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August 13, 2010

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BP accepts $50.6m fine for ‘falling short’ on Texas City agreement

BP Products North America Inc. (BP) has consented to pay a penalty of $50.6m (£32.5m) over safety issues stemming from the 2005 Texas City oil refinery explosion.

The agreement with the US Occupational Safety and Health Administration (OSHA) resolves 270 “notifications of failure to abate” raised in October last year. These violations were revealed during a follow-up inspection by the watchdog to check if the company had corrected potential hazards at the plant identified in the wake of the blast, which killed 15 workers and injured 170.

The $50.6m fine (reduced from $56.7m because OSHA had inadvertently accounted for 29 duplicate ‘failure-to-abate’ violations) is the largest fine ever issued by the regulator. BP contested the penalty and, despite the settlement announced yesterday (12 August), remains adamant that extensive action to enhance worker safety has taken place at the refinery in the last five years, in full compliance with the 2005 agreement.

Under the terms of the latest settlement, BP will immediately begin safety reviews of the refinery equipment according to set timescales, and make any necessary corrections. The company has agreed to swift action to address certain issues identified as in need of immediate attention, and will be bringing in independent experts to monitor its efforts.

Furthermore, BP’s safety programme is to undergo what OSHA describes as “an unprecedented level of oversight” in the form of regular meetings with the agency and the submission of quarterly reports, as well as frequent site inspections.

Commenting on the agreement, Secretary of Labor Hilda Solis said: “This agreement achieves our goal of protecting workers at the refinery and ensuring that critical safety upgrades are made as quickly as possible. 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.”

BP said it has worked closely with the United Steelworkers (USW) union in setting out the steps the company will take under the agreement. Said Steve Cornell, head of BP’s US refining business: “We have significantly improved the safety of our operations at Texas City over the last five years and are determined to carry this effort forward effectively in the future. Our commitments with OSHA and to the USW’s Triangle of Prevention (TOP) programme are consistent with how we intend to deliver further safety improvements.”

Echoing the company’s commitment, global head of refining and marketing, Iain Conn, added: “BP has a stated goal to become a leader in process safety and we look forward to working collaboratively with OSHA to achieve an injury-free workplace in our operations.”

Following the 2009 investigation, OSHA issued a further $30.7m in fines for 439 “wilful violations” relating to failures to comply with industry-accepted controls on pressure-relief safety systems and other process-safety management weaknesses. No settlement has yet been reached on these matters.

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