BP Agrees to Record $50.6 Million Fine for Texas City Blast

BP Plc agreed to pay a record $50.6 million U.S. fine for failing to correct safety shortfalls at a Texas refinery after a 2005 explosion that killed 15 workers, the Occupational Safety and Health Administration said today.

“The size of the penalty rightly reflects BP’s disregard for workplace safety,” Labor Secretary Hilda Solis said on a conference call announcing the agreement. “No one should have to sacrifice their life for their job.”

BP agreed to the fine as it faces civil and criminal investigations over the April 20 explosion at a Gulf of Mexico drilling rig that killed 11 workers and triggered the largest U.S. oil spill. The company has been faulted by lawmakers for failing to change its culture since the 2005 refinery explosion.

The settlement announced today resolves 270 of 709 citations OSHA issued at the Texas City, Texas, refinery in October, according to a company statement. OSHA said BP failed to meet its obligations after a 2005 agreement related to the explosion.

The agency and BP are still negotiating on $30 million in fines for new citations at the plant, Jordan Barab, OSHA deputy assistant secretary, said on the call. The U.S. in October proposed fining BP $87.4 million, later reducing it to $81.3 million after double-counting some citations, he said.

Regulators said the agreement will result in safety improvements that will exceed any that would be obtained through the inspection and citation process. The company will undergo an “unprecedented level of oversight,” OSHA said in a statement.

Liaison Appointment

BP will appoint a liaison between its North American and London boards of directors and OSHA, allowing compliance deficiencies to be raised at the highest level, OSHA said.

BP is accelerating the pace of making safety improvements as part of the agreement, according to the company statement. The work, expected to cost up to $500 million through 2016, will be verified by independent experts, according to the statement.

The agreement shows BP is determined to work with the government and the United Steelworkers union to make Texas City safer, Steve Cornell, head of BP’s U.S. refining business, said in the statement.

“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,” Cornell said.

The Texas refinery resumed full operations in late 2008 after being shut by the March 23, 2005, blast and Hurricane Rita and then running at a reduced rate. The company spent $1 billion to upgrade units and improve safety at the refinery, where the restart was part of BP’s plans to close an earnings gap with competitors.

The Texas City refinery is the fourth-largest in the U.S., including a plant in the U.S. Virgin Islands, and has a capacity of 470,000 barrels a day, according to data compiled by Bloomberg.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net.

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