedures required under the law for ensuring that mechanical integrity and a safe startup of the processing unit that expoded either had not been established or were ignored. The company also admits that BP knowingly put flimsy trailers near the unit and failed to inform workers that the unit was going to be restarted, a potentially dangerous process that requires extra care.

The 15 people who died were in a trailer 121 feet away from the blast site, in violation of BP's own policy that required trailers to be at least 350 feet away from processing units. After the blast, BP removed all trailers from the refinery site.

The company is spending $1 billion to overhaul the plant, including replacement of all blowdown stacks with flares that burn off vapors. BP also has spent $1.6 billion settling more than half of about 4,000 civil claims, but has not said how much will be spent to resolve hundreds more that remain outstanding.

So far, two bundles of lawsuits have gone to trial in the latter half of last year. Both settled before those plaintiffs finished presenting evidence.

Houston Chronicle
February 4, 2008